Dear SAP Banking Community members.
Weeks ago I had a conversation with some colleagues about the necessity of building a Planning System for Retail Banking capable of optimizing the consumption of the two main resources of a Financial Institution (Capital and Liquidity).
During the conversation there were some difficulties on understanding the market requirement for a system like that. I remember especially some questions about how to identify the person in a Bank who performs the activity of Capital Management.
And probably that’s the main issue; in many industries, especially after the 70’s oil crisis there’s been a growing concern about efficiency, and IT investments have gone on that direction. As a consequence of the Oil crisis Supply Chain Management emerged as a driver on IT investments during the 80’s and 90’s.
By the way, I was involved in one of the first implementations of the SAP-APO Solution for Supply Chain Management in Europe 10 years ago, and I remember when an executive of the client told me what the main reason was for them to implement APO. During the oil crisis the company suffered so much the rising cost of their resources that several of their European affiliates faced a high risk of bankruptcy. That’s why they developed a very sophisticated planning system on their AS400, and beginning of 2000 decade, as SAP released its APO system, they decided to implement it.
On the other hand, if we look at the traditional definition of performance/efficiency in the Financial System, and please forgive me for the oversimplification, it goes around the ROI, profit, etc. And consequently the bonuses of the Bank’s executives have been determined by this definition of performance. If the main resources of a Bank are Solvency and Liquidity, why the efficient management of those resources is not a critical activity?
Or more exactly, it is not or it was not?
Let me recommend you to have a look to the following post of Bloomberg.
http://www.bloomberg.com/news/2010-12-16/basel-regulators-give-details-of-bank-capital-liquidity-rules.html
According to it, “Basel Would Have Left Banks With $797 Billion Capital Shortfall”.
In my opinion, as the APO client learned on the Oil crisis that efficient management of resources is the key to survival in a difficult environment, Bank’s executives are going to learn very soon that efficient management of Capital and Liquidity is the most critical activity.
Two more posts describing what it comes
http://roubini.com/us-monitor/260229/going_bankrupt__100_bailed_out_bankshttp://online.wsj.com/article/SB10001424052970203568004576044014219791114.html?mod=rss_whats_news_us_business&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7014+%28WSJ.com%3A+US+Business%29
Kindest regards and my best wishes for 2011, challenging but full of opportunities.
Ferran.
Weeks ago I had a conversation with some colleagues about the necessity of building a Planning System for Retail Banking capable of optimizing the consumption of the two main resources of a Financial Institution (Capital and Liquidity).
During the conversation there were some difficulties on understanding the market requirement for a system like that. I remember especially some questions about how to identify the person in a Bank who performs the activity of Capital Management.
And probably that’s the main issue; in many industries, especially after the 70’s oil crisis there’s been a growing concern about efficiency, and IT investments have gone on that direction. As a consequence of the Oil crisis Supply Chain Management emerged as a driver on IT investments during the 80’s and 90’s.
By the way, I was involved in one of the first implementations of the SAP-APO Solution for Supply Chain Management in Europe 10 years ago, and I remember when an executive of the client told me what the main reason was for them to implement APO. During the oil crisis the company suffered so much the rising cost of their resources that several of their European affiliates faced a high risk of bankruptcy. That’s why they developed a very sophisticated planning system on their AS400, and beginning of 2000 decade, as SAP released its APO system, they decided to implement it.
On the other hand, if we look at the traditional definition of performance/efficiency in the Financial System, and please forgive me for the oversimplification, it goes around the ROI, profit, etc. And consequently the bonuses of the Bank’s executives have been determined by this definition of performance. If the main resources of a Bank are Solvency and Liquidity, why the efficient management of those resources is not a critical activity?
Or more exactly, it is not or it was not?
Let me recommend you to have a look to the following post of Bloomberg.
http://www.bloomberg.com/news/2010-12-16/basel-regulators-give-details-of-bank-capital-liquidity-rules.html
According to it, “Basel Would Have Left Banks With $797 Billion Capital Shortfall”.
In my opinion, as the APO client learned on the Oil crisis that efficient management of resources is the key to survival in a difficult environment, Bank’s executives are going to learn very soon that efficient management of Capital and Liquidity is the most critical activity.
Two more posts describing what it comes
http://roubini.com/us-monitor/260229/going_bankrupt__100_bailed_out_bankshttp://online.wsj.com/article/SB10001424052970203568004576044014219791114.html?mod=rss_whats_news_us_business&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7014+%28WSJ.com%3A+US+Business%29
Kindest regards and my best wishes for 2011, challenging but full of opportunities.
Ferran.
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