Dear,
The traditional shape of the Financial System is being challenged by two drivers; capital scarcity and new business models facilitated by the technology revolution.
We saw last week how Banking fees are an example of the transformation from both perspectives; regulation and new competitors with alternative value propositions.
But the question remains, what are the traditional banks alternatives in the new scenario?
For answering the question we must remember that in the new environment capital is scarce, and whatever action we take it must be aligned with the principle of efficient capital management.
When banks executives plan to generate profits by providing a service to their customers, they must weight them with the cost of the allocated resources. Consequently, determining accurately service costs becomes a priority.
I mentioned last week, that SAP can offer best of breed functionalities for analyzing and tracking banking services costs; this is the basis for calculating the margin of the service, expected profits and return on the allocated capital.
In a financial contract, like a customer account, multiple services are provided, by internal and external service providers. Let’s have a look to some of them and the costs involved.
- Maintenance of the customer account provided by the customer account manager, or other Human Resources, supported by processes and technology.
- Withdrawal of cash in an ATM machine (from the bank or a third party bank). This means that the bank will support maintenance costs of its ATM machine or fees from another bank.
- Overdrawn facility, meaning that the bank has to allocate capital and liquidity for fulfilling the service.
Let’s have a look at the tools provided by SAP Banking for managing these scenarios.
Cost of processes.- We have several typologies that must be analyzed with different approaches.
Human resources costs can be direct like the bonus of the account manager, or indirect like call center manpower. In both cases the Management Accounting modules of SAP ECC, including Cost Center Accounting, Activity Based Costing will support the determination of the costs and consequently margins and profitability.
Assets amortization, including hardware, software, buildings, can be accurately calculated with ECC modules like Assets Accounting, and the ECC Controlling modules.
Data extracted from the calculations above will support the estimation of a tariff based standard cost that we can include in Bank Analyzer for determining process costs on contract level.
Fees cost from another bank can be posted directly on contract level (if provided by the billing interface with the third party). Additionally the withdrawal could happen in foreign currency, triggering P&L effects due to forex fluctuations between the withdrawal posting date and the clearing date with the third party bank. The whole construction is supported by Bank Analyzer AFI and Profit Analyzer.
Capital and funding costs (including impairment costs) related to the overdrawn facility are fully supported by the AFI and Profit Analyzer modules of Bank Analyzer.
All the above is just a brief description of the functionalities provided by SAP Banking, real scenarios are more challenging and interesting.
Looking forward to read your opinions.
K. Regards,
Ferran.
No comments:
Post a Comment