Banking's bright future powered by Business AI, Cloud

Oct 3, 2024 2:22:55 PM

"For banks, continued success and growth may depend on how effectively they leverage the power of business AI and the scalability of the cloud to power innovation."

Banking's bright future powered by Business AI, Cloud

By Jens-Peter Jensen

The banking sector is set for a tidal wave of innovation as the adoption of a broad range of artificial intelligence (AI) solutions accelerates in the years ahead, supported by the growing power and scalability of the cloud.

The strategic use of AI is nothing new to the banking sector. Due to the data, processes and tech-intensive operations typical of the industry, banks have leveraged AI and machine learning to improve data classification and process automation, as well as uncover hidden patterns and predicting events, which is particularly useful in governance and compliance efforts.

The global banking, finance and insurance accounts for an 18% market share in the use of machine learning globally, second only to the ICT sector. This adoption is only set to grow as Generative AI is deployed to a broad range of use cases.

The new wave of generative AI promises new advances in employee productivity, system efficiencies, and innovation. The impacts of this innovation will likely be seen in critical areas including greater differentiation, improved financial performance, and enhanced risk management capabilities.

For banks, continued success and growth may depend on how effectively they leverage the power of business AI and the scalability of the cloud to power innovation.

AI powering strategic decision-making

One of the highest-value areas of AI-powered banking innovation is in improved strategic decision-making, especially at a CFO level.

In a banking and financial services context, the strategic role of the CFO is critical to the company's performance and its ability to both identify and adapt to emerging risks and opportunities.

To fulfil this strategic role, CFOs need access to accurate, real-time information about the performance of the business at every level of granularity, enabled by powerful modern data management technologies. However, this level of real-time insights has not been available to CFOs at the speed at which the business moves, affecting strategic decision-making.

The introduction of business AI is set to revolutionise the strategic role of the CFO by automating manually intensive tasks to free up time and resources for strategic initiatives, improving reporting accuracy, and mitigating risks related to fraud through improved anomaly detection and prevention.

A recent survey by IDC found that CFOs expect AI to dramatically improve the performance of their finance functions, ranging from payments and expense management to financial close, forecasting, budgeting and planning. The report highlights the role of AI to enable CFOs to predict and model complex business scenarios in real time, using AI-powered insights to draw on historic patterns as well as capture and adjust to business events as they happen.

However, the success of business AI depends on the quality and relevance of the data it ingests. Here, the role of business technology platforms leveraging the cloud become indispensable to banks' efforts at adopting AI for innovation and decision-making.

Cloud provides platform for banking innovation

Banks are in a perpetual state of innovation to meet changing customer needs, adapt to regulatory changes, and design and deliver new banking products and customer experiences. However, the high levels of complexity within their operations can make it hard for banks to adopt the new technologies they need for their innovation efforts.

Here, the power of the cloud and global best practices are critical to banks' efforts. The introduction of SAP Sygnavio to enterprise resource planning transformation efforts equips banks with standardised software processes to reduce human error, optimise the allocation of existing tech resources, and ensure core processes are sustainable and resilient.

Banks leveraging SAP S/4HANA Public Cloud also gain access to insights at a local and global level into aspects such as best-practice processes, regulatory compliance, change management and more. By drawing on the insights from global peers, banks can make improved strategic decisions over core business and technology processes to reduce complexity and accelerate business transformation efforts.

Smaller Africa-based subsidiaries of larger global banking organisations can also leverage public cloud for a lighter approach to adopting new technologies that still easily integrates with the parent company's core systems.

The adoption of SAP S/4HANA Public Cloud among smaller fintech companies such as neobanks, payment providers, insurance agents and brokerages also makes it easier for banks to integrate third-party innovations into their core banking offering.

Considering the speed at which fintechs can acquire new customers, especially in non-traditional markets where banks don't have a strong presence, the ability to integrate these customers into the broader banking offering provides a compelling commercial opportunity for banks seeking revenue and customer growth.

The impact of business AI and the scalability and flexibility offered by the cloud will transform Africa’s banking sector and power the next wave of innovation and growth. By leveraging global best practices and investing in a business technology platform that enables the adoption of business AI and other innovative technologies, banks can transform their decision-making capabilities, unlock new growth opportunities, and build sustainable and resilient business models.

Jens-Peter Jensen is the Global Head of Finance for Financial Services at SAP