How SMBC Group became a leader in transformation and digital perseverance

Man and woman working at a computer together


By Ahmed Mazhari, President, Microsoft Asia

Few industries are changing faster than finance. Technology has revolutionized banking and created a new field of fintech players and digital challengers – so traditional banks are digitally transforming to become more efficient and better serve their customers.

Sumitomo Mitsui Banking Corporation (SMBC) Group is one of Japan’s biggest and oldest commercial banks, with operations in over 40 countries, and is a great example of how a traditional bank can become an innovation leader.

SMBC is accelerating its transformation efforts to develop innovative products and services, which will not only benefit its customers in Japan and beyond, but also the industry at large. To achieve these aspirations, SMBC has become the first major Japanese bank to enter a multi-year strategic cloud alliance with Microsoft as its strategic cloud provider and digital transformation partner. I had the privilege to speak with Katsunori Tanizaki, the Senior Managing Executive Officer and Group Chief Digital Innovation Officer of SMBC as part of the latest episode of my Q&Ahmed series, to find out more about the Group’s ambitions.

As Mr Tanizaki told me: “SMBC Group aims to modernize its IT infrastructure to upskill people, transform culture and ultimately provide outstanding experiences for its customers and employees to grow our business globally.”

Enabled by the cloud, its ambition is to become a world-leading digital bank and the largest B2B Embedded Finance solution provider in Asia – all while pursuing its longstanding commitment to sustainability and green finance for future generations.

SMBC Group’s digital strategy and partnership with Microsoft

Much like Microsoft, SMBC Group is an organization that thrives on partnership. Its digital strategy is based on its desire to help its customers grow and achieve their business outcomes. SMBC Group’s digital transformation will enable the creation of diverse innovative services for its customers around the world through a global network of 149 overseas sites. Microsoft’s trusted and comprehensive cloud platform plays a pivotal role in streamlining the Group’s existing work processes and creating new business models.

A key innovation driven by this partnership is Embedded Finance, which involves the integration of consumer and corporate businesses by establishing B2B2C platforms. Embedded finance enables non-banking platforms to seamlessly integrate financial tools using customized ‘plug in and play’ stacks, which help them lower costs, deliver a personalized customer experience and drive new revenue models. For example, to tackle supply chain issues, SMBC Group launched a cloud-based digital supply chain finance solution in Asia to process customers’ financial requests within minutes, and adopted a cloud-based AI engine to digitize trade finance processing to cater to the increasing customer demand for cross-border trade.

“Our corporate customers are accelerating their digitization of supply chains to tackle the complexity of global supply chain operations. This drives the clear expectation to banks like us to provide the paperless and the real time transactions by seamless connectivity with their systems,” Mr. Tanizaki said.

SMBC Group is also providing digital tools to its customers to make their financial operations more efficient. This includes things such as the digitization of the office of the CFO, providing data analytics dashboards of KPIs such as cash conversion cycle and FX exposure using Power BI, and invoice processing and payment automation tools.

How digital transformation supports environmental goals

One of the greatest benefits of SMBC Group’s digital transformation journey is the additional support its customers are receiving in achieving their sustainability goals.

SMBC Group is providing digital tools to customers to eliminate the burden of acquiring data to analyze and visualize emissions trends, and to provide actionable insights to reduce their emissions. The Group also launched its own cloud-based solution named Sustana to help its corporate clients, and co-developed a project finance platform to support the rapid expansion of smaller renewable projects in Asia. SMBC Group continues to co-innovate green digital solutions together with Microsoft to advance sustainable growth and its customers’ progress against their environmental commitments.

“As a leading bank in sustainable finance, it’s our responsibility to help our customers in energy transition, utilizing digital technologies such as grid optimization and energy market management. I am encouraging my team to think big to innovate a green diesel solution together with Microsoft to advance sustainable growth and our customers’ progress against their commitments,” Mr. Tanizaki said.

Empowering talent and building culture

Digital transformation is as much about changing mindsets and culture as it is about technology. And culture is something that the SMBC Group has been tackling head-on.

The Group has established a global scale partnership ecosystem, creating co-innovation facilities in Japan, Singapore, and the US. It has also launched a series of new intrapreneurial ventures to drive non-financial digital solutions, assigning young talents as CEOs of those companies to ensure they feel empowered to make an impact. Mr. Tanizaki told me he had personally approved more than 20 internal projects within SMBC over the last two years.

“We are trying various avenues, both online and offline, to accelerate mindset and cultural transformation,” he said.

SMBC Group is also running an in-house Digital University to reskill and upskill its employees online – something Microsoft whole-heartedly endorses, as we continue on our mission to upskill communities around the world to take on opportunities in the digital economy.

 Key takeaways for leaders navigating unprecedented change 

We’re proud to partner with an organization like SMBC Group, which not only shares many of Microsoft’s core values but fundamentally understands that technological change doesn’t happen without cultural change as well.

It was illuminating to speak with Mr. Tanizaki, who clearly understands the power of technology in enabling transformation and digital perseverance, and has sound advice to share with leaders in the financial services industry.

Beyond the idea of digital transformation, ‘digital perseverance’ is an ongoing journey for organizations, and it’s what enables them to navigate uncertainty by not just having the right tech in place, but the capability to harness its full potential so they can do more with less. This is the journey SMBC is on.

“As leaders, we need to navigate the business through unprecedented changes in the geopolitical environment and the business environment. We cannot account for every scenario, but we should be prepared to adapt to sudden change,” said Mr. Tanizaki.

Ultimately, Mr. Tanizaki recommends that businesses should always think from a customer-first point of view, and this is something that we will continue to prioritize as part of SMBC Group and Microsoft’s ongoing partnership.

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