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Author's profile photo Astrid Stolbrink

Digital Transformation In Smaller Banks

The banking industry still has a black eye – but it’s more painful for some than others. Lasting repercussions from the global crisis, the emergence of non-banking digital disruptors, and impatient, tech savvy customers with low levels of loyalty and high expectations have redefined a ‘new normal’ in day-to-day retail banking.

Responding to omnichannel, real time requirements has been tough on all banks, but the headlines have largely focused on either the major global players or the new kids on the block – modern fintechs and non-bank challengers. While the same problems face smaller, mid-tier banks, the challenges they face in responding effectively have been given much less air time. 

Traditionally, the deeper your pockets, the better the solution you can afford. Although encumbered by hard coded, legacy siloes, global banks can at least throw money at the problem by overhauling and updating their systems. Likewise, fintechs can leapfrog any IT legacy obstacles and start from scratch with agile systems from day one.

However, smaller banks have been squeezed in the middle from both ends. Their pockets aren’t as deep as the bigger banks, nor can they simply start from scratch like the digital disruptors. And simply speeding up their existing models doesn’t help either as it lacks the currency of live, real time access to big data with meaningful customer insights.

In my view, mid-tier banks (as well as the smaller spin offs from large banks for that matter) need three things if they are to effectively compete in the digital world.  First, an affordable digital core with a standardised back-end, and minimal complexity. They need a means of applying best practice processes that level the playing field – and still fits their budget. Second, they need to be able to easily innovate at the front end and take advantage of standard APIs that cater to ever changing customer requirements. The benefits of open APIs have been widely reported with some predictions of banks moving from being one-stop-shops for financial services to open platforms as consumers start to embrace a more “modular” approach to banking.Third, their innovation needs to be fast and dynamic. That means faster time to value and delivering excellence, convenience, and innovation at the point of


This sort of modular utopia can only be achieved by leveraging the efficiencies of a standardised, pre-configured approach with the objectives of speed, automation, innovation and insight. The combination of these competences enable smaller banks to compete effectively in today’s digitally evolving marketplace, and stand shoulder to shoulder with larger banks and fintechs on their service offerings in an affordable and timely manner.

It also delivers big insights in the process. Consolidating data that’s scattered across a number of different and disconnected sources gives access to real-time insights to make better and more meaningful operational and financial decisions. That means more traction in cross selling products, better customer experiences, and lower IT costs – something that appeals to every bank, regardless of size or resources.

SAP Integrated Banking Package on S/4HANA (S4B) has been developed with these exact challenges in mind. It provides a digital core for banking that’s leveraged with the acceleration power of pre-configured and pre-integrated SAP standard software capabilities on S/4HANA. This means banks have the ability to operate real-time core banking practices on a single platform either in the SAP cloud, a private cloud, or deployed and run on-premise. 

It’s time smaller banks had an affordable way to harness the rich functionality of enterprise grade systems, affordable access to agile innovation, and the ability to pivot to meet market demand in real time – without breaking the bank…

Click here to find out more about what SAP will be showcasing at Sibos.

  Astrid Stolbrink is Digital Business Services Head of Financial Services, SAP Europe, Middle East and Africa

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