Business as unusual: The future of banking and insurance with SAP Fioneer


Businesses are contending with an ever-changing landscape. They need to think beyond their immediate sphere to innovate and stay ahead. This is just as true for financial services.

This is the heart of Business as Unusual with SAP: How Leaders Navigate Industry Megatrends, a new book from two SAP veterans: Thomas Saueressig, member of the Executive Board of SAP and responsible for SAP Product Engineering, and Peter Maier, president of the SAP Industries and Customer Advisory Group.

Drawing from interviews with SAP experts, customers, partners, and industry analysts, it explores how eight cross-industry megatrends. These trends are reshaping the world we live in, and how SAP and its customers are rising to the challenge.

Financial services: the catalyst for change

Chapter six, “The Future of Capital and Risk”, dives into how we at SAP Fioneer and our customers are innovating in the financial services space. It’s about how the industry is using technology to tackle the priorities of hyper-personalization, intelligent operations, crypto banking, performance, and compliance.

This is a time when top-tier banks and insurers are realizing that they are no longer just competing within the financial services sector. They need to innovate beyond it, taking and implementing lessons from retailers and consumer technology companies.

‘It’s a bit like when Lego realized their competition wasn’t other toy manufacturers, but rather the likes of Netflix and Amazon and Disney. This is because what they were actually competing for was the time and attention of their customers. […] And so that’s why they started creating Lego movies. […] Can financial services organizations actually bring capabilities from other industries into their portfolio and differentiate that way?’

– Stuart Grant, Head of Capital Markets at SAP

There’s a lot that financial services can learn from other industries. But the industry also has the potential to be the catalyst for change.

Making banking hyper-personal

The generation that are coming into the workforce now are bringing new wealth into the financial markets and expect more. They’ve grown up in a world where instant access, interconnectivity, digital- and mobile-first experiences are the norm. They expect the same from financial services. More transparency, more choice, and more self-service capabilities.

Newer, more agile banks like Discovery Bank are positioning themselves as more than just financial service providers. They act as financial coaches for their customers, personalizing their service and rewarding customers for responsible and healthy behaviors. And technology empowers them to do it.

To banking customers, they offer dynamic interest rates and personalized offerings based on customer status, as well as a loyalty program. And insurance customers are supported with preventative healthcare, going beyond simply paying out claims.

By providing a more personal touch, Discovery Bank benefits two-fold. They create a tailored financial health and wealth journey for their customers, and reduce their risk profile compared to traditional banks owing to their more loyal users.

Opening up new revenue streams in financial services

The financial services sector is also adapting to a younger generation of investors seeking higher returns and access to a wider range of assets. Crypto-native startups have yet to create a user-friendly layer for digital assets. This presents an opportunity for more experienced financial service providers to shape the future of the sector.

Take US-based Vast Bank, the first federally chartered bank allowing people to buy, sell and exchange crypto directly from a bank account. The bank is using SAP Fioneer technology to deliver the accounting and custodial services for managing cryptocurrency accounts. One persistent pain point with crypto is losing your key. Indeed, approximately 20 percent of all Bitcoins are lost due to lost private keys. Vast Bank acts as custodian for its customers’ digital assets, so they can be confident that they’ll never get locked out.

In addition, crypto pricing demands much greater precision than traditional currencies. It requires a system that can support at least eight decimal places – something SAP Fioneer can support out of the box. This might not sound like a lot, but legacy banking systems can’t do it. And it enabled Vast to introduce cryptocurrency accounts to their product suite and tap into a new customer base.

With this technological foundation, Vast provides a faster, safer experience than many crypto-native businesses.

Innovating at the heart of the financial system

Other banks are redefining processes that have been going since the eighteenth century. The Bank of London, launched in November 2021, is only the second clearing bank to appear in the UK for 250 years. It is shaking up financial clearing by modernizing this critical, and little understood, cornerstone of the global financial system. Technology is the enabler of that vision.

Directly or indirectly, every bank, payment company, and corporation globally relies on a clearing bank to process and settle net obligations. And this can take a long time.

The Bank of London success story

‘Say I was to send you 50 pounds today; you’d likely get the money within 24 hours. But your bank may not settle with its clearing bank for up to 40 days. […] We’re talking about a massive amount of money here, basically $2.5 trillion annually. […] It’s a very high margin business mainly driven by the fact that banks are massively manual still with armies of people .And their technology is generally antiquated, expensive, and at the end of its life.’

Anthony Watson, CEO of The Bank of London

So if you want to take on clearing the trillions that make the global economy run, and do it faster, you need robust, high-performance technology to power it. The core banking platform is what ultimately makes or breaks a bank’s processing. That is particularly true in clearing, where, as Watson puts it, you ‘can’t afford to get payments wrong. Ever.’ Watson first saw SAP’s potential when he was CIO at Nike, where they used the software to process 10,000 SKUs a season. So when he started the Bank of London, he knew what they needed.

‘We run the SAP Fioneer technology stack end to end across all applications. Most notably it’s our core banking stack. SAP Fioneer represents quality, reliability and scalability, which will enable us to meet our goals.’

Charlotte Bullock, Group Director of Banking-as-a-Service at The Bank of London

With this foundation, The Bank of London has created a cloud-native, open-API, straight-through processing system. It handles transactions in real time, without the need for periodic batch processing. It’s making banking more efficient and empowering the transformation of financial services.

Moving with the times

The insurance industry has been no stranger to disruption either. Fast-evolving consumer habits and technological advances are driving change and creating new challenges. Nowhere is this more pronounced than the automotive sector.

Mobility used to mean driving a car from A to B, and the insurance was as simple as the journey. But now there are a vast array of transport possibilities for a single journey: car and bike sharing, taxis, scooters and e-bikes. And the boundaries between buying, leasing, subscribing, sharing, renting, and on-demand are becoming ever more blurred.

EMS success story

Insurers like ERGO Mobility Solutions (EMS), part of the Munich Re family, are working to understand, influence, and capitalize on these disruptive mobility trends.

With SAP Fioneer infrastructure powering their motor insurance platform, EMS have built a system that supports digital interactions with customers through car, mobile and desktop channels. Leveraging a wealth of car and driver data, the system is designed to support the development of new insurance services, enabled by real-time data coming from the vehicle. It’s giving EMS a more granular and real-time understanding of the driver so they can deliver individualized pricing, and respond to new business models.

At the same time, the car itself is becoming a software platform – and a battlefield. Who controls the data of the connected car? And who benefits from the future profits of software and services sold and delivered through the car? Who will capture the value of the electric car’s battery and the new use cases it enables?

EMS is trying to answer these questions. They recognize that the car is getting smarter and insurance needs to keep up.

‘It needs to become more digital and needs to be integrated within the car software with over-the-air updates and the ability to buy car features on demand. We cannot continue with our 40 printed questions […] It’s no longer the car you buy in the dealership (it’s continually being updated) and the insurance provider needs to be prepared for this.’

Karsten Crede, CEO of ERGO Mobility Solutions

For that reason, EMS is collaborating more closely with its automotive partners. They are working to develop models for predicting the aging of battery cells under real operating conditions and analyzing the effectiveness of autonomous driver-assistance systems. By co-innovating like this, EMS can get a better understanding of these new risks, and proactively create new insurance products to manage them.

Co-innovating the future

As megatrends continue to transcend traditional boundaries, these cross-sector partnerships will become more and more common. Financial services businesses will increasingly need to embed themselves in various ecosystems outside of finance. They need to innovate together to shape the future of finance and drive change across industries. It’s business as unusual.

Yet no matter how far and fast this innovation goes, it will always need to be underpinned by the same values: stability, reliability, and scalability. These are the foundational qualities of SAP Fioneer. And the technology built on them allows businesses operating in the shifting landscape of financial services to fly.

If you want to read more, buy Business as Unusual with SAP: How Leaders Navigate Industry Megatrends here.

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