Intelligent Enterprise For Banking Industry

SAP Industries White Paper | The Banking Industry
THE INTELLIGENT
ENTERPRISE FOR
THE BANKING
INDUSTRY
Helping to create superior

customer experiences through
tailor-made solutions delivered
at scale and as a service
SAP Industries White Paper | Banking
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
2
WELCOME
Dear Customers and Partners, There are four strategic priorities for the
intelligent bank of the future:
The world is facing huge social, economic,  Seamless connectivity
and environmental challenges. Digital  Data-driven intelligence
“Banking 4.0 will see transformation will change the  Operational effectiveness
banks rethinking banking traditional definition of industries. New  Financial insight and risk control
from the ground up. This ecosystems will emerge and banks will
will affect the way banks need to adjust their business models. To execute on these strategic priorities
interact with customers In the experience economy, banks need and achieve the 2025 vision, banks must
and manage traditional to become intelligent enterprises to change the way they operate. They will
bank products, respond to increased customer integrate and increase the transparency
processes, and finance expectations, leverage data as the new of their own end-to-end processes and
and risk operations. The currency, and evolve into technology operations, combine this with a real-world
implementation of new companies as they are driven by the awareness involving customers and the
technologies and talent “platformification” of the industry. greater good of society, and then learn
will be required to The future will bring a more inclusive from this information to make decisions
succeed in the digital age. financial infrastructure, and banks play and solve problems in novel ways.
Banks will change to look an important role by providing digitally
and operate more like enabled and connected banking services By shifting routine tasks from humans to
technology companies, to address financial inclusion. intelligent systems enabled by machine
providing banking and learning (ML) and artificial intelligence
related nonbanking By 2025, a significant portion of banking (AI), banks will free up the capacity needed
services as they become revenue will come from nonbanking
K
to define and pursue innovative and
digital platforms. Data- services. Banks will be a platform for transformative business models.
driven intelligence digital services. These services will
will differentiate the reflect a wide range of banking and With the Intelligent Enterprise framework,
successful from the less related nonbanking services to deliver an SAP provides the integrated suite of
successful financial end-to-end service orchestrated by the applications, the intelligent technologies,
services providers which bank. Digitalized solutions will address and the digital platform that companies
will include banks and the “customer of one” anytime, need to make this shift. We have the vision,
new entrant nonbanks.” anywhere. These services will span from the solutions, and the commitment to go
simple after-sales services to more- with you all the way – from defining your
Falk Rieker complex outcome-as-a-service models, transformation strategy and delivering the
Global Vice President resulting in the monetization of the data right solutions to running your digital
Banking assets banks are able to generate based backbone in the cloud.
SAP SE on the business they conduct.
Sincerely,
Access more information

on the latest technology
trends in the banking
industry.
Falk Rieker
Global Vice President
Banking
SAP SE

3
TABLE OF
CONTENTS
3 Welcome
5 Thriving in a Digital World
6 The Need for Change
8 Intelligent Technologies Are a Key Enabler
10 Industry Vision 2025
11 Strategic Industry Priorities for Banks

to Transform Their Business
12 Banking Strategic Industry Priorities
14 Seamless Connectivity
15 Data-Driven Intelligence
16 Operational Effectiveness
17 Financial Insight and Risk Control
18 The Intelligent Enterprise for the Banking

Industry
19 SAP Point of View: Winning with the Intelligent

Enterprise
21 SAP’s Framework for the Intelligent Enterprise
23 Intelligent Scenarios for Banking: Optimize,

Extend, and Transform the Way Banks Operate
25 Seamless Connectivity
26 Data-Driven Intelligence
27 Operational Effectiveness
28 Financial Insight and Risk Control
30 How to Get There
31 Comprehensive SAP Ecosystem: Orchestrating

the World to Deliver Value Faster
32 SAP Is Committed to Innovation
33 Resources

4
THRIVING IN A
DIGITAL WORLD

5
THE NEED
FOR CHANGE
Global “megathemes” are
affecting the banking industry
and are providing new
opportunities for growth.
The quest for financial inclusion requires banks to

take a leadership role in bringing financial services to
underserved customers, creating opportunities for
individuals, businesses, and economies. Financial
inclusion is a key enabler to reducing poverty and
boosting prosperity, resulting in:
 Greater social and economic well-being for

individuals
 Higher profits, increased competitiveness, and

growth for businesses
 Greater economic growth and decreased inequality

(income and gender) across economies
Thriving in a Digital World

6
Digital strategies are disruptive and
changing the rules for banks
mBank SA is providing a more retail-like

customer experience and e-commerce
business models to meet its customers’
The banking industry is being reshaped expectations. This means mBank
by four major trends. creates a digital thread from the bank all
the way back to the customer. mBank is
using predictive algorithms on customer
behavior to increase campaign success
and help users find the best product
 Increased customer expectations:  “Platformification“ of banking: offer, resulting in the highest net
Bank customers want and expect A new type of plug-and-play promoter in their market.
more from their banks. Today business model is appearing
banks are trying to understand at banks that allows multiple Discovery Bank is using the latest
how to offer customized offers, participants (producers and technology and innovative process
products, and services beyond consumers) to connect to the designed to provide the first
banking transactions while bank, interact with each other, behaviorally oriented global bank. By
delivering the best customer and create and exchange value. linking interest rates directly to users’
experience. financial behavior, Discovery Bank is
 Evolution of banks into technology enabling clients to earn more interest on
 Data as the new currency: companies: Banks are reviewing savings and pay less interest on credit
Today, data analysis at banks is and changing their organizational as users improve their financial
behavior. Discovery Bank provides
very fragmented and piecemeal, structure, technologies, and cul-
clients with an attractive ecosystem
making a deep understanding of tures to run more like technology
of rewards in the form of dynamic
customer needs and wants very companies than banks. To
discounts that further deepen user
challenging. Banks are spending compete with the established
incentives.
significant resources to reduce technology firms for talent, they
duplicate data and create a single also need to deliver the best Gentera is a holding group that offers
view of each customer, from user employee experience. microfinance services such as loans,
history to user behavior and intent. deposits, insurance, and payment
services in Mexico. Using SAP®
technology, Gentera is able to do real-
time profitability and loss analytics on
its microfinance offers for mobile
account origination, leading to better
decisions on financial products and
customer offers.
81%
Of 132 banking and insurance decision-
makers stated that data management
and insight initiative were digital
transformation priorities1

7
INTELLIGENT
TECHNOLOGIES
ARE A KEY ENABLER
The current pace of technological advancements has the
most profound impact on enabling how banks transform
themselves to respond to competitive threats and the
regulatory environment while improving the customer
experience.
Intelligent technologies promise to bring great Advanced Analytics

benefits, such as productivity and efficiency gains, The integration of advanced analytics capabilities –
enabling innovative new business models and new including situational awareness – into applications
revenue streams. The following intelligent enables business users to analyze data on the fly
technologies are instrumental in helping banks and drives better decision-making. Empowered
respond to the quickly evolving global financial users, benefiting from embedded analytics in
services marketplace. business processes, can get real-time visibility into
their changing environment, simulate the impact
Artificial Intelligence and Machine Learning of business decisions, mitigate risk, and achieve
Machine learning and artificial intelligence enable better customer outcomes and experiences.
algorithms to “learn” from existing data and Predictive analytics of structured and unstructured
achieve the best possible outcomes without being data provide 360-degree customer insight,
explicitly programmed. Once the algorithm is enabling banks to anticipate the behavior of its
trained, it can then predict future outcomes based customers, respond to their needs, predict the
on new data. Businesses can leverage these next best step or product offer, and rapidly engage
capabilities to eliminate repetitive manual tasks, customers in real time.
such as service ticket management, automatically
determining classifications, routing, and
responses. They can also be used to anticipate
customer behavior – such as account closures
and credit card cancellations – with instant
insights from transactional data and digital
interaction points.

8
Blockchain Robotic Process Automation
A relatively recent breakthrough Robotic process automation
technology, blockchain is streamlines repetitive, rule-based
revolutionizing the movement and processes and tasks in an enterprise
97%
storage of value by creating a chain and reduces cost through the use
of unaltered transactional data. of software robots by replicating
The blockchain model of trust, specific tasks or keystrokes.
Of banks say customer experience is a focus2
through massively distributed Automation frees up employees
digital consensus, could reshape for engaging in higher-value tasks,
supply chains and commerce
across the entire digital economy,
resulting in increased employee
satisfaction. 94%
for example, digitalizing the bill-of- Of leaders are investing in Big Data and analytics3
lading document as part of the
international ocean shipping
process. 25%
Reduction in attrition by making proactive calls
Conversational AI to at-risk customers based on predictive
Advances in machine learning are models4
enabling algorithms to become
highly accurate in natural-language
understanding and in image and 20%
voice recognition, especially useful Savings on capital expenditures achieved by
in after-service and call center adopting intelligent computer programs that can
solve and even anticipate complex problems5
activities. Voice interfaces will be
the go-to for the next generation of
applications, allowing for greater
simplicity, mobility, and efficiency 60%
while increasing worker productivity Of human tasks will be automated by 20256
and reducing the need for training.
Customer experience bots for
services and commerce provide a 99%
humanized way for the customer to Accuracy in voice and video recognition by 20207
interact with their bank. This results
360,000 hours
in higher customer satisfaction and
better customer experiences due to
ease of consumption by using ML In reduced manual work by using an AI system to
techniques for natural-language automate tasks8
processing.

9
INDUSTRY
VISION 2025
By 2025 the role and revenue streams of banks will fundamentally
change (see Figure 1). A significant portion of bank revenue will come
from nonbanking services. Banks will act as platforms for digital
services.
These services will reflect a wide range of banking and related

nonbanking services to deliver an end-to-end (E2E) service 95%
orchestrated by the bank. Digitalized solutions will address the Of financial services companies believe
customer of one anytime, anywhere. These services will span from moving business processes to the cloud
simple after-sales services to more-complex outcome-as-a-service would notably improve their ability to
models and the monetization of data assets that banks are able to digitally transform their whole ecosystem10
generate based on the business they conduct.
The business of data management will emerge as a primary

technology driver and competitive differentiator for the bank. To
95%
Of financial services innovators believe
achieve this vision, banks must integrate and increase transparency
adopting Big Data and real-time analytics
of their own E2E processes and operations. technologies will help them achieve their
digital transformation goals11
Banks, now and in the future, need a real-world understanding of their
83%
customers and the environment to learn from this information, make
decisions, solve problems, and carefully manage the customer
experience.
Of innovative organizations have started
their digital transformation journeys,
By shifting routine tasks from humans to business systems enabled
compared to just 66% of other
by machine learning, banks will free up the capacity needed to define
organizations12
and pursue innovative and transformative business models, thus
becoming intelligent enterprises.
“Developing an omniadvisory and facilitation services business model

62%
requires building intelligent banking operations and customer Of finance companies are currently
investing in, expanding, or upgrading
profiles. This would be impossible unless banks develop connections cloud investments13
with the ecosystem to master open (customer) data.”9
Figure 1: Banking Transformation Curve

93%
Of innovative companies believe cloud
High technologies will have an impact on
Banks as
technology improving service delivery and
effectiveness14
Technology sophistication – machine learning,
companies
artificial intelligence, chatbots, digital services
Data
as new
91%
currency
Platformif
ication –
open APIs
Personal
Of innovative companies believe cloud
digital
customer technologies will help increase the speed
experience of analysis15
Product- Closed
driven Siloed system
customer customer Siloed access
experience data systems
Low Product offering sophistication and personalization

STRATEGIC
INDUSTRY
PRIORITIES
FOR BANKS TO
TRANSFORM
THEIR BUSINESS
Strategic Industry Priorities

11
BANKING STRATEGIC
INDUSTRY PRIORITIES
Banks provide the This important role requires banks to digitalize and quickly evolve to provide easy access
to money to keep up with the pace of technology.
financial foundation
for individuals, Traditional banking value chains have been disrupted by new entrants. The always-
connected, digitally savvy customer is turning to alternative banking providers.
governments, and
Financial technology providers, known as “fintechs,” are fueling rapid innovation. To
businesses across better address the challenge of open banking, disruptive new competitors, and Big Data,
all industries. leading banks are pursuing four strategic priorities to move to digital banking and beyond.
Seamless Connectivity
Banks must attract, cultivate, and retain customers by enabling an integrated,
multichannel environment. They must analyze each customer’s behavior and point of
view to succeed in the digital age. This lifestyle view determines what products are
created and what services are offered when and where to meet the customer’s needs.
Data-Driven Intelligence
Banks should be able to process applications centrally, regardless of their source, in a
digital, multichannel world. They should be able to respond quickly, thanks to a high
degree of automation. Decisions should be based on accurate and complete customer
information provided through automated application processing and seamless customer
onboarding. Leveraging data to manage the customer experience is a key component of
an intelligent enterprise.
Operational Effectiveness
Banks need to deliver customer-centric products and services using a 360-degree
customer view enabled by streamlined and automated banking operations and a
seamlessly integrated finance, risk, and compliance system across retail and commercial
banking businesses.
Financial Insight and Control

Banks are required to keep their systems and processes up to date in real time in a
complex regulatory environment. They need to meet regulatory requirements in an easy
and flexible way to keep costs down.

12
87%
Margin pressure and regulatory complexities are a constant challenge for banks.
Legacy systems, mergers and acquisitions, along with changes in technologies,
business models, and rising customer expectations require constant adaptation.
Of survey respondents indicated that
Banks must be able to respond to increasing customer demands yet still comply they were interested or very interested
with all regulations and reporting requirements. in E2E digital transformation priorities
for data management and insights
(see Figure 2)16
Figure 2: Banking and Insurance
“How interested is your company or organization in adopting an industry

cloud for each of these end-to-end digital transformation priorities?”
Data management and insights 38% 49%
Speed to market 41% 46%
Business support 48% 37%
Risk and finance processes 43% 39%
Mobile and digital channels 32% 49%
4 Very Interested - 5

13
SEAMLESS
CONNECTIVITY
Bank customers expect more of their banks. They expect
an experience similar to other commercial retail sites – easy
to use with personalized recommendations for products and
services.
Users are increasingly expecting their banking The Journey
platform to go beyond banking services by Banks will start toward this goal by linking islands
providing integrated, complimentary, partnered of information to create a unified customer view
services and offerings. Users are looking to through various technologies (APIs). Then, using
banking as a platform for needs beyond financial virtual views across divergent systems using in-
services. memory and cloud technologies, banks will service
and sell products to the customer. Banks will then
The Vision create products for a customer of one – unique
and specific to that individual customer with
In 2025 banking will be a customer-experience-
product attributes that are outcome driven, not
driven business. Customers will access and obtain
product-feature driven.
services seamlessly on any device, based on a
detailed product set catered to a customer of one
91%
(see Figure 3). Customers will be able to consume
banking and nonbanking services without a
detailed knowledge of the financial services
industry and jargon, but rather through product Of innovative companies believe cloud technologies
intent and desired outcomes. will help increase the speed of analysis17
Figure 3: Future of Seamless Connections
Today Future
Segmentation Single Customer

14
DATA-DRIVEN
INTELLIGENCE
When customer needs are taken seriously, it becomes clear
that one size seldom fits all.
Individuals as well as companies require solutions The Journey
that are built to meet their exact requirements and Banks will start toward this goal by applying ML
differentiate them. On the other hand, customers and AI to data. Then they will be able to create,
are not willing to pay more than for a standard simulate, and forecast various business scenarios
solution, which forces banks to move from rigid and financial impact using deep real-time data
product models to approaches that include analytics to understand customer and market
platforms and personalization to allow behavior tied to intent. To achieve the cultural
customization at scale. change needed, performance incentives will evolve
from individual products sales to an aggregate
The Vision customer satisfaction score correlated to the
In 2025 banks will use deep data analytics to really customer-of-one model.
understand their customers’ desires and intended
outcomes (see Figure 4). This will lead banks to
use data in an intelligent way to position products
and services and manage all aspects of the bank.
Banks will have transformational, internal cultural
change, as incentives are aligned around servicing
customers.
Figure 4: Future of Data-Driven Intelligence
Today Future
Selling products Selling outcomes

15
OPERATIONAL
EFFECTIVENESS
Banks need to deliver customer-centric products and services
using a 360-degree customer view enabled by streamlined
and automated banking operations and a seamlessly integrated
finance, risk, and compliance system across retail and
commercial banking businesses.
The Vision The Journey

In 2025 banks will have fewer data silos and will Banks will start toward this goal by introducing ML
be more connected in their view of the customer – and AI technologies to leverage and manage data
all while automating human-based decisions and – while automating low-value, human-based
reducing errors in the decision stream. This activities. Once implemented, trade reconciliation,
connected view will provide agile product transaction matching, and ledger adjustment will
development and will spawn the rise of outcome- be automated using ML and AI routines, greatly
based products – products that customers reducing manual intervention. Finally, banks will
consume based on what they want. Data replica- adopt blockchain for distributed ledger so that
tion will be replaced with real-time connectivity, maintenance windows and batch processing will
accessible anywhere from the cloud, allowing be limited and customers will experience no
for real-time servicing. Decision-making will downtime. Blockchain changes the game by taking
be enabled against real-time data, secured by data from behind the firewall, making information
blockchain, and served through the cloud. available to external sources and providing a full
Latency will dramatically decrease, allowing picture – enabling “open banking” in real time.
greater operational efficiency (see Figure 5).
Figure 5: Complete Digital Representation of Products Throughout the Lifecycle
Today Future
Batch-driven manual processes Always on
95% of financial services companies believe moving E2E processes or business processes to industry cloud
would notably improve their ability to digitally transform their whole ecosystem18

16
FINANCIAL INSIGHT
AND RISK CONTROL
Banks are required to keep their systems and processes
up to date in real time in a complex regulatory environment.
Banks need to meet regulatory requirements in an The Journey

easy and flexible way to keep costs down. Current Banks will start toward this goal by adopting a
processes are highly reactive and manual – banks comprehensive set of technology, process, and
employ entire workforces to chase regulatory governance tools. This will allow data to stream
compliance. into these tools, simulating positions and financial
market conditions in real time and allowing a bank
The Vision to forecast various business scenarios and
In 2025 banks will migrate to universal journals financial impacts. Banks will distribute these tools
linked through blockchain and delivered through and controls across borders and time zones,
the cloud (see Figure 6). By doing so, universal reducing market-specific risk while increasing data
journals will allow better access to regulatory and transparency and regulatory compliance. Finally,
business data, allowing the bank to be more agile banks will enable third parties such as fintechs
and responsive to the requirements for financial to share data for advanced insight and control
insight and control. Third parties will provide through APIs, allowing banks to shift headcount
contract and accounting capabilities in addition to higher-value activities.
to bank capabilities, allowing banks to meet
regulatory requirements from a single source of
data while reducing their need for human capital.
Figure 6: Future of Financial Insight and Risk Control
Today Future
Reactive and manual Universal journals
90% of cloud decision-makers at financial services companies believe in the importance of software that
integrates across an E2E value chain in an industry cloud.19

17
THE INTELLIGENT
ENTERPRISE FOR
THE BANKING
INDUSTRY
To continue the digital transformation

journey, you now need intelligent,
integrated business processes.
In a connected world where every company is becoming a
technology company, smarter products and services will
further focus on outcomes for your customers and continue
to blur industry boundaries. To remain successful, banks will
bring advanced intelligent technologies to their products,
services, and business models.
The Intelligent Enterprise for Banking

18
SAP POINT OF VIEW:
WINNING WITH THE
INTELLIGENT ENTERPRISE
Digital disruption has transformed how com- Embracing these technologies is critical for banks
panies and customers interact, and disruption to thrive and become intelligent enterprises.
is continuing as the transformational power
of digital fuels the fourth industrial revolution, Intelligent enterprises empower employees
changing how people live, work, and relate to one through process automation. In the coming years
another. Unlike its predecessors, the current (see Figure 7), AI will evolve to automate even
industrial revolution is affecting every sector of more complicated tasks, freeing up employees
the economy, with banking 4.0 being the next and empowering them to do more meaningful
level of evolution in the banking industry. and rewarding work. Banks have the opportunity
to transform the workplace with automation,
New intelligent technologies are changing the augmenting their expert resources. Instead of
way companies operate and how they deliver fearing automation, many employees can look
and monetize their products, solutions, and forward to jobs that challenge and interest them,
services. Intelligent technologies are enabling providing opportunities to add more value
the disruption of the industry. instead of performing mundane, repetitive tasks.
Figure 7: Becoming an Intelligent Enterprise
Business
Industrial process Digital Intelligent
automation automation transformation enterprises
Productivity
High-value
tasks
Repetitive
tasks
Automation

19
This empowered workforce will be able to focus The imperative for change is clear. The difference
on high-value activities such as customer success, between winners and losers will be their ability
strategic planning, and innovation. Automation to digitally transform, embracing intelligent
can now be implemented far more cost-effectively, technologies and the major trends shaping
because it is embedded more and more within the future of the industry.
business processes. Advances in ubiquitous
connectivity coupled with AI and ML can be used We think that companies will become intelligent
to create new business models that generate enterprises on three distinct tracks as they evolve
new revenue streams. Companies can monetize their strategic priorities to match their company’s
data-driven capabilities and apply core business vision. They will:
competencies in innovative ways that would never
have been possible with traditional face-to-face 1. Optimize what they already do by
engagement models. implementing a stable and scalable
digital core to make processes more
When interaction shifts to the digital, it becomes transparent and integrated
far easier for customers to switch to other
providers, especially with new, disruptive market 2. Extend their current processes by
entrants. New approaches and business models connecting them to the real world
are required to attract and retain customers, and using Internet-of-Things technologies
companies will need to anticipate and proactively
respond to customer needs, creating personalized 3. Transform their business using a
and unique customer experiences using AI, constant stream of data enabling
chatbots, and voice technologies to deliver new service-driven business models
best-in-class customer service.

20
SAP’S
FRAMEWORK
FOR THE
INTELLIGENT
ENTERPRISE
The Intelligent Enterprise framework is a

suite of intelligent business applications
that use intelligent technologies and can be
extended on a digital platform. This enables
next-generation business processes to
deliver breakthrough business value on the
customer’s journey to becoming an intelligent
enterprises.

21
Figure 8: The Intelligent Enterprise Framework
Digital
Manufacturing Core People
& Supply Chain Engagement
Customer Network & Spend

Experience Management
Intelligent
Suite
Intelligent Technologies
AI/ML | IoT | Analytics
Digital
Platform
Data Cloud
Management Platform
Note: This representation is a general visualization of the Intelligent Enterprise and may include functions not covered in every industry.

22
INTELLIGENT
SCENARIOS FOR
BANKING: OPTIMIZE,
EXTEND, AND
TRANSFORM THE WAY
BANKS OPERATE
To execute on their strategic digital priorities and
achieve the 2025 vision, banks need to change the
way they operate.
By shifting routine tasks from For banks, the Intelligent Enterprise

humans to business systems offers unlimited innovation opportu-
enabled by machine learning and nities across the enterprise and
by redesigning processes, banks opens up the path toward new
will free up the capacity needed to frontiers beyond traditional enter-
define and pursue innovative and prise boundaries. It offers intelligence
transformative business models. that is embedded into processes
within the enterprise and transforms
The Intelligent Enterprise is the enterprise by supporting new
the fabric that weaves together all business models and revenue
these siloed processes, intelligent streams.
technologies, and real-world data
threads from customers and the The strategic priorities that address
environment into flexible, end- the major themes shaping the
to-end value chains that provide industry impact the entire value
a transformative customer chain. The application of intelligent
experience and support next- technologies will help banks address
generation business models. their digital priorities, implement
next-generation business processes,
and become intelligent enterprises.

23
Figure 9: Strategic Priorities Across Lines of Business
Digital Customer Retail Bank Commercial Finance Human Procurement

Engagement Operations Bank Operations and Risk Resources Excellence
Customer Offer Bank Financial Employee Procure

Experience Management Connectivity Insight Feedback to Pay
Today Future Today Future Today Future Today Future Today Future Today Future
One-size- Tailored Siloed loan Instant loan Point-to- Seamless Limited real- Instant drill- Fragmented Rapid Manual, Synchro-
fits-all omnichannel and product offerings at point real-time time insight down and and not deployment complex, nized and
customer customer offers point of sale custom connectivity using response to unified of feedback multilevel automated
experience experience using real- solutions between optimized any inquiry from procure- procurement
Seamless time data corporate queries employees to-pay and payment
Connectivity ERP and processes process for
procurement streamlined
systems and operations
banks
Product Cash Management Financial Services Workforce Spend

Digital Marketing
Selection and Payment Services Data Platform Analytics Management
Generalized Highly Simple Predictive, Fragmented End-to-end, Fragmented Unified Limited Insight to Fragmented Total spend
banking personalized and mass targeted services and real-time data silos data model insight on possible by spend management
products product campaigns marketing applications digital with supporting outcomes outcomes types across all
offerings using AI services and multiple federated through spend
Data-Driven technologies platform data models data predictive categories
management analytics
Intelligence
Customer Financial Product Talent Supplier

Onboarding Loans Processing
Feedback Subledger Recruiting Management
Multiphased, Streamlined Opportunistic Systematic High degree Straight- Single GAAP, Multi-GAAP Selection Machine Silos Automated
lengthy digital customer embedded of manual through single multiproduct process learning to with each bid
process process feedback customer intervention processing product subledger that takes machine supplier management
process feedback (STP) subledgers a very long candidates managed
Operational process factory time and to positions independently
Effectiveness using ML candidates
that give up
Financial Career and Succession Supplier Risk

Compliance Operations Compliance
Reporting Management Management
Reactive Machine Batch Real-time Fragmented Blockchain- Many parallel End-to-end Poor career Machine Risk Predictive
response to leaning to processes processes systems based processes and process management learning to management analytics
regulatory automate and data processes data using and talent identify key based on against
Financial needs “know your availability that drive replication machine retention employees historical established
Insight customer,” transparency with signify- learning for data supplier
anti–money and cant manual techniques development performance
and Risk
laundering, compliance reconciliation indicators
Control Patriot Act, effort
and others

24
SEAMLESS
CONNECTIVITY
Customers are demanding that their banks provide a similar experience to those delivered by their retail and
social media interactions. Banks are responding with new products and services that look, act, and feel like those
frictionless experiences. These new products and services impact every facet of business, not just the front office.
Banks must address E2E processes across departments and lines of business (LoBs) to deliver on improved
customer experiences, products, and services. Banks must attract, cultivate, and retain customers by enabling an
integrated, multichannel environment. They must analyze each customer’s behavior and point of view to succeed in
the digital age. This lifestyle view determines which products are created and which services are offered when and
where to meet the customer’s needs.
TRADITIONAL SCENARIO: MANUAL RISK MITIGATION
LoB business case IT codes and tests process for Marketing campaign applied LoB consumes success
retrieval of target marketing metric data
New product to market is defined If additional markets segmented
data
with success metrics further, process returns to IT Success metric reported to
LoB must scrub and validate code and test management based on segment
LoB also identifies and defines
systems needing access and data test data returned LoB defines data need from marketed to during campaign
needed for campaign, requiring LoB must iteratively provide IT to assess success metrics Each campaign follows similar
intimate knowledge of system instructions to IT for data Process returns to IT code and process to the previous
landscape retrieval correction until
test-batch process New campaigns start from the
satisfied
beginning
A NEW WORLD WITH SAP: REAL-TIME RISK MANAGEMENT IN THE CLOUD
Cloud-based customer data now a single source Iterative, granular campaigns run in days, Success metrics stream within campaign,
for divergent systems (internal, social, third not months, allowing the bank allowing bank to further tune segments and
party), allowing real-time access by digital to further segment campaign criteria campaigns along various inputs without the
customer engagement (DCE) tools from SAP in the cloud, on the fly, and without IT need for IT development
without need for deep knowledge of system constraints
New campaigns built and deployed on
landscape
Machine learning can be applied to the fly without IT dependencies
Campaign segmentation and target customer campaign results, reducing human
defined in real time using DCE technology and dependency for analysis and next best
Big Data offer
TOP VALUE DRIVERS

Faster business process from business case More accurate and personalized product offers,
completion to campaign evaluation resulting in higher product conversion and
dramatic reduction on application abandonment.
Source: SAP Performance Benchmarking

25
DATA-DRIVEN
INTELLIGENCE
Every bank needs the computing capability to carry out complex algorithms with large data sets to support timely,
real-time analysis. Everyone in the bank must have access to data they need, whenever and wherever they need it.
This is also true for the rest of the ecosystem so that compliance officers can monitor transaction histories in real
time to ensure policies and procedures are being followed and bankers can see client history for credit risk and
other client relationship management tasks. Banks should be able to process applications centrally, regardless of
their source, in a digital, multichannel world. They should be able to respond quickly, thanks to a high degree of
automation. Decisions should be based on accurate and complete customer information provided through
automated application processing and seamless customer onboarding.
TRADITIONAL SCENARIO
Product predefined Product catalog Every option exists Unique product A multitude of Inefficient, expensive,
by marketing and with limited number independently as a definitions with detailed product and error-prone
product management of options and price product, resulting different capabilities definitions for each product processes
lists available in inconsistency and pricing, making possible combination, and delivery
and errors in product it impossible to generating a low
management simulate costs early level of process
downstream standardization and
high maintenance
costs
NEW-WORLD SCENARIO
Customer request for Product options and Customer offered Seamless E2E Automatic updates High customer
personalized account pricing alternatives an individualized process between of customer-specific satisfaction with
offering managed by system product by the channel, product contract changes personalized
rules channel system, systems, and and pricing products delivered at
tailored to meet accounting, allowing the same costs as a
specific needs and cost simulations standardized product
banking behavior
TOP VALUE DRIVERS
Faster Lower Increase

time to market R&D costs in revenue from
new products

26
OPERATIONAL
EFFECTIVENESS
A digital core is an IT architecture that offers stability and long-term reliability for core enterprise processes yet also provides
the flexibility to adapt quickly to new opportunities, challenges, and regulations. This solid foundation gives you a single source
of truth, which in turn enables flexibility for innovation to accommodate things such as new business models, new regulations,
and business events such as mergers and acquisitions. Banks need to deliver customer-centric products and services using a
360-degree customer view enabled by streamlined and automated banking operations and a seamlessly integrated finance,
risk, and compliance system across retail and commercial banking businesses.
TRADITIONAL SCENARIO: MANUAL RISK MITIGATION
Lack of system integration Manual analytics and risk Batch-driven risk management Slow response to market
process conditions
Disparate legacy applications Siloed landscape product
and data silos make it Limited or nonexistent leads to risk being managed Batch-driven processes don’t
impossible to focus on the aggregate views of customer at the product level and not reflect rapid changes in market,
holistic customer experience interactions across channels at the customer level leading to intelligent guesses
and journey and products make Manual reporting generated about risk management, either
customer-intent prediction resulting in too much or too little
Independent system in batch for human review
and therefore capital needs in capital and reserves
accounts for customer data and evaluation
uniquely, leading to difficult difficult or impossible
customer data mapping
A NEW WORLD WITH SAP: REAL-TIME RISK MANAGEMENT IN THE CLOUD
Single source of risk management Analytical tools for real-time risk management Forward-looking what-if scenarios
Data streams into the cloud for a single Use of transactional analysis for patterns, Calculation of forward-looking what-if
customer view in real time, and analysis channel attributes, customer behavior, scenarios using real-time positional risk,
can be automated and reported in real current and historic values, velocity, and whether it be market exposure, asset
time, sending alerts to various business historical pattern trends valuation, liability exposure, or cash
owners for immediate risk management Real-time analysis of customer intent and reserves, using a single data source in
the cloud
behavior based on internal data, third-party
data, social media, browser history, and
cookie information
TOP VALUE DRIVERS
Improve the customer experience Reduce fraud and risk Increase revenue growth

27
FINANCIAL INSIGHT
AND RISK CONTROL
The ability to respond quickly is an essential part of managing a bank. To do this, simulation, prediction, and analytical
capabilities are important components. Data is critical for gaining the insight to make decisions. This insight must be at
a granular level, so decision-makers have the detail they need to understand trends, opportunities, and risks and quickly
carry out what-if analysis using predictive algorithms. Banks are required to keep their systems and processes up to date
in real time in a complex regulatory environment. They need to meet regulatory requirements in an easy and flexible way
to keep costs down.
TRADITIONAL SCENARIO: MANUAL PROCESSES FOR FINANCIAL DATA MANAGEMENT
Isolated systems across the bank Manual analytics and risk process Fraud analysis after the fact Slow response to competition
Many legacy systems that provide Determining user behavior Legacy systems isolated from Isolated offer management
point solutions isolated from other and intent by running manual other channels, resulting in a systems that don’t provide a
systems processes across multiple limited view of fraud exposure holistic, 360-degree view of
Legacy systems not open to systems, normalizing the data, and required mitigation to limit customer activity and potential
sharing data or providing minimal and then conducting analysis, that risk intent, resulting in lost sales
which results in stale predictions and revenue-generating
data-sharing capabilities
opportunities.
Manual processes that make
Banks dependent on IT to provide
adapting to new regulations
custom and isolated services
difficult
A NEW WORLD WITH SAP: A REAL-TIME SINGLE SOURCE OF TRUTH
Complete customer view in the cloud Real-time analytics and fraud management Real-time service and sales in the cloud
The SAP Cloud portfolio allows a bank Provide deep real-time risk assessments Increase the LoB’s view of customer
to stream multiple data sources from for flight, churn, and abandonment. profiles, preferences, and activity
various systems (internal, third party,
Identify fraud behavior in real time, Create personalized product offers
social media, and so on) into a real- minimizing state predictions and and campaigns based on a user’s
time, 360-degree customer view financial loss behavior within the bank site, as well
as off the bank’s site in the cloud
TOP VALUE DRIVERS
More control over the customer Real-time data management, allowing

experience, offer management, and better fraud management and mitigation
customer behavior and intent as well as sales campaigns that are more
relevant to the user

28
29
HOW TO
GET THERE
The journey to becoming
an intelligent bank begins
with digital and uses a
transformation road map.
How to Get There

30
HOW TO PLAN
YOUR PATH TO THE
INTELLIGENT ENTERPRISE
In the digital economy, intelligent technologies and integrated
business processes are now driving digital transformation.
To do this effectively requires an end-to-end plan for becoming an intelligent enterprise. This includes
creating an intelligent enterprise road map and implementation plan with proven best practices and
deployment options that optimize for continuous innovation with a focus on intelligent outcomes.
The End-to-End Journey to Becoming an Intelligent Enterprise
Follow us
Plan Build and launch Run Optimize

well to manage with proven best all deployment for continuous
expectations practices models innovation
Simplify and innovate Standardize and innovate Run with one global Optimize to realize value
 Reimagined business  Model-company support Continuously captured and
models, business approach to accelerate  One global, consistent realized benefits of digital
www.sap.com/contactsap
processes, and work adoption with model experience transformation
industry solutions
 SAP Digital  End-to-end support –
Transformation  Design thinking and on premise, in the
Framework rapid, tangible prototypes cloud, or with a hybrid
methodology as approach
 Coengineered industry
a guide for digital
innovations delivered
transformation
Studio SAP | 51737enUS (19/03) with agility
 Value-based innovation
road maps
No part of this publication may be reproduced or transmitted in any form

or for any purpose without the express permission of SAP SE or an SAP affiliate
company.
To move forward with speed and agility, it helps to focus on live digital data and combine solution
The information contained herein may be changed without prior notice. Some software
know-how and industry-specific process expertise with data analytics so that the right digital reference
products marketed by SAP SE and its distributors contain proprietary software
components of other software vendors. National product specifications may vary.
architecture is defined and delivered. In that context, a model-company approach is aimed at simplifying
These materials are provided by SAP SE or an SAP affiliate company for informational
and
purposes only, without increasing
representation theof any
or warranty speed
kind, andof
SAPthe digital transformation journey.
or its affiliated
companies shall not be liable for errors or omissions with respect to the materials. The
only warranties for SAP or SAP affiliate company products and services are those that
Model companies represent the ideal form of standardization for a specific line of business or industry.
are set forth in the express warranty statements accompanying such products and
services, if any. Nothing herein should be construed as constituting an additional
warranty. They are built on preconfigured SAP solutions based on best practices supported by SAP, along with the
business
In particular, SAP SE content
or its affiliated companies havethat encompasses
no obligation to pursue any courseour experience and expertise relevant for the industry. They provide
a comprehensive baseline and come with the accelerators to jump-start digital transformation projects.
of business outlined in this document or any related presentation, or to develop or
release any functionality mentioned therein. This document, or any related
presentation, and SAP SE’s or its affiliated companies’ strategy and possible future
developments, products, and/or platforms, directions, and functionality are all subject
to change and may be changed by SAP SE or its affiliated companies at any time for any
reason without notice. The information in this document is not a commitment,
promise, or legal obligation to deliver any material, code, or functionality. All forward-
looking statements are subject to various risks and uncertainties that could cause
actual results to differ materially from expectations. Readers are cautioned not to place
undue reliance on these forward-looking statements, and they should not be relied
upon in making purchasing decisions.
SAP and other SAP products and services mentioned herein as well as their respective
logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company)
in Germany and other countries. All other product and service names mentioned are
How to Get There
the trademarks of their respective companies.
See www.sap.com/copyright for additional

© 2019 SAP SE or an SAP trademark
affiliate company. Allinformation and notices.
rights reserved.
31
COMPREHENSIVE
SAP ECOSYSTEM
ORCHESTRATING
THE WORLD TO
DELIVER VALUE FASTER
Our comprehensive banking ecosystem offers integration into:

 A wide range of support and implementation  Forum for thought leadership, influence, and
services knowledge
 Complementary and innovative third-party  Large skill sets
solutions
 Reach, with partners to serve your business
of any size anywhere in the world
Our partner ecosystem includes, among others:
How to Get There

32
SAP IS COMMITTED
TO INNOVATION
10-Year Innovation Vision Comprehensive Industry Proven Services Offering

SAP delivers fully intelligent Coverage By bringing together world-
business solutions and networks SAP enables comprehensive class innovators, industry
that span across company coverage of the complete and emerging technology
boundaries and promote purpose- banking value chain across expertise, proven use
driven businesses. These solutions the enterprise. With its clear cases, and design thinking
will be the most empathic symbiosis industry road map, SAP is methods, we help banks
between machine intelligence and the partner of choice for the develop innovations that
human ingenuity. banking industry. deliver impact at scale.
 Self-running enterprise  Customers support more  Proven methodologies

systems than 140 million active to drive innovation, from
 Self-organizing business banking accounts across reimagining customer
ecosystems the world experiences to
 New markets and business enhancing operations
 Global banking customers
models  Innovation that is fueled
manage over US$70 trillion
through a managed
in assets
innovation ecosystem
 Support for all lines of from SAP
business on a single  Ability to build your own
platform innovation capability and
culture
SAP supports banks in becoming intelligent enterprises – providing

integrated business applications that use intelligent technologies and can be
extended on SAP Cloud Platform to deliver breakthrough business value.
Learn more
 SAP.com for Banking  SAP Digital Business Services

 SAP Leonardo  SAP Design Thinking
How to Get There

33
RESOURCES
Outlined below is external research that was used as supporting material for this paper.
1. “Emerging Opportunities to Deploy Industry 6., 7. Mala Anand, “SAP Leonardo: A Closer Look
Processes in the Cloud,” Forrester Consulting at a Year of Innovation,” SAP, June 2018.
thought leadership paper commissioned by SAP,
8. Prasad Chintamaneni, “How Banks Can Use
July 2018.
AI to Reduce Regulatory Compliance Burdens,”
2. Jim Marous, “2017 Retail Banking Trends and Cognizant, June 2017.
Predictions,” Digital Banking Report, December
9. Jan van Vonno et al., “IDC’s Digital Use Case
2016.
Map for Financial Services,” IDC sponsored
3. “SAP Digital Transformation Executive by SAP, August 2018.
Study: 4 Ways Leaders Set Themselves Apart,”
10.–19. “Emerging Opportunities to Deploy
SAP Center for Business Insight and Oxford
Industry Processes in the Cloud,” Forrester
Economics, 2017.
Consulting thought leadership paper
4. Michael Grebe et al., “Customers Steer Digital commissioned by SAP, July 2018.
Trends Driving Retail Bank Transformation,”
BCG, May 2016.
Note: All sources cited as “SAP” or “SAP
5. Mike Blalock, “The Future of AI in Banking,”
Performance Benchmarking” are based on
Intel IT Peer Network, April 2017.
our research with customers through our
benchmarking program and other direct
interactions with customers.
Resources
34
Follow us
www.sap.com/contactsap
Studio SAP | 51737enUS (19/03)
No part of this publication may be reproduced or transmitted in any form

or for any purpose without the express permission of SAP SE or an SAP affiliate
company.
The information contained herein may be changed without prior notice. Some software
products marketed by SAP SE and its distributors contain proprietary software
components of other software vendors. National product specifications may vary.
These materials are provided by SAP SE or an SAP affiliate company for informational
purposes only, without representation or warranty of any kind, and SAP or its affiliated
companies shall not be liable for errors or omissions with respect to the materials. The
only warranties for SAP or SAP affiliate company products and services are those that
are set forth in the express warranty statements accompanying such products and
services, if any. Nothing herein should be construed as constituting an additional
warranty.
In particular, SAP SE or its affiliated companies have no obligation to pursue any course
of business outlined in this document or any related presentation, or to develop or
release any functionality mentioned therein. This document, or any related
presentation, and SAP SE’s or its affiliated companies’ strategy and possible future
developments, products, and/or platforms, directions, and functionality are all subject
to change and may be changed by SAP SE or its affiliated companies at any time for any
reason without notice. The information in this document is not a commitment,
promise, or legal obligation to deliver any material, code, or functionality. All forward-
looking statements are subject to various risks and uncertainties that could cause
actual results to differ materially from expectations. Readers are cautioned not to place
undue reliance on these forward-looking statements, and they should not be relied
upon in making purchasing decisions.
SAP and other SAP products and services mentioned herein as well as their respective
logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company)
in Germany and other countries. All other product and service names mentioned are
the trademarks of their respective companies.
See www.sap.com/copyright for additional trademark information and notices.

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SAP Industries White Paper | The Banking Industry

Helping to create superior

Access more information

SAP Industries White Paper | Banking

5 Thriving in a Digital World

6 The Need for Change

8 Intelligent Technologies Are a Key Enabler

10 Industry Vision 2025

11 Strategic Industry Priorities for Banks

12 Banking Strategic Industry Priorities

17 Financial Insight and Risk Control

18 The Intelligent Enterprise for the Banking

19 SAP Point of View: Winning with the Intelligent

21 SAP’s Framework for the Intelligent Enterprise

23 Intelligent Scenarios for Banking: Optimize,

28 Financial Insight and Risk Control

30 How to Get There

31 Comprehensive SAP Ecosystem: Orchestrating

32 SAP Is Committed to Innovation

SAP Industries White Paper | Banking

SAP Industries White Paper | Banking

The quest for financial inclusion requires banks to

 Greater social and economic well-being for

 Higher profits, increased competitiveness, and

 Greater economic growth and decreased inequality

Thriving in a Digital World

mBank SA is providing a more retail-like

Thriving in a Digital World

Intelligent technologies promise to bring great Advanced Analytics

Thriving in a Digital World

Thriving in a Digital World

These services will reflect a wide range of banking and related

The business of data management will emerge as a primary

“Developing an omniadvisory and facilitation services business model

Figure 1: Banking Transformation Curve

Low Product offering sophistication and personalization

Thriving in a Digital World

Strategic Industry Priorities

Financial Insight and Control

Strategic Industry Priorities

“How interested is your company or organization in adopting an industry

Data management and insights 38% 49%

Speed to market 41% 46%

Business support 48% 37%

Risk and finance processes 43% 39%

Mobile and digital channels 32% 49%

Strategic Industry Priorities

Figure 3: Future of Seamless Connections

Segmentation Single Customer

Strategic Industry Priorities

Figure 4: Future of Data-Driven Intelligence

Selling products Selling outcomes

Strategic Industry Priorities

The Vision The Journey

Figure 5: Complete Digital Representation of Products Throughout the Lifecycle

Batch-driven manual processes Always on

Strategic Industry Priorities

Banks need to meet regulatory requirements in an The Journey

Figure 6: Future of Financial Insight and Risk Control

Reactive and manual Universal journals

Strategic Industry Priorities

To continue the digital transformation

The Intelligent Enterprise for Banking