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Issue 9, September 2006

SAP INFO Solutions

continued from page 4

Banking Advisory
able to highlight the achievements. Banks
and partners interested in learning more
about the Network will be able to participate in local info sessions. The next steps
will include an opening of the Network to
further enhance the community, continue
working on the various topics, and to further drive standardization.
SAPs role in the Network is to supply
solution expertise and to help banks agree
on service definitions and other enterprise
SOA-oriented issues. The effort is an example of how SAP relies on collaborative, industry-wide input as refines enterprise
SOA, the SAP blueprint for a business-driven approach to SOA.

Basel II still causing

headaches in the
banking industry
Many major international banks
still face significant challenges in
preparing for Basel II, according to a
global study conducted by Accenture,
Mercer Oliver Wyman, and SAP. Banks
across the world are concerned about
the total expenditure involved and
share a lack of confidence in their existing systems for risk management and
economic capital. Compared to their
European counterparts, banks in the
USA and Asia are trailing behind when
it comes to their Basel II preparations.
Almost 60% of the institutions surveyed were planning to implement new
solutions to meet operational risk requirements. To keep costs down, over
half of the banks in the study said they
were going to develop solutions internally, or to simply modify their existing solutions. For 63% of banks, centralizing
data storage is a top priority. Thomas
Balgheim, senior vice president, financial services, SAP AG, says that banks
see this as a way to increase their
chances of completing a project successfully and potentially reducing costs.
Further information:

SAP transactional banking applications
To meet increased competition from both existing and new entrants targeting specific market segments, banks must become more innovative. In retail banking,
product innovation has traditionally been poor: A savings account or a fixed deposit account looks much as it did 20 years ago. To compete in price and keep their
profitability, banks must become more efficient and innovative in their processes,
doing the same things smarter and faster.
Banks have recently concentrated
their efforts on increasing the availability of their services that is, innovation
through new channels such as the Internet
or phone banking. An Internet bank today
is much more than a pure transaction interface; automatic investment advisory has
become common. The level of sophistication is different between different countries, but within a country, most banks offer Internet channels with comparable
Innovation in product development is
no longer a matter of developing a new
type of savings account with a particular
way of calculating interest, but combining
a set of products into a package. It can be
a combination of a mortgage loan and repayment insurance or a credit card bundled with a current account.
The handling of these packages poses
a set of challenges for many banks, challenges in the administration, charging,
and flexibility of the package. For example, what happens if the customer cancels
one component of the package or wants
to extend the existing package with an additional product? The current IT landscape of most banks increases the complexity, since the different components are
managed in different product silos, with
limited possibilities to handle whole
product packages.
SAP Deposits Management
With its latest release, SAP Deposits Management offers unique handling of product
bundles. A bank can combine a number of
accounts into a contract bundle which is
managed by a master account to which a
number of functionalities can be attached,
such as payment distribution or pricing.
It also supports automated cross-account processes, such as overdraft protection. Overdraft protection allows a customer to define a second account from
which to withdraw money whenever the
current account is at risk of an overdraft.

Through its open architecture, based on

SAP NetWeaver and SAPs Enterprise Services Oriented Architecture (Enterprise
SOA), its also possible to include accounts
managed in legacy systems in the bundle,
solving the problem of cross-system interfacing.
Another area of innovation is salesprocess efficiency. The ability to respond
rapidly to a customer request and turn it into business has become increasingly important. This is accomplished by enabling
the sales channels with a highly efficient
and automated sales system.
The SAP Account Origination module
integrates mySAP CRM sales processes
with SAP Loans Management to enable a
streamlined, fully integrated origination
process with the back-office systems. With
data entered only once and enriched
through the process, its possible to follow
a loan contract from an initiating sales
campaign, through a set of offers, to contract closure.
A final area of process innovation is in
the back office. A large amount of banking
work takes place in the back office, handling such standard activities as when a
customer has overdrawn an account or a
payment has disappeared somewhere between two banks. Most existing core banking solutions have a limited level of support in this area; they produce only a daily
printed report for manual work.
The SAP transactional banking solutions automate these processes through
rule-based processing, which can respond
according to external parameters, allowing
for different service levels depending on
customer segment.
Overall, SAP transactional banking applications offer an open architecture for
banks that want to become more innovative through both products and processes
to meet and beat the competition.
Ralph Baumgrtner and
Jesper Behr, SAP AG