Is SAP Ready for the Financial Services Industry After All?

Yesterday, SAP announced that it had secured a deal with HSBC for the implementation of the NetWeaver platform. The focus will be to standardise and automate the bank's communications for the delivery of banking services to its corporate banking clients, as well as to enable customers to gain easier access to their banking information. This follows on from the deal won with Nationwide Building Society in March this year, which chose SAP’s Banking platform for banking, savings, mortgage and customer service systems.

I have to admit I was skeptical as to whether SAP would make progress in the banking industry so soon, particularly in the light of the financial turmoil that has cast a shadow over the industry as well as the economy on the whole. However, SAP’s increased investment in its solutions and vertical expertise seems to be paying off! Although IT spend in the banking business is expected to further slow down in 2009, and will inevitably delay new potential deals overall.

The vendor is managing to successfully raise its profile in the industry through signing deals in the non-core parts of the business with large multi-national banks (e.g. Lloyds TSB implemented SAP SRM and Bank of America chose SAP ERP), while participating in industry networks to encourage banking standards and the adoption of new technologies like SOA to push its image in the core banking space.

With two major deals secured in the UK banking sector in 2008 so far, this will add more credibility to SAP’s capabilities and portfolio in the core banking arena. However, it is still early days and we are yet to see the outcome of these projects. No doubt SAP will encounter some challenges - the back-office bank processes and IT landscape on the whole is very complex and unique compared to the back-office of other vertical organisations that SAP is perhaps more exposed to.

Additionally, while disruption can sometimes breed opportunity; if conditions were to worsen in the financial markets, decision making related to further large IT investments could be pushed 9-12 months as companies focus on just keeping the lights on. Let's all hope that's not the case!