As the battle for supremacy in the sector continues, partially spurred on by new customer expectations in the post-COVID-19 environment, incumbent banks have learned that passivity can no longer garner success. With challenger banks now posing a serious threat via their mastery of mobile-based technology, a new approach is required.
“Human experience is the new disrupter in the experience economy,” said Falk Rieker, Global Vice President of Banking, SAP SE. “Banks will change to look and operate more like technology companies, providing banking and related non-banking services as they become digital platforms.”
Transforming with technology
When considering which technologies to implement in the new ‘banking 4.0’ paradigm, SAP recommends considering the gains on two aspects of business: productivity and efficiency.
Estimating that 60% of human tasks will be automated by 2025, the company is confident that the optimal customer experience of the future (which is an important focus for 97% of banks) will be delivered by enhanced technological sophistication. Areas worth exploring include:
Artificial intelligence (AI) and RPA (robotic process automation): Estimated to reduce manual work by up to 360,000 hours, deep learning algorithms can automate complex tasks, streamline workflows and provide continuous customer service.
Data analytics: Finance is a particularly data-rich sector. Advanced analytics can help unlock the value of enterprise data, anticipate customer behaviour and gain valuable consumer insights. It’s no surprise, then, that 94% of leaders are investing in enhanced capabilities.
Blockchain: A recent and relatively unexplored technology in finance so far, blockchain’s ability to create trustworthy and immutable records could be revolutionary in the commercial and supply chain sectors.
Conversational AI: SAP states that the accuracy of audio-visual recognition tech has reached 99% in 2020. Capable of providing customers with a more ‘human’ experience while still enabling the efficiency of a bot, this will also allow employees to refocus their efforts on more value-adding activities instead.
Although adopting new technology is important, SAP emphasises that doing so without a strategy is ill-advised; by differentiating their customer experience from others in the sector, banks can gain a distinct advantage over their competitors.
As such, the white paper outlines four priorities for the future and establishes a ‘2025 vision’ for each:
Seamless connectivity: In a customer experience-driven banking environment, customers will be able to connect and navigate banking and non-banking services with little difficulty through well-designed products. Active analytics will allow banks to quickly isolate and improve customer pain points
Data-driven intelligence: Using AI and machine learning algorithms, banks will gain revealing insights into customer desires and shape their services around them. This will not only make the service more engaging but optimise investment and potentially accelerate revenue growth too.
Operational effectiveness: Driven by the widespread adoption of cloud, banks will no longer rely on siloed collections of information. The open availability of data facilitated by cloud will also enable real-time analytics, effectively supercharging development and allowing for constant improvements.
Financial insight and risk control: A universally accessible network of journals linked by blockchain will make finance increasingly transparent, more compliant and easier to track instances of fraud.
Fulfilling banking’s potential
For both banks and the customers they serve, the future looks bright. What’s clear from SAP’s white paper is that digital technology has entered a distinctive era: capable of giving innovative organisations a distinct market edge, the difference between those who utilise it and those who don’t will be incontestable.
“Banking provides vital services to society; our impact is poised to grow. But to fulfil this potential, banks need to become intelligent enterprises to respond to increased customer expectations, leverage data, and take a hard look at their own processes. Banking must have the courage to remake itself, or risk being marginalised,” concludes Rieker.