Dear,
We all know that SAP Banking is about integration, and most likely you have seen and read that main advantages of integration are lower Total Cost of Ownership, improved Data Management and Governance, Best Practices in Process Management, etc.
All the above is true and all those facts have made SAP the market leader in Enterprise Management Software for the last 40 years.
On the other hand, an SAP Banking implementation is a huge investment, an investment which is going to determine the strategy of the organization for decades.
If I was the President of a Bank and had to take a decision like this, I would expect to hear stronger, non trivial arguments, which helped me to take the decision.
We’re crossing a systemic crisis which is driving the Financial System from a business model based in volume to a business model based in efficient Capital Management. For taking a strategic decision I expect strategic arguments, if the Financial System is in the middle of a systemic change, I want to know that my decision will position my bank into the new model.
If the answer is Capital Optimization, the question should be what SAP Banking will offer me to drive my Bank towards the new paradigm?
Capital Optimization is not just about Portfolio Management, it’s embedded in the Bank’s business processes, from the Account Origination till the Corporate decisions.
Let me give you an example.
Tracking the consumption of a critical resource is the main priority if we want to optimize it. Does SAP Banking help me to track the Capital Consumption on my Bank?
Capital Consumption does not start with accounting relevant transactions. For instance, the commitment of a Loan does not have any accounting impact (only disbursement has). But a committed, not disbursed loan represents a Free-Line which consumes capital.
A committed, non disbursed Loan starts in the Origination process, and the integration of Account Origination and Bank Analyzer is more than an interface; it’s a seamless integration based in common semantics. With this approach is easier to support bi-directional communications, and sometimes, they can be very useful.
I worked for a client sometime ago in an efficiency and business process analysis; during the assignment, we discovered that the branches did not reduce the free-line of non-fully disbursed loans, even when by contract the client was not allowed to further disbursements.
This means that the free-line did not exist anymore but that was not represented in the Information System. From the Bank’s perspective, that “virtual” free-line meant increasing wrongly the Capital Requirements of the Bank. As the free-line does not have accounting relevance, nobody noticed. Or more exactly, the Bank’s executives knew that it was happening, but they could not measure the impact and correct the problem. This is serious when Capital is the more scarce and critical resource for a Bank nowadays. Giving visibility to this type of shortcomings is what the integrated proposal of SAP Banking is about.
There’re other examples, and I hope we have the chance of discussing about them in the next weeks, but I promised to a friend that I was going to write about SAP Account Origination this week, so here you have it.
By the way, this is what the Fed said this week about Capital Planning.
http://ca.reuters.com/article/businessNews/idCABRE97I0S920130819
Capital Optimization is the answer to this Systemic Crisis, and the closer we're to the crash the more visible will be.
Looking forward to read your opinions.
Kindest Regards,
Ferran.
We all know that SAP Banking is about integration, and most likely you have seen and read that main advantages of integration are lower Total Cost of Ownership, improved Data Management and Governance, Best Practices in Process Management, etc.
All the above is true and all those facts have made SAP the market leader in Enterprise Management Software for the last 40 years.
On the other hand, an SAP Banking implementation is a huge investment, an investment which is going to determine the strategy of the organization for decades.
If I was the President of a Bank and had to take a decision like this, I would expect to hear stronger, non trivial arguments, which helped me to take the decision.
We’re crossing a systemic crisis which is driving the Financial System from a business model based in volume to a business model based in efficient Capital Management. For taking a strategic decision I expect strategic arguments, if the Financial System is in the middle of a systemic change, I want to know that my decision will position my bank into the new model.
If the answer is Capital Optimization, the question should be what SAP Banking will offer me to drive my Bank towards the new paradigm?
Capital Optimization is not just about Portfolio Management, it’s embedded in the Bank’s business processes, from the Account Origination till the Corporate decisions.
Let me give you an example.
Tracking the consumption of a critical resource is the main priority if we want to optimize it. Does SAP Banking help me to track the Capital Consumption on my Bank?
Capital Consumption does not start with accounting relevant transactions. For instance, the commitment of a Loan does not have any accounting impact (only disbursement has). But a committed, not disbursed loan represents a Free-Line which consumes capital.
A committed, non disbursed Loan starts in the Origination process, and the integration of Account Origination and Bank Analyzer is more than an interface; it’s a seamless integration based in common semantics. With this approach is easier to support bi-directional communications, and sometimes, they can be very useful.
I worked for a client sometime ago in an efficiency and business process analysis; during the assignment, we discovered that the branches did not reduce the free-line of non-fully disbursed loans, even when by contract the client was not allowed to further disbursements.
This means that the free-line did not exist anymore but that was not represented in the Information System. From the Bank’s perspective, that “virtual” free-line meant increasing wrongly the Capital Requirements of the Bank. As the free-line does not have accounting relevance, nobody noticed. Or more exactly, the Bank’s executives knew that it was happening, but they could not measure the impact and correct the problem. This is serious when Capital is the more scarce and critical resource for a Bank nowadays. Giving visibility to this type of shortcomings is what the integrated proposal of SAP Banking is about.
There’re other examples, and I hope we have the chance of discussing about them in the next weeks, but I promised to a friend that I was going to write about SAP Account Origination this week, so here you have it.
By the way, this is what the Fed said this week about Capital Planning.
http://ca.reuters.com/article/businessNews/idCABRE97I0S920130819
Capital Optimization is the answer to this Systemic Crisis, and the closer we're to the crash the more visible will be.
Looking forward to read your opinions.
Kindest Regards,
Ferran.
1 comment:
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