Dear,
Last week I talked to a friend who was one of the first Bank Analyzer consultants in Europe, but he moved to other businesses years ago.
He told me that SAP Banking has been just a hope for more than 10 years and he thinks that the situation is not different today.
I disagree; today we’re confronting a systemic crisis, forcing a much more stringent regulation, which is driving a profound change in the Financial System, from a business model based in Volume to a business model based in efficient Capital Management.
Today, and in the next years, SAP AG and the whole ecosystem of partners and consultants, have the opportunity to play a principal role in the systemic change,
During this month, we’ll see the strategy on the Assets Quality Review that the ECB is performing during 2014 in the European Banks.
There have been previous audits of the solvency of the European Banking System, giving guarantees on the solvency of the Irish, Spanish, British, German, Greek banks…, and we discovered some months later that they were severely under-capitalized and had to be bailed-out.
This time is going to be different, it has to be different; today financial authorities have the protocol for shutting-down a non viable bank that has been “successfully” tested in Cyprus. They have the book and they’re going to use it.
After that, we all will be aware of what Capital means, what the consequences of its scarcity are and why it has to be managed efficiently.
For the last 7 years the center of my interests have been Capital Optimization; a wide discipline with implications in every corner of the financial system. You can find some ideas here.
But the posts above are a very tiny description of the endeavor. From time to time I’m invited by some senior executives of Banks, (who have been reading my posts for a while, or know somebody who does) to share and exchange some ideas about Capital Optimization.
When I explained them that Capital Optimization is much more than Portfolio Management, and extend its implications to every activity, (from Loans Origination to Collateral Management, from Securitization to Payments Claim) requiring to be managed in a integrated model, they understand the size of the challenge and show their concerns about the feasibility of the objective.
I also understand the difficulties, but I’m also aware of the implications of avoiding the transformation.
For those of you, who think I’m wrong, please remember the words of Michel Barnier (Member of the European Commission responsible for the Internal Market and Services).
"We need a new deal between financial regulation and society. A deal in which financial services are back at the service of the real economy. And at the service of citizens. Citizens who are also taxpayers. Those same taxpayers who are paying the bill of bailing out the banks. Citizens and taxpayers who have lost all trust in the financial system. Who don’t believe it works for them. And who won't forgive us if we don’t learn all the lessons of the crisis. And change what needs to be changed in the financial sector.This must be the starting point of any "new deal" between the world of finance and society: restoring trust"
And now, tell me who can offer the technology infrastructure to put Capital at the center of the financial system, reflecting clearly the implications of the peripheral activities; from determining the Free Line of a non-fully disbursed loan in Banking Services, to reduce the rating of a counterpart, after an IRB estimation in the Historical Database of Bank Analyzer.
Explaining why SAP is the only software offering this holistic approach is the reason why I founded this community and the main objective of every post.
Looking forward to read your opinions.
K. Regards,
Ferran.
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