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Discovering the Digital Banking Platform

Connecting Digital Capabilities to SAP Banking Architecture


Guillermo Salazar
COMPETING IN DIGITAL FSI
1 | WHY IS DIGITAL CHANGING FSI NOW?
2 | HOW IS DIGITAL DIFFERENT?
3 | ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
4 | DELIVERING ON CUSTOMER EXPECTATIONS
5 | FINANCE & CAPITAL

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1. WHY IS DIGITAL CHANGING FSI NOW?
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WHY IS DIGITAL CHANGING FSI NOW?

TECHNOLOGY CYCLES
Technology eras are characterized by exponential growth and connectivity.
1970 1980 1990 2000 2010 2020
TECHNOLOGY TECHNOLOGY TECHNOLOGY TECHNOLOGY DIGITAL EXPONENTIAL
CORE ENABLEMENT COLLABORATI ENGAGEMENT
ON

MAINFRAMES OFFICE COMPUTING PC REVOLUTION INTERNET MOBILE ARTIFICIAL


DISTRIBUTED MINI-COMPUTERS NETWORK REVOLUTION CLOUD COMPUTING INTELLIGENCE
TERMINALS WORD PROCESSING COMPUTING BROWSER WARS BIG DATA SENSING
CORE COMPUTING SPREADSHEETS EMAIL CUSTOMER ANALYTICS HOME AUTOMATION
HOME COMPUTING RELATIONAL ENGAGEMENT SOCIAL MEDIA DIGITAL CARS
DATABASES INTRANET WEARABLES DIGITAL MONEY
CLIENT-SERVER APPLICATIONS QUANTUM
APPLICATIONS BROADBAND COMPUTING
3D PRINTING /
MANUFACTURING

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WHY IS DIGITAL CHANGING FSI NOW?

DISRUPTIVE INNOVATION

DISRUPTIVE INNOVATIONS ARE


RESHAPING
THE WAY FINANCIAL SERVICES
ARE:
STRUCTURED, PROVISIONED,
AND CONSUMED

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WHY IS DIGITAL CHANGING FSI NOW?

THE FUTURE OF FINANCIAL SERVICES


How disruptive innovations are reshaping the way financial services are structured, provisioned and consumed

• Innovation in financial services is deliberate and predictable; incumbent players are most likely to be attacked
where the greatest sources of customer friction meet the largest profit pools
• Innovations are having the greatest impact where they employ business models that are platform based,
data intensive, and capital light
• The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of
disruption is likely to be felt in the insurance sector
• Incumbent institutions will employ parallel strategies; aggressively competing with new entrants while also
leveraging legacy assets to provide those same new entrants with infrastructure and access to services
• Collaboration between regulators, incumbents and new entrants will be required to understand how new
innovations alter the risk profile of the industry – positively and negatively
• Disruption will not be a one-time event, rather a continuous pressure to innovate that will shape customer
behaviours, business models, and the long-term structure of the financial services industry
Del
oitteDigDigital
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ght©2015© Del2016
oitteDiDeloitte
gitalLLC.AlDigital
lrightsreserved.
LLC. All rights reserved.
WHY IS DIGITAL CHANGING FSI NOW?

NEW NETWORKS ARCHITECTURES ORGANIZATIONS BUSINESS MODELS NORMAL

”The days of a centralized controlled world


are over just like the centralized state-run
economy of the Soviet Union is a thing of
the past”

—Forrester

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2. DIGITAL CX BUYS DIFFERENTLY
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65
130
HOW IS DIGITAL DIFFERENT?
Bank Sales
Digital Sales need to replace lagging branch sales.

Estimated Bank Sales


In Millions of Active New Accounts
A projected 30% drop in branch
130

sales need to be replaced by


99
62
the digital channel. 9
Non-
∆=
(30)%
Branch
Banks need to drive to a 50% 65
Sales
125
90
Digital Sales mix by 2019. 63

0
Total Sales 2014 Branch Sales Total Sales Sales Needed to
2019 (E) Required 2019 Fill the Gap
(E) 2019
Digital Banking is about protecting revenues, and
growing top line.

9
Source:SourceCEBCustomerExperienceSurvey
65
130
HOW IS DIGITAL DIFFERENT?
Constant Goal Seeking drives Digital Decision making
69% of digital purchases are from constant seeking, not life events.
Digitals are constantly seeking in their digital
Reasons network, not the
for Financial Product Bank’s
Purchase
network. Other
Dissastisfied with Another Product

Digital purchases are shifting away from Life Event Caused a Need for a New or Different Product
Responded to an Attractive Product Offering

life events to influence based, or 100% Learned That I Have a Need for the Product
3% 8% 2%
10%
choice based on superior solution.
21%
Digital buyers are changing products and 28%

institutions more frequently. 28%


50%
Personalized marketing & education 29%

drives digital product selection


41%
30%

Constant listening, engagement and messaging is 0%


required to acquire and retain digital buyers. n = 2.343 Branch Oriented Digitally Oriented

10
Source:SourceCEBCustomerExperienceSurvey
65
130
HOW IS DIGITAL DIFFERENT?
Networked Learning Process has changed
Digitals do not wait to be educated by the branch. 62% learned
about the financial product outside their bank. Initiated Traditional Process
Customer Bank Directed
Branch Branch
Customer Branch
Cognitive Bias is masking the true
CustomerRecognizes Staff Staff
Chooses StaffFulfill
Need Clarify Propose
Bank Solution
Need Solution

behavior of Digital customers. BankBuildsBrand


Salience
Digital buyers churn through products
Suspected Digital Process
and institutions more frequently. Customer Controlled Bank Enabled

Personalized marketing & education CustomerRecognizes


Need
Customer
Clarifies
Customer
Evaluate
Customer
Selects
BranchStaff
Affirmor
BranchStaff
Fulfil
Need Alternatives Alternative Challenge Solution

drives digital product selection


BankBuildsBrandSalience

Actual Digital Process


Balance the investment to optimize the customer experience, Customer Controlled Bank Reaction
returns on technology investment & neutralize risk. Customer Customer
Learns
Determines Opens
Learns Need Relevant
Best Necessary BankNoticesChange
Response Account
Solution

11
65
130
HOW IS DIGITAL DIFFERENT?
Digital Loyalty is fickle
With the smartphone as the ‘bank’; Full Wallet is not in the mind of
the digital customer. The full wallet must be earned.
Digital Customers
Non-Digital Customers

Customers Who Consolidate All Strong Likelihood to Purchase


Products at Primary Institution Next Product from Primary
Full Wallet - is 60% less likely to 1.0x
Institution
1.0x
1 1
consolidate all of their 0.7x

products.
0.5 0.4x 0.5
Digital buyers – are less likely to
buy from a single institution.
0 0
1 2 1 2
n = 3.900 n = 4.957
Source: Federal Reserve Board Source: CEB 2013 Customer
2013 Survey of Consumer Experience Survey
Competition for the Digital Wallet will be fierce & frequent.

12
65
130
HOW IS DIGITAL DIFFERENT?
Loyalty is an engaged experience
Helping digitals ‘stay on track’ drives 50% more loyalty. Digitals find
value in managing and measuring the pivotal steps to goal
attainment--but it must be integrated and permissioned.
Loyalty
Continuous Engagement is
rewarded with an increase in Day to Day tasks Pivotal Steps

financial products and upsells Staying on Track Purchasing Products Financial Planning

Automate important and


Driving Action Reducing Complexity Providing Information
unpleasant tasks that help
digitals attain goals 13% 24% 64%

Customer Weighting
Source: CEB Customer Experience Survey

Traditional banking is an undifferentiated experience, Digitals seek value add


that impacts their goals.

13
65
130
HOW IS DIGITAL DIFFERENT?
Constantly Seek Opportunities to Engage
Digital Banks can run short cycle test and learn cycles to (digitally)
learn the kind of engagement customers seek.
Customer Product Customer Default Account Related Customer Feature
Digital Engagement creates a digital Use Risk Events and Channel Use

history that can be used to compare


negative and positive outcomes.
Opportunity
Digital buyers churn through products Getting ahead of Getting ahead of Getting ahead of Ensuring customers
potential product potential repayment account related to- get more out of
and institutions more frequently. service problems problems dos product and
channel features

Personalized marketing & education Outreach

Proactive alerts Proactive alerts and Reminder of Educational tips


drives digital product selection tips on ways to
better manage
upcoming account
events and related
during customer
use of services via
credit tasks bank outreach

Result

Customers regularly Improved loan Customers Customer accesses


use banks products repayment remember to take features and
Goal attainment and behavior modification can be executed in without service decreases defaults necessary account channels that can
high volume, small impact touches that can be measured problems actions best meet their
needs
continuously in real-time.
14

Source:LPfinancial
3. ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
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ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Enabling the Digital Banking Capabilities
Design to the Gartner Digital Business Platform, enabling the required capabilities, to defend against
the threat, and to partner with the innovators, the technology stack must be rethought.
Partners

Ecosystems
& API
Platform
Information Systems Platform
Customers
Customer & Digital Platform
Employees
Data & Analytics Platform Customer /
Data & Information
Digital
Ecosystems & API platform Platform
Analytics Systems Platform
Platform
Internet of things platform

Internet of
Balance the investment to optimize the customer experience, returns on Things
technology investment & neutralize risk. IOT Platform
Platform
16
*Gartner – G00297286 Things
ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Information Systems Platform
Supports the Back Office and Operations such as ERP and Core systems
Partners
Employee collaboration and workplace - Email, telephony and
video, file storage and sharing, collaboration tools, productivity Ecosystems
tools & API Supplier Portal &
Back-office systems - finance, HR, purchasing, MDM, billing, Apps
Platform
ERP, Customer Portal Employee
Core systems – Core banking & Apps Collaboration and
Supplier portal and apps –Vendor Interaction & supply Customers Workspace
management Back Office Employees
Customer portal and apps –Customers use them to gain Systems
information, get customer service, apply for services, place Customer /
Data &
Business Information
orders and transact, and/or view status Digital
Analytics
Intelligence Systems Platform
Business intelligence - reporting, dashboards and online Platform
analytical processing (OLAP) analysis of back-office and core
Platform
Core Banking
system data Applications
Operational technology (OT) systems – operational system
directly control and monitor equipment and assets. End Point
Endpoint computing - endpoint devices and the security and Computing
management tools that support them Internet of
Things
Balance the investment to maximize returns and the IOT Platform
Platform
customer experience. OT Systems
17
*Gartner – G00297286 Things
ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Customer & Digital Platform
Contains the main customer-facing elements, such as customer and citizen portals, multichannel
commerce and customer apps. Multi Channel is table-stakes. Partners

Multichannel interaction and commerce- enables Ecosystems


customers to look up information, request services and do any & API Supplier Portal &
Apps
of the activities associated with e-commerce, regardless of Platform
interaction channel Customer Portal Employee
& Apps Collaboration and
Social networks- participate in social networks for Customers Workspace
community interaction and transactional (e.g., commerce and Social Networks Back Office Employees
payment) functions. Bilateral data exchange with social Systems
networks; i.e.: feeds & reads. Customer /
Data &
Business Information
Digital Customer
Analytics
Analytics Intelligence Systems Platform
Customer analytics– Digital Banking uses analytics ranging Platform
from simple historical analysis and segmentation to demand Multichannel Platform
Core Banking
analytics and advanced social sentiment. Can be diagnostic, Interaction &
Applications
predictive and prescriptive (e.g., customer offer engine). Commerce
The output/results of customer analysis can be fed to any other End Point
parts of the technology platform. Computing
Internet of
Things
Gateway to Interaction & Commerce. Integrated IOT Platform
Platform
across the platform. OT Systems
18
*Gartner – G00297286 Things
ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Internet of things platform
Connects physical assets for monitoring, optimization, control and monetization. Capabilities include
connectivity, analytics and integration to core and OT systems. Partners

Connected Things (Customers) – Applications, Devices & Ecosystems


Technology. Scale, security, cost, and privacy and ethics will be & API Supplier Portal &
Apps
major factors in connecting customer-owned things Platform
Customer Portal Employee
Connected Things (Partners) - assets that it leases or that & Apps Collaboration and
are operated by partners, agencies, or Customers Workspace
Social Networks Back Office Employees
Connected Things (Internal)– The IoT platform provides Systems
connectivity, and interaction to this equipment, and should be Customer /
Data &
Business Information
able to handle many different data and wireless standards. Digital Customer
Analytics
Analytics Intelligence Systems Platform
Platform
Multichannel Platform
IOT Analytics - Digital Banking uses analytics ranging from Core Banking
Interaction &
simple historical analysis and segmentation to demand analytics Applications
Commerce
and advanced social sentiment. Can be diagnostic, predictive
and prescriptive (e.g., customer offer engine). End Point
Connected IOT Analytics Computing
The output/results of customer analysis can be fed to any other Things
parts of the technology platform. (Partner) Internet of
Connected Things Connected
Things IOT Platform Things
Platform
Leverage Connected Things (Customer) OT Systems (Internal)
19
*Gartner – G00297286 Things
ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Partner & Connected Ecosystem
Supports the creation of, and connection to, external ecosystems, marketplaces and communities.
API management, control and security are its main elements. Partners
Enterprise Run API Industry Run
Ecosystems Management Ecosystems
Ecosystems
API management software– management, security and Customer & API Supplier Portal &
governance are for APIs that will be public-facing and APIs from Facing API Apps
Platform
partners that will be employed in a business ecosystem that Customer Portal Partner Facing Employee
could include employees, customers and partners & Apps API’s Collaboration and
Customer-facing public APIs - to be used by customers or Customers Workspace
other partners in customer-facing roles
Partner-facing public API - Designed to be used outside the Social Networks Back Office Employees
enterprise, but for partners instead of customers. Systems
Customer /
Data &
Business Information
Enterprise-run ecosystems- The ability to create social graphs, Digital Customer
feeds, monetization engines and algorithms that link supply Analytics
Analytics Intelligence Systems Platform
Platform
with demand (e.g., recommendation engines) are some of the Multichannel Platform
main capabilities of this platform. Core Banking
Interaction &
Industry- and vendor-run ecosystems The technologies that Applications
Commerce
connect and allow interaction and commerce to occur are part End Point
of the Connected IOT Analytics Computing
capabilities of an ecosystem platform. Ie: Intuit’s Financial API’s, Things
SAP Ariba. (Partner) Internet of
Connected Things Connected
Things IOT Platform Things
Platform
Run or Participated in Ecosystems and API Economy (Customer) OT Systems (Internal)
20
*Gartner – G00297286 Things
ENABLING DIGITAL CAPABILITIES WITH TECHNOLOGY
Data & Analytics Platform:
Information management and analytical capabilities. Data management and analytical applications
fuel data-driven decision making; algorithms automate decisions, discovery and action.
Partners
Enterprise Run API Industry Run
Partner and supplier analytics– analyze the services Ecosystems Management Ecosystems
rendered and products delivered by vendors and partners. Ecosystems
Includes data procured from the rapidly expanding landscape of Customer & API Supplier Portal &
data brokers and open datasets. Facing API Apps
Platform
Business and operational analytics- analyses can be Customer Portal Partner Facing Employee
financial, market-focused and process-focused. Data for these & Apps API’s Collaboration and
types of insights will come from core system and back office Customers Workspace
sources, complemented by other sources. Machine Partner And
Social Networks Learning Supplier Back Office Employees
Algorithm engines- Algorithm and analytics modelling
Analytics Systems
workbenches are becoming an important capability for banks. Customer / Business
Data &
Business Information
Sets of tools create and then run the algorithms used in all parts Digital Customer & Op
of the enterprise. Analytics Analytics
Analytics Intelligence Systems Platform
Platform
Multichannel Platform
Artificial Core Banking
Artificial Intelligence- branch of computer science Interaction & Intelligence Algorithm Applications
attempting to build machines capable of intelligent behavior. Commerce Engines
Machine Learning - Based on algorithms that can learn from End Point
Connected IOT Analytics Computing
data without relying on rules-based programming. Ie: Google
Things
‘did you mean..’ Internet of
(Partner)
Connected Things Connected
Things IOT Platform Things
From Siloed BI to Analytics Everywhere Platform
(Customer) OT Systems (Internal)
21
*Gartner – G00297286 Things
4. DIGITAL BANKING PLATFORM –
DELIVERING ON CUSTOMER EXPECTATIONS
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DELIVERING ON CUSTOMER EXPECTATIONS
Digital Banking Platform – Meeting current & Future expectations
Algorithms are at the heart of all on-demand digital solutions. The Algorithm will blend digital, human and
operational processes that bring customers fully automated, end-to-end value to match emerging expectations.
The platform must listen, adapt, and be scalable. Partners

Ecosystems
& API
Platform
Listen - is where the algorithm begins. This element
focuses on the edge or the front end of systems,
enables and triggers opportunity. Customers
Employees
Adapt- is the heart of the algorithm. It focuses on Customer /
the IT systems and data analysis, striving to derive Data & Information
Digital
meaningful insights and predictions out of raw data. Analytics Systems Platform
Platform
Platform
Scale is where the algorithm runs. This element
focuses on ensuring that "listen" and "adapt“ happen
every time and everywhere.
Internet of
The most successful digital solutions will combine
Things
innovation to deliver market value and disruption in real IOT Platform
Platform
time, all the time.
23
Things
DELIVERING ON CUSTOMER EXPECTATIONS
Legacy Banking Platforms – Application Mapping
Digital engagement and CX initiatives are outpacing the supporting Information Systems Platform
Partners

The Core has Shifted - Most Legacy Banking platforms


(Information Systems Platform) were designed & launched Ecosystems &
when banking was a ‘systems of record’ activity, with the SAP HCPAPI Platform
shift the digital, the core must be repurposed support the
customer / digital platform. Success Factors
Customers
ECM
SAP CRM
Sustaining Digital Gains - To sustain the gains made in Exchange Employee
digital, the core investment needs to be balanced so that Excel SharePoint
True Digital Transformation can occur. Customer / Digital Data & Information Systems
Platform Analytics Platform
SAP BW
Platform
Pulling the Core – Driving Digital Customer Experience is SAP Hybris
SAP Core (ECC)
E- EDW
pulling the core closer to the customer. Digital Processes Commerce SAP Hybris SAP Bank Analyzer
must support the Digital Customer. Marketing
ESB
Past: Information Systems Platforms à Digital Platform
Present: Digital Platform à Information Systems Platforms Internet of
Future: Virtual Platform à Digital Platform Things Platform

24
Things
DELIVERING ON CUSTOMER EXPECTATIONS
Activate the Digital Banking Platform – Pull the Core
To deliver on the Digital promise, Banks needs to pull the core Information Systems Platform towards
the Customer / Digital Platform. Unbalanced transformation will deliver marginally decreasing returns
as the back end will not be able to execute on the digital promise.
Partners
Ecosystem
Holding the Core Back Myths…. SAP s & API
Mobile banking is sufficient to cope with CX HCP Platform
needs: Omni Channel should be a consistent Success Factors
experience, back end or ‘execute’ platforms need to Customers ECM
SAP CRM
deliver in real-time. Exchange Employee
Ancient Solutions risky to enhance – Hard-wired Customer / Excel SharePoint
business logic and rigid transactional interfaces don’t Data & Information
Digital
allow quick extensions, and some applications got Analytics SAP BW
Systems Platform
Platform
maintained to death — delivering close-to-zero SAP Platform
EDW SAP Core
flexibility and low availability. Hybris E-
Commer SAP SAP(ECC)
Bank
Risk prevents E2E transformation – Analyzer
ce Hybris ESB
Transformation & Reinvention will be perpetual. Agility
Marketing
supersedes robustness.
New Solutions / Priority unclear- Identifying the Internet of
priorities is complex; feeling of ‘no good answer’. Things
Platform
Horror Vacui – Nature Abhors a Vacuum. 25
Things
DELIVERING ON CUSTOMER EXPECTATIONS
Digital Banking Platform – Accelerate Customer Experience, Innovate, Connect, &
Mitigate Risk
Supporting the notion of rapid and constant transformation — as opposed to one-time, multiyear
Partners
change projects — and allows enhancements of existing solutions.

Information Systems Platform – Agile, Robust and Ecosystems &


Real-Time, able to process, connect and support bank’s digital API Platform
ambitions. The Hub of all customer and transactional data.
SAP
Customer / Digital Platform- Flexible and connected, HCP
able to integrate with Fintech’s , driving innovation, able to Customers
deliver ‘in seven seconds’. Success Factors
SAP CRM
ECM Employees
Data & Analytics Platform– Customer & Enterprise Exchange
Intelligence, Center for Automation, M2M, Algorithms, Vena
Exponential Customer / Data & Information Systems
Ecosystems & API Platform– Social Media Digital Platform Analytics S4 Platform
Integration, Fintech Integration, Platform
SAP
SAP Banking
Internet of things platform– Sensing & listening for Hybris E- E-HANA
Services 9.0
the right time and right place to make next offer. Commer
SAP
ce Hybris ESB
Marketing
Virtual and in-memory is the standard for real-time Internet of
Digital Core Focuses On Customer Engagement And Eases Things Platform
IOT Platform
Transformation.
26
Things
5. DIGITAL BANKING PLATFORM – FINANCE &
CAPITAL
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FINANCE & CAPITAL
SAP S4 & SAP Bank Analyzer
SAP has built the S4 & SAP Banking Services Suite to address the most common banking challenges, the pressure to engage, for liquidity management
and ultimate transparency.

S/4 HANA ● Aggregated AFI postings ● Fixed assets


The Universal Journal in S4–S/4HANA Finance is an Finance ● Manual postings ● Planning
Accounting System, whose final objective is providing General ● Accts Payable ● Consolidation
multidimensional Financial Statements, eliminating the separation ledger
between Sub-Ledgers and the General Ledger. ● GL acct derivation
SAP ● Notes
Sub- ● Sub-
Sap Banking Services / Bank Analyzer - is a Capital Accounting
ledger ledger ● Other results
Optimizer, whose objective is offering a multidimensional for Postings
representation of the Accounting Results of a bank’s business Financial
Instrument ● Amortized costs ● Hedge accounting
segment, the Capital consumed for generating the results, and the Accountin
liquidity generated or consumed in the process. This is the foundation s (AFI) ● Fair values ● Re-classification
g Engines
of the Integrated Financial and Risk Architecture. Sub-ledger ● Risk provisioning ● Forex

Postings in the Ledger are for Risk, Liquidity, Accounting & Cash. ● Master data ● Business trans-
Events ● Cash-flows actions
registe Market data
● Business events ●
r

Loans Cards Deposits Securities Derivatives

28
FINANCE & CAPITAL
SAP S4 & the Universal Journal
SAP has built the S4 & SAP Banking Services Suite to address the most common banking challenges, the pressure to engage, for liquidity management
and ultimate transparency. Customer Product Channel Integrated
Real-Time Lights-Out
Universal Journal - Combined financial and management accounting and Lifetime Profitability Profitability Planning &
Analytics Finance
profitability data into one universal journal. Value View View Forecasting
Planning, Forecasting, Budgeting, Consolidation- planning, S/4 HANA ● Aggregated AFI postings ● Fixed assets
budgeting, forecasting, financial reporting, and consolidations. SAP BPC for S/4 Hana, Finance ● Manual postings ● Planning
natively integrates S/4 HANA at the data level.
General ● Accts Payable ● Consolidation
Treasury and risk management - manage payments and bank ledger
communications and help manage cash, liquidity, debt, investment, financial risk, and
commodity risk. ● GL acct derivation
SAP ● Notes
Corporate Finance- Real-time visibility into exchange rates and working Sub- ● Sub-
capital; automate treasury operations and related activities, optimize cash forecasting,
Accounting ledger ● Other results
ledger
ensure adequate liquidity, improve financial risk management, and ensure compliance for Postings
with global accounting regulations. Receivables, payables, invoice processing, and Financial
travel management solutions combine with its real estate management in real-time, Instrument ● Amortized costs ● Hedge accounting
all the time. Accountin
s (AFI) ● Fair values ● Re-classification
Lights-Out Finance- continuous and event-driven finance. financial and g Engines
Sub-ledger ● Risk provisioning ● Forex
management accounting and profitability data into one universal journal.
Reconciliation- All the accounting information in a single multi-dimensional ● Master data ● Business trans-
ledger, with separated but integrated entries, structured on the multiple dimensions of Events ● Cash-flows actions
this ledger. Integrating the Bank Analyzer Accounting (sub-ledger type) Postings in the registe
S4 HANA Universal Ledger Banks have ZERO reconciliation effort between the ● Business events ● Market data
r
accounting and banking applications.

Loans Cards Deposits Securities Derivatives

29
FINANCE & CAPITAL
SAP Bank Analyzer
SAP has built the S4 & SAP Banking Services Suite to address the most common banking challenges, the pressure to engage, for liquidity management
and ultimate transparency.

Optimize Capital– and fulfills the IFRS reporting requirements S/4 HANA ● Aggregated AFI postings ● Fixed assets
of a Financial Institution . Finance ● Manual postings ● Planning
Compliance - IFRS 9, Basel III, IFRS 15, BCBS 239, TLAC are General ● Accts Payable ● Consolidation
not isolated pieces of regulation, they're a complete framework ledger
designed to put Capital Efficiency at the center of the banks' strategic ● GL acct derivation
objectives, often by business segment. SAP ● Notes
Sub- ● Sub-
Bank Analyzer IFRA–provides an accurate measurement of Accounting
ledger ledger ● Other results
the Capital and Liquidity, generated and consumed, by any potential for Postings
combination of analytical dimensions, including the business Financial
Instrument ● Amortized costs ● Hedge accounting
processes involved Accountin
s (AFI) Fair values Re-classification
IFRS 9 – requires to report in "accounting terms", the Capital
● ●
g Engines
Sub-ledger ● Risk provisioning ● Forex
generated and consumed by business segment, including Fair Value
and Impairment Calculations data once and rolling the same
● Master data Business trans-
detailed data in multiple ways Events

Cash-flows actions
Capital Consumption –Correspondent Capital Requirements

registe Market data
● Business events ●
of the Bank's Assets r

Loans Cards Deposits Securities Derivatives

30
FINANCE & CAPITAL
SAP Bank Analyzer
SAP has built the S4 & SAP Banking Services Suite to address the most common banking challenges, the pressure to engage, for liquidity management
and ultimate transparency.

Optimize Capital– and fulfills the IFRS reporting requirements S/4 HANA ● Aggregated AFI postings ● Fixed assets
of a Financial Institution . Finance ● Manual postings ● Planning
Compliance - IFRS 9, Basel III, IFRS 15, BCBS 239, TLAC are General ● Accts Payable ● Consolidation
not isolated pieces of regulation, they're a complete framework ledger
designed to put Capital Efficiency at the center of the banks' strategic ● GL acct derivation
objectives, often by business segment. SAP ● Notes
Sub- ● Sub-
Bank Analyzer IFRA–provides an accurate measurement of Accounting
ledger ledger ● Other results
the Capital and Liquidity, generated and consumed, by any potential for Postings
combination of analytical dimensions, including the business Financial
Instrument ● Amortized costs ● Hedge accounting
processes involved Accountin
s (AFI) Fair values Re-classification
IFRS 9 – requires to report in "accounting terms", the Capital
● ●
g Engines
Sub-ledger ● Risk provisioning ● Forex
generated and consumed by business segment, including Fair Value
and Impairment Calculations data once and rolling the same
● Master data Business trans-
detailed data in multiple ways Events

Cash-flows actions
Capital Consumption –Correspondent Capital Requirements

registe Market data
● Business events ●
of the Bank's Assets r

Loans Cards Deposits Securities Derivatives

31
FINANCE & CAPITAL
SAP Bank Analyzer
Combining S4 and Bank Analyzer is a powerful advantage for Banks

Virtual views of the sub-ledger– Dynamically adjust or SAP S/4HANA General Ledger
create new views of the data sets in the sub ledger instantly. Data Legal entity
or structures do not need to be altered or moved. GL Account
(CoCd)
N combinations of data views- Merge data from external
applications or external feeds (ie: social, regulatory, exchange) to
create infinite views of looking at Bank’s data, seeking new Trading Business
Geography Portfolio
opportunity and defending against challenges. partner segment
Continuous visibility to Profitability and Exposure–
provides an accurate measurement of the Capital and Liquidity, Profit center
Customer Source / Costing
generated and consumed, by any potential combination of analytical Product
Type System Cost center Statistics
dimensions, including the business processes involved
Continuous Activity Based Costing - Model costs and
revenues from nonfinancial data collected continuously from NO BW REQUIRED
clickstream data in ecommerce applications such as hybris.
Compliance – requires to report in "accounting terms", the GeneralLedgerDimensions SAP AFI sub-ledger
Capital generated and consumed by business segment, including
Fair Value and Impairment Calculations data once and rolling the
same detailed data in multiple ways Rich Ledger Customer Instrument pricing Valuations, Classification Etc…….

Digital– Able to leverage data in the moment, make


recommendations and offers to customers based on volatile data
SAP AFI Financial Instrument Sub ledger
sets/data streams.

32
DIGITAL BANKING PLATFORM – END STATE
ARCHITECTURE
Deloitte Digital Copyright © 2016 Deloitte Digital LLC. All rights reserved.
END STATE ARCHITECTURE
Digital Banking Platform
The DBP Enabled by HANA is Real-Time & Virtual
Partners
Note1–Cloudintegrationvia
POorHCItobedetermined

Ecosystems
Listen - Continuous virtual views between the 5 & API
platforms allows data, algorithms and customers
Platform
offers to be personalized and triggered based on
customer behavior & non-system activity (ie social).
Customers
Adapt- When the sensing engine identifies an Employees
opportunity or intervention, the adapt engine
Customer /
calculates an offer or the appropriate intervention Data & Information
Digital
based on algorithms, rules and machine learning. This Analytics Systems Platform
Platform
process is designed to run ‘lights out’. Platform

Scale – Leveraging the Listening & Adapt elements,


the system can run continuously, not bound by
geography, hours or events. Banking is Continuous.
Internet of
Things
IOT Platform
Continuous Banking is Realized Platform
34
Things
END STATE ARCHITECTURE
Digital Banking Platform – The urgency to tighten the gap
An unbalanced transformation approach will fail to deliver digital expectations, great CX and increasingly increase
risk exposure for Banks.
The long-tem business model has changed, so must the architecture.

Data Rot-Stale data rots at an accelerated rate; when end-


users are engaging with vibrant data, quality improves.
Continuous Change- The banking industry has entered a
phase of continuous change, the architecture must be
flexible and responsive.
Modern Solutions- Modern solutions will form part of the
portfolio, modern integration must exist to participate.
Fintech Integration- Services provided through Fintech
organizations need to be enabled in a standardized interface to
encourage experimentation and rapid discovery
Organizational Learning- Tighter engagement cycles
from 3 months to 3 minutes amplify data centric learning;
40,000X learning cycles are enabled reducing costs and
personalizing the customer experience

Without core revitalization, Banks end up with a ‘digital façade’ without a supporting
business infrastructure for long run success
35