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Exploring the Cutting Edge in Machine Learning for Banking and Insurance

Feature Article | March 23, 2017 by Jeanette Rohr

In financial services, the near future will see a shift in power toward the customer. That was the general consensus among SAP and the bankers and insurers participating in the first SAP Next-Gen Boot Camp on Machine Learning in Financial Services, held at the SAP Innovation Center Potsdam last week.

Forty-six SAP customers from banking and insurance gathered to discuss the current and future challenges these sectors face, as well as to gain hands-on experience as to how machine learning can help master them.

Machine learning and artificial intelligence provide unheard-of opportunities to banks and insurers to gain actionable insights from the large amounts of data they are dealing with on a daily basis. Banking is currently experiencing the need to accommodate the wishes of a generation who expects to have “a bank on their phone” (Stephen Lofthouse, University College London), a development that FinTech startups have caught on to much faster. The insurance industry faces the challenge of moving from loss compensation to loss prevention. Both industries are being challenged to rethink the customer experience to prevent customer churn and must look to machine learning to provide personalized service to customers.

“To address our customers’ needs, we joined forces with SAP Next-Gen due to its unique approach to connect SAP customers with partners, startups, research, and academia as well as experts from the SAP side,” said Birgit Fien-Schmalzbauer, global head of Innovation, Insurance at SAP, and a fan of the SAP Next-Gen approach to combine resources with the goal to collaborate and ultimately co-innovate.


SAP Next-Gen is an innovation platform for the more than 345,000 SAP customers across 25 industries in 190 countries. The platform leverages more than 3,100 educational institutions in 110 countries in the SAP University Alliances network, as well as more than 100 innovation and development centers, and startups in the SAP ecosystem. The platform:

  • Drives innovation with purpose linked to the UN Global Goals, through the global SAP Next-Gen Labs network of companies, academic thought leaders and researchers, students, startups, accelerators, venture firms, and other partners.
  • Enables companies to crowdsource together with academia; seed in disruptive innovation from startups; and connect with SAP experts, partners, and venture firms.
  • Supports SAP’s commitment to the 17 Sustainable Development Goals defined by the UN, through the SAP Next-Gen Global Challenges, a platform where everyone can contribute solutions for the Global Goals.

Powered by SAP Next-Gen, the bootcamp event brought together SAP and customer expertise, as well as research insights from the Hasso Plattner Institute, Portsmouth Business School, University College London, and University of Leipzig. Through design thinking workshops, participants were given the opportunity to develop new use cases for banking and insurance leveraging machine learning.

Introducing SAP Clea

With the introduction of SAP Clea, SAP embeds machine learning intelligence into applications and SAP Cloud Platform to help customers develop the intelligent enterprise. Developed within the SAP Innovation Center Network, SAP Clea offers customers the possibility to discover unprecedented insights and automate routine tasks so that employees can focus on higher-value work.

“Considering the demographic changes, fewer employees will have to fulfill more and more tasks in the future,” Udo Patzelt, division manager for product and release management at AOK Systems, commented. “We see a great potential in machine learning to either handle business transactions fully automatized or support our consultants by making suggestions for the next best action.”

During breakout sessions, the participants familiarized themselves with the solutions SAP Clea offers to address their needs to improve efficiency and increase customer satisfaction. With SAP Clea for Customer Retention Insights, participants were given the opportunity to evaluate an SAP product that was developed in co-innovation together with a bank, and is targeted especially at the banking and insurance sectors. SAP Clea for Customer Retention Insights doesn’t stop at predicting customer churn, but also provides recommendations as to how to prevent customers from leaving.

Network Thinking: Competition Was Yesterday

Petra Hubalek from Allianz SE pointed out the huge value added to the bootcamp from the simple fact that so many high-profile SAP customers from the same branches were assembled in the same room for two straight days. “It was interesting to get into contact with other insurance companies, to see how they progressed so far,” Hubalek said.  “Unsurprisingly, everybody in the industry is facing the same issues at the moment. It would be good to drive the topic together and exchange further information.”

This idea certainly resonated with most of the bootcamp participants. Professor Uli Weinberg from the Hasso Plattner Institute’s School of Design Thinking introduced the differentiation between what he calls “IQ and WeQ.” According to him, networks (WeQ), not competition (IQ), will be key to humans mastering this new era with machines potentially outsmarting them in all areas of knowledge work. Hoarding one’s own intelligence for fear of being thwarted by competitors will be substituted by what Weinberg calls “network thinking.”

A world shaped by digital interconnection will need a concept that features openness and community thinking to inspire creativity and innovation. “It’s important that we lay greater stress on the human needs and values as compared to technical feasibility or viability,” Weinberg said.

The Future of Customer Relationship Management: From Payer to Partner

This shift in paradigm plays a huge role in how relationships between SAP and its customers will develop in the near future, but also for relationships between insurance companies and and their own customers. “From an insurers perspective, we can expect a shift in the relationship from a payer to a partner,” predicted Karsten Fiolka, Director Machine Learning for SAP Financial Service Industries.

Indeed, there are few industries where human values, such as trust, matter so much as for the banking and insurance sectors. To drive innovation with a purpose, SAP Next-Gen is bringing together banks and insurers with the goal of building a community and enabling exchange within an open network that connects customers, SAP experts, partners, academic thought leaders, and startups.

Or as Weinberg puts it, “IQ grows into WeQ, not the other way around.”

SAP Next-Gen Machine Learning Bootcamp is part of a series of bootcamps and other events for financial services taking place throughout 2017. Register here for the upcoming SAP Next-Gen Bootcamp on Blockchain for Financial Services and Public Sector.

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