This episode of the Futurum Tech Podcast – Interview Series is the tenth and final installment of our Intelligent Enterprise Industry Series — done in partnership with SAP. I welcomed Dr. Betty Moon, an executive advisor for the banking and capital markets industry at SAP to discuss how she is working with enterprise organizations during this time of turmoil to further their intelligent enterprise story. And how they are helping organizations focus on furthering their intelligent enterprise story.
The Interconnected Bank
SAP recently partnered with Oxford Economics to conduct a research study to identify how an interconnected mindset impacts organizations. Banks and other financial institutions are no stranger to disruption. FinTech, new startups, digital payment systems, and 24-hour customer service demands were on everyone’s radar well before the pandemic hit. Many organizations were making steady progress with their transformations and were proactively dealing with the changes, but there are still areas that can be improved. This study includes findings from 3,000 senior executives, including 300 from the banking sector, and covered the challenges, opportunities and current state of the industry.
My conversation with Betty revolved around the following:
- The biggest changes banks and other financial institutions have experienced in 2020 as a result of COVID-19 disruptions.
- New ways banks are digitizing their businesses to meet rapidly changing consumer demands.
- The technology investments that are bringing banks the most value.
- What the banks that haven’t shifted to digital need to do now to speed their digital transformations.
- Why Systems Thinking is making a difference for leading banks.
Betty and I explored some of the findings of the Oxford Economics report: The Interconnected Bank that will have a big impact on the future. We only explored a few topics in the report and there’s so much more to it. If you’re interested in a comprehensive view of the subject download The Oxford Economics report here.
Listen to my interview with Betty here:
Want to listen to the other interviews in the series? Check out the playlist here: The Intelligent Enterprise Industry Series
Disclaimer: The Futurum Tech Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Read more analysis from Futurum Research:
Daniel Newman: Welcome to the Futurum Tech Podcast, The Interview Series. I’m your host today, Daniel Newman, Principal Analyst and Founding Partner at Futurum Research. Excited about today’s interview series podcast, where I have Dr. Betty Moon of SAP joining me as part of our continuation of podcasts covering SAP industries, the Oxford Economics Study, and the intelligent enterprise. Dr. Moon, Betty, she said to call her, and I’ll bring her on in just a moment, will be talking today about the financial services and banking space. And I’m excited about this conversation. It’s an industry I track a lot, I watch very closely. I love the markets financial services. It’s always a really fast changing market with a ton of technology in the background. So definitely excited about this conversation.
As a reminder, this is a series, there’s 10 of these different podcasts. Please hit the subscribe button on the Futurum Tech podcast on Apple, or check it out on YouTube because I’d like you to listen to all these podcasts. Tons of great guests, lots of interesting information. No matter what industry you are in, there is a lot to learn from all these industry executive advisors that have joined me here on the podcast. So, without further ado, Dr. Betty Moon, welcome to the Futurum Tech Podcast Interview Series. How are you today?
Dr. Betty Moon: I’m great, Daniel, and thanks for having me today.
Daniel Newman: Yeah. I’m always excited to have you here. Love to get a little background because well, everybody’s going to want to know about you. They all know me, they’ve heard me, they’ve seen me. If they’re here, they’ve been on our podcast before, but you’re the guests. So tell everyone a little bit about yourself, your role, and what you do day in and day out at SAP.
Dr. Betty Moon: Well, sure. Thank you for the opportunity, Daniel. So, I’m SAP’s industry executive advisor for banking and capital markets. And so, for SAP, I provide my colleagues across all of North America advice about banking and capital markets and the issues that these industries are facing today. And then at the same time, I also try to help the financial service industries, senior executives, really understand how they can put new technologies to work and how they can use it to help themselves, some of the big challenges they have.
Daniel Newman: This year, I’m guessing you’re probably getting more questions than ever before. Before we even talk specifically about financial services and banking, let’s just say 2020, what a crazy year. So much change, so much transformation. You’ll hear quotes of anywhere from five years to 10 years of digital transformation and disruption that took place in a matter of just a few months. We are on video day in and day out, but it wasn’t just about video, it’s about the infrastructure, it’s about data, it’s about connecting. It’s a whole new route to market with our customers, and I have to imagine you’re just getting an influx of questions. And of course, SAP has a huge legacy relationship in the financial services and banking. So, I’m guessing the work this year was maybe even a little different than in the past.
Dr. Betty Moon: Yeah, you can say that. I mean, think about it, what has been happening this year? Everything has been so dramatically changing for every one of us, personally, professionally. And before I joined SAP, I spent 30 years in banking, and I worked for some bank brands that you probably recognize, like bank of America and PNC and Huntington. And I was really fortunate to have that time in banking because I learned so much about money and how people manage it and how people feel about it. But this year has caused so much disruption for everyone and how they think about all the things that they do on a daily basis. And banking is just one of those things that’s been massively disrupted by COVID-19.
Daniel Newman: Oh, absolutely. No question about it. And so, let’s dig in on that. I’ve alluded to it already, but this disruption that’s gone on, there’s been a ton. 2020’s loaded with it. What about banking? So let’s get specific. What are some of the biggest impacts you’re seeing in this space? How are you helping the banks through it?
Dr. Betty Moon: Yeah. And I think even before this started to happen in the spring, Daniel, banks and bankers were already facing some pretty big challenges. The industry has been going through some strange times because customers’ expectations have been changing over the past few years. We are all bank customers, you’re a bank customer. And I’m guessing you want your bank to give you really good products and really good service and just make it easy for you to engage with them. But it’s always been and still continues to be kind of hard to do business with some banks. And that’s been shown to be a bigger problem now as branches had to close because of COVID and hours had to get reduced, and people couldn’t get out of their houses for a while.
All along banks have seen their customers demanding more from them and more accountability. So, I think it’s just pointing out some of the weak spots, and it’s also pointed out some of the financial services companies that are much further ahead than others, that have been embracing some of these new technologies to help them get ahead and be more agile when things like this have happened.
Daniel Newman: Yeah, you make some great points. In my, not my most recent, but my second most recent book, which I published a couple of years ago called Futureproof, I had a whole section that talked quite a bit about the financial industry and the transformation it was going through. And I had this quote, and I’d love to get your take on it, but I said, “In the future, people will always need banking, but they won’t always need banks.”
And I think that is sort of at the core of what you just said, that’s been the transformation, is you have these certain banks that have almost completely digitized the entire engagement. And some banks that have huge real estate footprints and have legacy retail operations, real estate, everything. And they’re kind of reeling of how do we unwind successfully but still not alienate customers that like this, all those things are big questions which have caused some serious challenges. And then of course, the FinTech disruption that’s going on with non-banks delivering banking services.
Dr. Betty Moon: Oh, absolutely. I think about that, just the FinTech competition that’s coming, let alone the traditional banks that are starting to embrace technology and create some new business models. But if you’re going for a mortgage right now, are you going to be patient with a traditional bank, who’s going to make you jump through a thousand hoops and take weeks and weeks to process your mortgage? And then once you have your mortgage, you have to sit on hold for servicing for 15 minutes waiting for someone to answer the phone so that you can get an answer about mortgage payments.
Customers are no longer going to be that patient any longer with financial institutions that don’t start to change how they treat their customers. And the only way to treat your customers as good as a FinTech is you have to embrace the technology that the FinTechs are embracing. And banks have been talking about digital transformation for years, Daniel. And some have done some really good work in this area, but others we’re just not seeing it happen. And they’re not being early adopters, they’re not even being fast followers. They’ve been waiting too long, and now, that’s caught up with them.
But you mentioned you’ve written some books. The one that I really liked that you did was what was it called, Human Machine?
Daniel Newman: Yeah.
Dr. Betty Moon: And one thing I really, there it is, yeah, he just held it up, everyone. It’s a great book.
Daniel Newman: There’s no video for you, but for her, her and I are chatting on video. Way More engaging.
Dr. Betty Moon: I really liked the way in that book that you differentiated between task automation and job automation, because when you think about that in banking, I wholeheartedly agree with your premise. I’m going to paraphrase, you’re going to have to correct me, but you said something along the lines that most tasks are going to be able to be automated and most jobs are not. I see that as an exact, absolute perfect example in banking because when you were still in grade school, I was working in a bank. And that was like 30 years ago. And we were just rolling out ATMs in some of our branches. And the branch employees were having to go out and teach people how to use the ATM.
And the bankers didn’t want to do it. The branch people didn’t want to do that because they were concerned that these ATMs were going to take their jobs away.
Well now, 30 years later, fast forward, ATMs are ubiquitous, and bankers are still in branches, and people are still going to want to talk to somebody when it comes to making serious decisions about their money. But the task of just getting cash, you don’t need to go into a branch to do that anymore.
Daniel Newman: Oh, absolutely. And nowadays, you don’t even necessarily need a card or devices, biometrics are in the future, we’re going to be seeing that. One of the banks I often refer to as an interesting story has been Ally. Their entire philosophy was, they have not nailed it yet, by no means has it been a perfect strategy, but essentially got rid of all of its branches and basically came up with that theory.
When you go for a jog, you don’t carry your wallet. Say you get in an emergency and you need to get money. People don’t always have their cards and IDs now, but the one thing everyone seems to always have is their phone. You’ve got to kind of keep that in perspective as you’re developing new technologies. That’s why Apple’s a FinTech company now and Google is a FinTech company now. They’re all becoming FinTech because that’s how we pay. How do we move money? It’s so interesting though, like I was thinking about this, just my daughter went off to college, and I have an email account that just for emergencies I can track, but I get sometimes these emails, I see them moving Venmos between all the friends, eight bucks, five bucks. There’s no cash.
Dr. Betty Moon: No, no. Usage during COVID of ATMs dropped significantly. Nobody wanted to touch cash anymore.
Daniel Newman: But we saw that transformation happen. The adoption of these services had happened, but now it was like, it was same thing with using eCommerce. Anyone that saw Amazon’s results over the last few days and their earnings, you’re like, apparently, we know where all the money flowed. It all flowed to getting our prime deliveries. It’s interesting though because a lot of people that are using it now though would have never done it before COVID. It was forced. It was like, oh, this is the only way I can get it. I’m going to try. And then they’re like, holy cow, this is a good experience. I like this experience. I’m going to keep doing it.
I mean, now we have car vending machines. It’s like, I don’t even go to a car dealership anymore, I pick the car, it comes out of a little slot machine and it gets delivered. It’s just crazy this transformation. So, let me ask you, we’ve kind of started, but one of the things that banks had long succeeded on or the financial industry as a whole though was that human relationship, because it’s not even really just banking, Betty. It’s really investment, it’s your mortgage. It was insurance products. And I know you’re not insurance, but this stuff all kind of ties together. It used to kind of have that, you’d go in and sit down with somebody. You’d go to the bank, I need a loan for my business or I want to open a checking account.
So that personal relationship is shifting to digital. So kind of how are you seeing that human to digital shift and how are these banks really making this work, especially the ones that we talked about that are maybe a little slow and lagging? What are you thinking and what do they need to do?
Dr. Betty Moon: That’s a great question, Daniel, and it’s a big question. I mean, there’s a lot to unpack in that question.
Daniel Newman: It’s like five questions.
Dr. Betty Moon: It’s like five questions. I think the thing that I believe truly is that when it comes to making big decisions about money, people are always going to benefit from having a conversation with somebody who can help them. I still believe that it’s an emotional thing when you’re talking about money. And so, I don’t think bankers and banks and financial advisors are ever going to go away. But I do think that the way people want to access that information and access smart advice is going to change, and it’s already changing. And the key to making that happen, if you’re a banker and you’re listening and you’re going, yeah, I know that but what do we do about it, the key is you have to use your data differently.
Banks are drowning in data. They have so much information about all of us. They know where we shop, they know what we buy, they know everything about us. They know how we invest our money. But they don’t use that data as well as they could. And that’s where the problem’s happening. And yet bankers know it. They know that if they use and invest in data analysis tools, the vast majority say that it helps them be more profitable, it helps them better engage with their employees. It helps them do better with their own employees by teaching them how to use data differently. But the problem is you have to have a strong data strategy that involves both the right tools and the right employee development so that all the data you have can be leveraged to really personalize what you’re talking to your customers about.
Because think about it, Daniel, you want your bank to know who you are, right? You want your bank to be able to recommend products that are going to help you and really do right by you. But the problem is banks don’t even know who their most profitable customers are. So how are they going to recommend a product to that person? How are they going to help Daniel if they don’t really know what Daniel wants? And the only way to know what Daniel wants and needs is to use the data that they have about Daniel in some new ways.
Daniel Newman: Absolutely. And I would say there’s varying levels of that, Betty. There’s the levels, some of these more tech driven banks that have invested huge in customer data platforms and CRM intelligence and business intelligence are getting closer and more granular understanding lifetime customer value. Being able to identify trends based upon deposit growth of customers moving into different wealth classes that may deserve more attention. There’s other things too that I would say, and it’s not more better attention, it’s just different. When you hit different financial parts of your life, you need different things. And so the banks need to give you that different attention as an option.
And of course, as we know, there’s this whole rising generation of Robinhood and e-traders, that don’t really want to engage much with an investment professional, at least they don’t think they do. After you maybe make a few really big losing trades, you’re like, hey, maybe I should talk to someone, or at least maybe I should talk to somebody about some of the investing I’m doing. I’ve been there. And the point though is it’s balanced too, because personalization, it’s all about identity management, it’s about understanding that customer. It’s about being able to take intra data and extra data from what you can grab obviously within your systems and data, outside of your systems through social channels, digital channels.
I write on Forbes and MarketWatch. A bank could actually find all my articles and learn a little bit about me. They’re not going to necessarily have a banker reading what I write, but using machine learning and AI, they can say, oh, this person has a fairly sophisticated IQ about financial markets. He writes for a market investors channel. We probably shouldn’t be offering him like free checking., we should be talking to him about derivative products. I mean, being able to get things right. And you don’t see much of that, because I can tell you, I actually work, my main bank is one of those banks you named early on, and they’re nice, they’re great. I grew up with one of the banks they had acquired, we went to high school together. So it ended up becoming my bank because it was just a family bank all the way up until it became PNC.
Long story short, you make a lot of great points there, which brings me to my last question, which you heard me mention platforms and you heard me mentioned systems. So all the stuff you’re saying really takes kind of a whole change in thinking. Maybe it’s a platform thinking, maybe it’s systems thinking. Explain that a little bit because I think in order to get to where we just said, that level of personalization, that level of granularity, you need to have a very systematic approach to transforming your business. And how should banks think about that, and how is this important to the banks and maybe any guidance that you can give?
Dr. Betty Moon: I love doing research, it’s a big part of my job. And I know you like research too because you write a lot and you do a lot of research to write those great books. But I think that, a recent research report that we did with was with Oxford economics. And Oxford told us a lot that we kind of knew but really reinforced that bank executives know that they need to invest in new technologies and they need to bring it all together. But they just still aren’t doing it. Only 35% of banking executives say that their organization has actually invested in these technologies that can bring all the data together to give them real insight.
And systems thinking, yeah, it’s a fancy term, but let me break it down. So, I love to travel. And a couple of years ago, my husband and I went to Germany, and we visited Marksburg Castle. So, think about that castle sitting up on the tall hill that we went to. It’s a beautiful castle because it never got destroyed in the wars. All the chambers were still intact. The wine cellar, the horse stables, the armory, everything was still there. Think about all the things that have to happen in that castle to keep it running back in the 13th century. Everything had to run smoothly, and they had this moat around it to protect it from the onslaught of their enemies. All of those things had to work together seamlessly. That’s systems thinking. If you think about it, it’s making everything work together seamlessly.
Now you translate that to banking, for example. In banking, you have different departments, right? You have sales and finance and branches and wealth management and small business and HR. You have to layer in that all of those different departments have different priorities and revenue targets and customer experience metrics. They have to bring all of that complexity together and then keep in mind that at the same time there, they’ve got bad guys now today that are trying to get across their moat, across their firewall and invade their castle.
So, this is a really important thing for bankers to think through, in that, how do you integrate all these components into a cohesive system that can work more quickly so they can adapt faster to change like the ones we’ve been seeing over the past eight months? They have to break down their silos because systems thinking can bring real benefits to a company. It can make them much more profitable, it can make their customers a lot happier, and it can make their employees stick around a lot longer when they are more engaged as well.
Daniel Newman: Yeah, you makes so many great points and yes, guilty, I do like doing research. The Oxford Economics Study was fascinating to read.
Dr. Betty Moon: Wasn’t it?
Daniel Newman: Yeah, it really was. I like anything that sort of takes these two converging forces of people and technology. I often find that technologists want to solve all the problems with technology and people, and very much leaders tend to think you can fix everything with better leadership. And what I would say is the data actually generally says the culture will drive the adoption. And so if you get the culture right, you’ll drive the adoption.
When you have businesses that have historically made money one way, been very successful, often, they’re very slow or they’re very challenged with the idea of change. So that comfort with change, I have a slide in one of my presentations, I think you’ll appreciate this. It says that basically chaos is normal, the normalcy of chaos. And I can’t remember, it’s not the exact thing, but basically it’s creating an environment where people become comfortable in a state of chaos, and actually, the best thing a business can have because the speed of transformation and change is chaotic. CEOs 50 years ago, big change was maybe five and 10 year, there was five and 10 years, especially in tech, between disruptive technology changes. It can be days now sometimes, it’s days and weeks, where something can come out that can completely upend.
It’s often more additive too, Betty. It’s not like it’s just, we’re just changing over from, it’s not like we’re going cloud to hybrid and that meant like a complete new thing. It was and. You’re going to be using cloud and you’re going to be using prem, and you’re hearing more and more, oh, now there’s containers. You know what I mean? So all these things are additive. And being in an organization that can flourish in a state of chaos allows for that sort of additive rapid change to happen well.
I do think you can almost walk into any business, and I’d love to get your take on this before we wrap up, is you can walk into almost any business, and immediately when you talk to a few people, you just get a sense of probably how well they’re changing and transforming just by the people’s demeanors. I mean, with the exception of their most extraordinary offer on days, you can sort of just talk to five or six people and you’re like, oh, this place is probably doing really well. I can just sense the energy, I can sense the positivity, I can see the enthusiasm. As opposed to there’s just no life in their eyes. This place must be just sucking them dry. Do you see that much? And I know you’re a data person and a researcher.
Dr. Betty Moon: But you know, I was a banker for a lot longer before I joined the technology world. So, I do see it. And I think that banking is doing a better job than they had in the past. And I think a lot of companies are changing and they’re recognizing, you mentioned culture, they’re recognizing that the culture of their organization is key to the success that they’re going to have in the future. Compared to other companies in that survey we were talking about with Oxford, banks showed up pretty well because they’re making good strides with their culture. They are really taking seriously things like sustainability and social justice. And I think a lot of bankers in the leader groups in that study have really made strong efforts to take that very seriously because their employees care about it and their customers care about it.
And you see it with social investing now too. I mean, that’s a whole nother conversation we could have. Everything is changing around the cultures of organizations, and banks are competing for talent today. So they have to take the culture seriously if they’re going to attract and keep good talented employees that are going to take good care of their customers. You can’t have good customer experiences if your employees aren’t happy, if they’re not having a good experience at work. And banks need to continue to ensure that everybody in their system is engaged.
Daniel Newman: Yeah, absolutely. It’s been really nice talking to you, I really appreciate this conversation. Dr. Betty Moon, everyone. Great opportunity to learn from someone that’s not only spent a whole career worth of time in banking, but also kept learning, kept studying, became a doctor in business and now also is in tech. I mean, what a transition and transformation. I’ve really enjoyed this conversation very much.
Let me ask you this, I know you said you’re social and you like to stay engaged, where can people connect with you and keep in touch?
Dr. Betty Moon: Thank you, Daniel. Yes, I would love to stay in touch. If you enjoyed this conversation, please follow me on LinkedIn. I’m the only Dr. Betty Moon on LinkedIn, so it’s easy to find me. And you can follow me on Twitter as well, Dr. Betty Moon there as well. I’d love to hear your thoughts and stay engaged with your audience, Daniel.
Daniel Newman: I love that. We’ve done a lot of these, you heard me mention of these podcasts. I love that you want to stay connected socially. I mean, everyone out there, a lot to learn from every one of these guests. This has been a tremendous series of podcasts, and this one was another great one. So Betty, I’m going to let you go now, and I want to say thank you so much for joining me today.
Dr. Betty Moon: Thank you, Daniel. It was a great time with you, I really enjoyed meeting you today.
Daniel Newman: Absolutely. So for everyone out there that tuned in, you heard Dr. Betty Moon. Check her LinkedIn profile or follow her on Twitter. I’m going to do that. Also, go ahead and hit subscribe to the Futurum Tech Podcast. We have tons of great interviews and other shows. Executives from across the industry, tech. We are going to keep you flushed with knowledge and all kinds of other research and reports you can get on our site.
Also, you heard me talk about that Oxford Economics Study. I will go ahead and throw that into the show notes. Click there. This is also free and it is a wealth of knowledge and information and it’s an interesting read. I promise you, I wouldn’t tell you if it wasn’t. But for this episode of the Futurum Tech Podcast interview series, I want to thank our partners at SAP for making this happen, and I want to encourage you to tune in and stick with us for all these episodes. But for now, I got to go. I’ll see you later. Bye bye.