• Banks need to be present in the new ecosystems their customers operate in
• Taking a collaborative approach is the new trend in the relationship between technology vendors and banks
• Banks have to come up with analytical support to identify what their customers need

Siddharth Chandani (SD): I’m pleased to be speaking to Falk Reikier, who is the global vice president for the financial services industry at SAP. So Falk, from your client’s perspective, what are some of the transformations that you see from product-driven experience to one being that of technology companies? So talk about the transformation curve.

Falk Rieker (FR): You're referring to my customers to banks or my corporate customers?

SC: Points on both. 

FR: So let me first start with the corporate customers. I think for the corporate customers, technology is a huge opportunity to get services and a level of service they've never seen before. This includes analytical services but also new products as well. Products that leverage things like machine learning, artificial intelligence, predictive analytics, Internet of Things (IoT) that can really benefit to have tailor made, personalised, I would even say hyper-personalised offerings. 

When I look at the banking side, I think the trend we are seeing here is that there is a much different approach between technology vendors and banks at this point in time. It's a more collaborative approach. It's a more partner-led approach. It's a more of an approach that suits the ecosystem idea. And that's where I see a lot of opportunities with a lot of banks ready to innovate corporate banking and come up with new offerings that excites the corporate customers and obviously drive efficiency for these corporate customers as well.

SC: This year's theme at SIBOS, as you know, is about thriving in a hyper connected world. So both corporate and financial institutions need to comply with these new regulations and this need will grow as instant payments become the norm, how are SAP’s score banking solutions in this context help your banking customers meet their compliance need.

FR: First of all, when we talk about instant payments or faster payments, it literally means they are fast or instant. So the first thing is that you need to have the systems to do real time processing, real time settlement. And this is where obviously some of our technology kicks in. It could be a core banking system and it could be also a payment-app solution. And it's not only for loans as I said, it’s also for any type of payments and it could even include cryptocurrencies. 

SC: Any possible use case that you would like to highlight in the areas you've talked about where clients are underserved and where you see opportunities in terms of growth, not only growth that is bigger, but also inclusive?

FR: I think when I look at the large corporate segment, versus the SME segment, on the large corporate segment, we always had a whole variety of offerings from the banks to their customers. Depending on what was feasible, there was always a very high standard in these services. So now with the new technology, yes, you can optimise. 

And as I said, we are doing that around treasury service, we're doing it around trade finance, we are doing it around payments. But I think besides that segment, which is already on the radar screen of the banks and very much of those have a huge focus on, what I would love to see is a stronger focus on the SME business. Because these companies in the SME business, they actually need the services of a bank even more than the large corporates do. Why do they need it more? Because first thing is, they have a hard time getting competitive rates and getting banking offerings today, because they are not as transparent. They don't have the same standards in bookkeeping, reporting, controlling and procurement. So therefore, working together with banks on improving things for SME is really exciting. So I’ll give you an example, with United Overseas Bank, we have worked together on a solution for small and medium enterprises (SME), very small enterprises. And what the bank is doing, they're offering an earpiece system for the small and medium enterprises, which is managed in the cloud, which is the service to their customers. By that, the bank gets insight into the cash flows, into everything they own: incoming cash flows, outflowing cash. They have a look at the order book and they have complete transparency about the small businesses and by that, they can actually give advice, they can come up with the right offer and they can become more of a coach. And that will benefit the bank as much as it will benefit the customers.

SC: We were talking about interoperability that thwarts connectivity. Amidst all this, what is your key takeaway from SIBOS this year?

FR: First of all, I'm glad that the buzzword is not blockchain this year.

SC: It still remains a buzzword but it has yet to reach the levels of commercialisation. 

FR: I'm glad that we talk about hyper connectivity, because what we will see in the future are the new arising ecosystems: large ecosystems, smaller ecosystems, local ecosystems, regional ecosystem, global ecosystem. But business will be made in these ecosystems and banks need to be present in these ecosystems because these ecosystems will find partners that offer financial services. If it is a bank or non-bank, they don't care. They just want financing. They want to be able to do payments. So if banks are missing the boat here, then they have a big issue. So they need to be present in these ecosystems. They need to take a more collaborative approach. They need to be proactive to drive hyper connectivity with these ecosystems. And I think that at the end of the day, when you think about digital business, connectivity and experience you will deliver with that connectivity, are the two things that really decide about your success. If you're not connected, you can't do business. If you're not delivering a good customer experience, you're not doing repeatable, sustainable business. So these two things are absolutely crucial. And by the way, data plays a big role in that. So more than ever, banks need to come up with analytical support, to come up with the right offerings, not only to identify what the customer needs, but also give the customer self-service capabilities to do their own analytics to draw their own conclusions. 

FR: Actually, analytics becomes crucial to offer successful business proposals and for the customers to stay successful. So analytics need to be in the mix as well. So we need to have the connectivity, we need to have the customer experience, and the customer experience very much linked to data driven intelligence that is accessible for the customer and provided by the bank. 

SD: Thank you.

FR: Thanks a lot