Modernization: One of the Top Priorities of Every Finance Organization

According to a Forbes article published in January 2023, the global financial services industry (FSI) is in a catch-22 situation right now.

But, if you think about it, the possibility of a recession has always been a concern for the industry, and it's something that FSI leaders need to take into account as they plan for the future. However, as finance companies are under pressure to be mindful of their expenses, the need for a transformation becomes stronger than ever. A business transformation can help FSI companies save millions of dollars by automating manual business processes, applying leading practices and intelligent technologies, and optimizing finance function and operations.

But the recession is not the only driver here. Transforming the finance industry and its highly complex business processes is equally necessary to keep up with changing customer expectations, technology advancements, industry regulations, and perhaps the most important of them all, increased competition from the fintech companies.

But What's Fueling Business Process Transformation in the FSI Industry?

We all know that traditional business processes as well as business models are archaic in today’s fast-moving market. From opening a new account to submission of loan applications and even the underwriting and approval processes, everything is digital now. The majority of finance organizations are using emerging technologies like data analytics, AI and ML to gain insights into customer behavior and preferences, assess creditworthiness, and offer custom recommendations that bring greater value to the services. And that is fundamentally changing the business processes and business strategy, creating new business models for the sector. Here are the top five reasons FSI decision-makers are prioritizing business process transformation to meet the demands of today's digital economy:

1. Streamlining operations: As discussed above, FSI companies, in general, have way too many manual and time-consuming processes, whether paperwork, manual data entry, or processing transactions. These processes can be streamlined and automated through digital process management technologies like robotic process automation (RPA), which can help reduce errors, improve speed, and free up finance employees to focus on more strategic tasks.
2. Enhancing customer experience: As FinTech companies continue to revamp and revolutionize customer experience, customers of traditional finance services too start expecting a similarly seamless, omnichannel experience with personalized and quick services. By digitizing customer interactions, the FSI industry can provide a better customer experience, improve customer satisfaction, and build loyalty. For example, many organizations are investing in chatbots, mobile apps, and online portals to provide customers with instant access to financial information and support.
3. Improving risk management: Being one of the highest regulated industries, compliance and risk management is a critical component of FSI operations. By digitizing risk management processes, companies can significantly improve accuracy, reduce errors, and comply with regulations more efficiently. Data analytics and AI have proven to be effective in identifying and mitigating risk in real-time.
4. Enabling innovation: Business process transformation also enables financial services companies to innovate and develop new products and services. By leveraging blockchain, AI, and cloud computing, companies can drive innovation that meets evolving customer needs and helps them stay ahead of the competition.

How Does SAP Support Transformation for the Finance Industry?

SAP, being one of the pioneers of digital transformation across industries, plays a significant role in supporting the transformation goals of the global FSI sector as well. In fact, in 2021, SAP formed a strategic partnership with FSI to "significantly increase its support for the financial-service industry’s (FSI) digital transformation and leverage its solutions in the FSI space." SAP aims to help FSI players become ‘Intelligent Enterprises’ by providing a range of intelligent technologies and solutions, known as SAP Business Transformation Services, that enable them to harness the power of data, automate processes, and drive innovation.

Let's explore the ways SAP supports the transformation goals of financial services companies:

1. Comprehensive suite of software solutions: SAP offers a comprehensive suite of software solutions that help financial services companies streamline their operations, automate processes, and enhance customer experiences. These solutions cover a wide range of financial services including banking, insurance, capital markets, and asset management. We will discuss the solutions in detail later.
2. Cloud-based solutions: SAP's cloud-based solutions enable financial services companies to easily and securely manage their data and applications, and scale up or down as needed. This helps companies reduce costs and improve flexibility, while also improving their ability to innovate and develop new products and services.
3. Advanced analytics capabilities: SAP's analytics solutions help financial services companies gain valuable insights into their operations and customers, enabling them to make better decisions and improve their overall performance.
4. Compliance and risk management solutions: SAP's compliance and risk management solutions help financial services companies meet their regulatory obligations and manage risk effectively. These solutions include tools for anti-money laundering (AML) compliance, fraud detection, and data privacy.
5. Collaboration with partners: SAP also collaborates with a wide range of business partners, including fintech startups, to help financial services companies leverage emerging technologies and stay ahead of the competition.
6. Integration: SAP's integration solutions that allow financial organizations to connect their disparate systems, applications, and data sources, enabling them to operate more efficiently and effectively.
7. Digital platform: The leader provides a digital SAP platform that allows financial organizations to build and deploy applications, services, and workflows, enabling them to innovate rapidly and respond to changing market conditions and industry trends.

What are the SAP Solutions That Help Drive FSI Transformation?

SAP solution	How it helps
SAP financial services	A financial management suite designed specifically for financial services companies and helps improve processes, increase customer satisfaction and grow their business.
SAP Banking Services	This solution provides end-to-end banking processes and supports multi-channel interactions, enabling financial services companies to offer a seamless and personalized customer experience.
SAP Insurance	This solution is designed to help insurers manage their core processes, including policy administration, claims management, and customer service. It also offers advanced analytics and reporting capabilities to help insurers gain valuable insights into their operations.
SAP Ariba	This procurement and supply chain management solution helps financial services companies automate their procurement processes and gain better visibility into their supply chains, improving efficiency and reducing costs.
SAP S/4HANA Cloud	This cloud-based platform provides advanced analytics capabilities, enabling financial services companies to analyze large amounts of data in real time and gain valuable insights into their operations and customer behavior.
SAP Fraud Management	This solution helps financial services companies detect and prevent fraud in real time, using advanced analytics and machine learning capabilities.
SAP Transformation Navigator	This is a tool that helps financial services organizations plan and execute their digital transformation initiatives. The SAP Transformation Navigator tool provides a comprehensive view of SAP's solutions, enabling organizations to identify the technologies and solutions that will best support their transformation goals.
SAP Digital Readiness Assessment	SAP offers a free self-service tool called SAP Digital Readiness Assessment, which is specifically designed to help financial services organizations assess their digital transformation readiness. The tool provides a quick and easy way for organizations to evaluate their current level of digital maturity and identify areas for improvement by asking a range of questions and creating one comprehensive report detailing the path forward.

What are the Steps of Finance Transformation?

Like every other transformation, finance transformation too is a process of rethinking and redesigning financial processes, systems, and operations to improve efficiency, increase agility, and enhance the overall performance of the finance function. The process of finance transformation typically involves 5 steps, explained below:

Step 1: Define the scope and objectives

The first step in finance transformation is to define the scope of the initiative and identify the key objectives. This may involve conducting a thorough assessment of the current financial processes, systems, and operations to identify areas for improvement.

Step 2: Develop a roadmap

Based on the assessment, a roadmap is developed outlining the steps required to achieve the objectives. This roadmap will typically include a timeline, milestones, and specific actions required to achieve the desired outcomes.

Step 3: Implement changes

Once the roadmap has been developed, changes are implemented to streamline processes, optimize systems, and improve operations. This may involve introducing new technology, reorganizing the finance function, or changing processes to support new business models.

Step 4: Monitor and measure results

As the changes are implemented, it is important to monitor and measure the results to ensure that the objectives are being achieved. This may involve implementing key performance indicators (KPIs) to track progress and measure success.

Step 5: Continuously improve

Finance transformation is an ongoing process, and it is important to continuously assess and improve financial processes, systems, and operations to ensure that they remain effective and efficient. This may involve regular reviews and updates to the roadmap, as well as ongoing training and development for finance staff.

The Solution to Effective Finance Transformation with SAP

Having said all that, financial transformation can be an extremely challenging task for traditional FSI companies. There are several factors that contribute to the complexity of financial transformation initiatives, including their legacy systems, stringent regulatory compliance, a vast amount of complex data, and talent and skills gap.

With Cloud4C’s in-house expertise in SAP financial services, we are capable of helping you get started on the financial transformation journey you have been looking for. We have personnel with prior exposure and success in various finance roles. Our solution architects are seasoned and can provide the right recommendation on the TO-BE state to be achieved based on your existing systems.

Cloud4C SAP Financial services are designed to help re-engineer processes across all siloes – Finance, HR, Procurement, Operations, and Delivery – with a reporting layer and access to strategic data at each point. And since the whole system is operable through a neat User Interface, the solution turns financial management from a chore into a satisfying experience. If you have 2 minutes, visit our Cloud4C SAP Financial Management section to know more about each of the services we provide to accelerate your SAP transformation goals.