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SAP Banking SummitSeptember 10th 2015Raffles Hotel, Istanbul
EXPLOITING THE DIGITAL OPPORTUNITY IN BANKINGROB HETHERINGTON
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 2
The Digital World – a day in the life ….
Positive headlines
“Will software that writes code alter tech’s script?”“Speeding up the process”“Uber raises $1.2bn in Chinese drive”“Microsoft chairman backs Nadella’s shift in strategy”“Royal Mail bets on tech start-ups”“Bats Chi-X Europe to launch share auctions”“Enlisting technology to conquer hearts and minds in the battle for customer loyalty”
Negative headlines
“Borderless world of technology threatens Europe’s business base”“Apple: bigger than big”“Toshiba inflated profit by nearly $2bn in seven years”
So a fantastic opportunity or an existential threat, but it can’t be ignored …
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 3
FinancialInstitutions
Customers Regulators
Shareholders
New Competitors
Personalised offerings
Real time society
Poor return on equity
SOX, Dodd Frank
IFRS, US GAAPBasel II and III
Market Conditions
Sclerotic growth
Retailers/telcos Fintech
Foreign institutions
Trust
Eurozone challenges
Bancassurance
Governance / Reputation
Lower margins
New technologies
Digital is not the only disruptive force in the Banking Industry …
Digital natives
Margin / ROA
…But it may be the key disruptor ….
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 4
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 5
Customers Of The Future – Ever More Demanding!
ResponsivenessConvenience ReliabilityRelevance Anytime, anyplace,
any device! Simple and easy to
interact Self service; assisted
only where necessary
Real-time banking - immediate response to my needs
Proactive problem identification and resolution
Tailored response based on dynamic feedback
Transparency & trust Consistency across all
channels Accurate, robust, on-
time delivery
“You should know me! and anticipate my needs”
Expect to be rewarded for loyalty (more choice)
Context-based personalized offers
Helpful information tailored to customer preferences
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 6
REFERFRIENDS
POSTREVIEW
JOINGROUPS
TRACKORDER
RECEIVEPACKAGE
MISSINGITEM
SETUPPHONE
BILLINGISSUE
MAKEPAYMENT
PHONEDAMAGE
TERMINATESERVICE
NETWORKISSUE
CHANGEADDRESS
RECEIVEOFFER
DISCOVERNEED
RESEARCH
RECEIVEOFFER
USEPRODUCT
RESTARTSERVICE
SHOP &BUYCONTRACT RECEIVE
INFORMATION
ADDFEATURE
POSTREVIEW
HELP & SUPPORT
BILLINGISSUE
MAKEPAYMENT
FIXISSUE
LOYALTYBONUS
JOINGROUPS
COMPLAINT
CHANGEADDRESS
ADDITIONALPURCHASE
RECEIVEOFFER
REFERFRIENDS
WEBPRINT
DIGITAL ADS
WORD OFMOUTH
SOCIALTV
AGENT
WEBSITE
REVIEWS
SEARCHKW/ADS
CONTACTCENTER
WEBSITE
SOCIAL
AGENTWEBSITE
CONTACTCENTER
CONTACTCENTER
AGENT
CONTACTCENTER
CONTACTCENTERSOCIAL
WORD OFMOUTH
SOCIAL
SUPPORTPORTAL
?
SUPPORTPORTAL
?
BRANDEDCOMMUNITY
?
AWARENESS
INTEREST
DECISION
ACTION
USE
ACTION
ADVOCACY
ADVOCACY
DECISION
USE
EACH CUSTOMERSCRIPTS THEIR OWN JOURNEY
Next Generation Customer Engagement: Prospecting, Sales and Service converge
The Customer Journey today: Non-Linear, Complex, Individual, Spontaneous, Unpredictable!
AWARENESS
INTEREST
DESIRE
ACTION
AWARENESS
INTEREST
DESIRE
ACTION
AWARENESS
INTEREST
DESIRE
ACTION
Savings Mortgage Investment
AWARENESS AWARENESS
FROM: TO:
EVERY JOURNEY IS UNIQUEAND EVERY POINT OF ENGAGEMENT
MATTERS
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 7
Millennial Lifestyle Scenario: My Bank is so cool!
Teenager Check Mobile Social Group Rock Concert
No Funds!Bank InteractionRanked OffersBest Offer
Rejected Customer Created Approved and Live!
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 8
Via
Family dreams of a new home
New Home Scenario: My Bank can read my mind!
Wife searches leading property portal via
facebook loginBank‘s mortgage
calculator
One day later…
Personalized Mortgage Recommendation at ATM
20 days later…
Wife browses favourite website
Personalized bank ad pops up with online mortgage form with
pre-filled details and real-time interest rate
Online chat to answer any questions on form
OR
Face-to-face meeting with advisor in branch
Option to fix appointment online with branch advisor
NEW HOME!
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 9
Corporate Scenario: My Bank is my Trusted Business Partner!
Bank provides real-time credit report on selected
supplier via mobile
Ship sinks!
Face-to-face meeting with Relationship
Manager in branch
Bank learns about Wallace deal in real-time and tracks goods via iOT and FSN
Search Ariba Network for available suppliers
Wallace click on ad and get details of services
FXTradeFX hedgeInsurance
Wallace places order with supplier in Indonesia
SAP Financial Services Network
Data mapping and process integration
Secure, private SAP-Hosted platform
Pay
men
ts
Mar
ket d
ata
Mas
ter d
ata
Rec
onci
liatio
n
Rem
ittan
ce d
ata
Ana
lytic
s
Oth
er s
ervi
ces
Virtu
al c
ards
Sta
tem
ents
paym
ent a
dvic
e
Bus
ines
s m
onito
ring
Goods in transit
Bank notifies Wallace of sinking
Bank advert appears with available service details in
countries from where mahogany can be sourced
Bank offers to place new order covered by
insurance
• No loss of lead-time• Robust working capital position
• Perfect FX hedge• Good and timely advice by bank
Wallace Cabinet Makers need mahogany hardwood
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 10
Where does a Bank create value for itself and its customers?
SellProduct
Service Product Payments Resolve
disputes StatementsCreate Product Reconcile
………… ………. ………… ………….. ………….…………. ………….
………… ………. ………… ………….. ………….…………. ………….
Process 1
Process 2
Process n
Core Business Collaborate Outsource Insource
Where is the value in the chain?
What is the value?
What’s the risk of creating that value?
What is the opportunity cost of obtaining the value?
Is someone else better placed to gain that value?
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 11
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 12
A Digital Bank is more than “digital banking”
Customer-facing processes Internal processes• Account opening• Credit servicing• Advice in branch• Complaint handling
in call-centre• Reporting and Query
servicing • Mortgage origination• …
• Employee enablement and collaboration
• HR and Payroll• Finance • Risk & Compliance• Procurement• …
Self-service Innovation - new value-added
offerings
Straight-through processing where possible
Improved analytics and decision-making
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 13
Digital Transformation can drive higher profitability in Banking
The opportunity:• Next level of efficiency• Excellence in Capital &
Risk Management• Winning the battle for
customers• Increasing revenue from
adjacent businesses
The Transformation journey: a mix of “legacy” concepts and Digital Technology.
Source: Accenture analyses
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 14
The successful Bank of the future – key capabilities
13*
Omni-Channel capability
Seamless, Simple & Real-time processing
PersonalizationOrchestrating the Eco-system
•Harmonized experience across bank-owned channels and bank’s presence on external social media and aggregator sites; one brand on all channels
•Maximum self-service including for origination and fulfilment (assisted channels by exception for customer-requested advice and/or regulatory reasons only)
•Seamless transfer from one channel to another at any stage of transaction
•Platform for collaboration with seamless integration to 3rd parties in digital eco-system across banking value chain (e.g., online retailers, other FIs, crowd funding sites, aggregator sites) which will allow banks to launch new value-added offerings including own products as well as white-labelling of products from extended eco-system
•Ability to outsource and in-source different components of the value chain
• Contextual Banking: Themed 1:1 experience (based on personalized preferences, history and anticipating lifestyle needs) orchestrated across bank-owned and external channels
• Dynamic user interface content reflecting customer insight
• 1:1 customer engagement with real-time offers and value-added services
• Customer-defined product configuration capabilities
• Dynamic pricing for all bank-owned and white-labelled products and product bundles
• Automation of end-to-end customer as well as internal processes
• Real-time transaction processing
• Improved controls and management e.g., rules-based filters for amendments and exceptions
• Self-monitoring of performance based on external feedback
• Improved collaboration for bank’s employees
