Bank Communication Management

7/17/2019 Bank Communication Management

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SAP Bank Communication Management

Overview and Strategy

Christian Mnich

Suite Solution ManagementBusiness Suite Technology Group

SAP AG



© SAP AG 2009. All rights reserved. / Page 2© SAP AG 2009. All rights reserved. / Page 2

1. Trends & Challenges2. Solution Offering

2.1. Introduction – Treasury Applications from SAP

2.2. SAP Bank Communication Management

2.3. SAP Integration Package for SWIFT3. Benefits & Summary

4. Wrap-up

Agenda



© SAP AG 2009. All rights reserved. / Page 3

Market Trends and Key Challenges in

Cash Management

Key Challenges

Increase cash flow transparency and

visibility of working capital across thewhole group

Managing counter party r isks

Ability to communicate with multiple

cash management banks through a

single channel

Gaining reliable and timely information

from business units

Standardize formats, technologies and

processes

Corporate Cash Managers need to reconcile cash flows across multiplebanks to determine the group’s cash position in short time

© SAP 2008 / Page 3

Market Trends

Global Financial Crisis and the

importance of transparency

Increasing centralization of Treasury and

managing cash on a global basis

Cost savings

Cash f low forecasting as an increasingly

important area for corporates

Regulations and standards, such as

Single Euro Payments Area (SEPA) or

ISO20022 payment formats




Multiple Formats & “Standards”

Corporate client Banks

Accounts

Payable

Accounts

Receivable

Treasury

Other

e-banking

Host to Host

Domestic

MT101 and SEPA CT

Edifact

IDOC

ISO20022

SAP

Integration

Package forSWIFT

SAP

NetWeaverPI




ChallengesCompliance, Security & Efficiency Issues

High Maintenance Costs For Communication Interfaces

Corporates typically deploy several different bank communication interfaces that each usevarious technologies and file formats

Over EUR 25,000 and more per year for each proprietary interface

Cumbersome Interfaces Hinder Compliance Efforts

Payment data is highly sensitive in nature and requires sophisticated security processes tomeet ever-increasing regulatory mandates

Process Inefficiencies

High levels of manual processing, productivity losses, excessive exception handling, and anoverall lack of transparency into payment flows

Missing straight-through processing and separate handling of payment orders or bank

statements for each bank



© SAP AG 2009. All rights reserved. / Page 6© SAP AG 2009. All rights reserved. / Page 6© SAP 2008 / Page 6

ChallengesIncreased Costs, Dependencies & Lack of Transparency

Cost of Working Capital

Errors in payment orders are identified too late

Certain level of liquidity must be kept on transaction accounts due to lack of information

Need for global visibility to cash

Security Issues

Security gaps during payment file transfer (authorization, signature, and encryption often notpart of the solution)

Dependency on House Banks

Proprietary interfaces create dependency on single bank due to cost of changing bankrelationship

During the financial crisis the Counterparty Risk Management becomes more important

Lack of Payment Transaction Transparency

Most proprietary interface applications cannot process incoming status messages from banks


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SEPA promise end-to-end interoperability.SAP is on both sides

New Message Standards… Based in UNIFI (ISO 20022) XML

Message standards available for complete end-to-end communication

Ordering Customer Beneficiary Customer

Ordering

Customer’s

Financial Institution

Beneficiary

Customer’s

Financial

Institution

XML

Payment initiation

&

FIN MT 101

XML Bulk payments & FIN Category 1 & 2

XML Cash management

&

FIN Category 9

R

E

P

O

R

T

I

NG

R

E

P

O

R

T

IN

G

I

N

I

T

I

A

TI

O

N

R E P O R T I N G

(I N T E R B A N K) P A Y M E N T S

XML Portfoli o

FIN Portfoli o



SEPA – Single Euro Payments AreaUpdate 2009

SEPA Credit Transfer is live in Europe since Jan 28th 2008, SEPA Direct Debit planned forQ4/2009

Volume for SEPA transactions currently pretty low – only about 4% of the total credittransfer volume

There is currently no official end date for national credit transfers and direct debit schemesofficially announced

SEPA is just a European initiative – more challenges to be expected in order to allign aglobal ISO20022 format

* Source ECB - http://www.ecb.int/paym/sepa/timeline/use/


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SEPA Package from SAP

SAP appreciates and supports the SEPA framework of the European Payment Council,

improving straight-through processing and allowing increased transparency into paymentflows

SAP’s Business Suite is already enabled to help customers to benefit from the new regulatory

A dedicated SEPA package for the SAP Business Suite is available since the end of 2007.

SAP’s SEPA Package is available for all SAP customers with maintenance contract free ofcharge (R/3 Enterprise onwards)

Support of new payment formats and instruments in SAP ERP XML enablement of the new standard European SEPA payment formats

SEPA Credit Transfer based on EPC Rulebook 3.2

SEPA Direct Debit based on EPC Rulebook 2.3.

Management of SEPA direct debit mandates Support of IBAN and BIC

SEPA Support of MT940 Bank Statements







4. Wrap-up

Agenda



Financial Excellence with

Treasury Applications from SAP

Treasury applications from SAP

SAP Treasury and Risk Management

Risk Analyzers

Transaction Manager

MoneyMarketMoneyMarket

ForeignExchangeForeign

ExchangeSecu-ritiesSecu-rities

Com-modities

Com-modities

Deri-vatives

Deri-vatives

DebtMgmtDebtMgmt

Manage Global

Financial Risks

Optimize Debt and

Investment Strategies

Manage Cash

and Liquidity

SAP Cash and Liquidity Management

Cash Management Liquidity Planning

Optimize Payments and

Bank Communication

SAP In-House Cash


Exposure Management Hedge Management

Credit Risk AnalyzerCredit Risk Analyzer Market Risk Analyzer Market Risk Analyzer Portfolio Analyzer Portfolio Analyzer



End-to-end integration of processes in Finance

Banks

CustomersSuppliers

Treasury

Physical Supply Chain

Credit2Cash

Financial Supply Chain

Invoice2Pay

Check

CrediteInvoice

Resolve

disputes

Collect

cash ApprovePayments

TransmitPayments

Monitor

Payments

Managecash

ManageRisk

Accounts Receivable Accounts Payable

ManageInvoices



What’s The Topic?Optimize Payments and Bank Communication

SAP In-House Cash

SAP In-House Cash is a solution for global operating companies to manage their

intra-group and external payment transactions more efficiently

The In-House Cash Center is a virtual bank set up at the group headquarter where

subsidiaries have current accounts

SAP In-House Cash allows companies to minimize the actual f low of cash and

therefore reduce the number of bank accounts and save bank fees


SAP Bank Communication Management enables customers to track the entirepayment life cycle, and significantly improve straight-through processing rates

and internal compliance

SAP Bank Communication Management enables corporate customers connecting

via SAP NetWeaver ® Process Integration to the SWIFT Net Interface

SAP Bank Communication Management includes SAP Integration Package for

SWIFT and is available since SAP ERP 6.0, Enhancement Package 2

Update

status

monitor

Initiate

payments

Batch &

Approve

payments

Process

Bank

Statements

Create

payment

media

Processing

by In-

House

Bank

Send

payment

media







4. Wrap-up

Agenda



Streamline Payments and Bank

Communications

Streamlined Payments andBank Communications

SAPERP Financials

ApprovalWorkflow

Improved CashTransparency

Open Interfaces

and Standards

StatusMonitoring

Compliance



Payment Solution provided by SAPNew since SAP ERP 6.0, Enhancement Package 2

Status Monitor

SAP ERP

GL

Payroll

Treasury

In house

cash

SAP

Integration

Package forSWIFT

AggregatePayments

Approval

WorkflowDigital

SignaturesTransmitPayment

Workflow

ReceiveStatusReport

PaymentMedium

Workbench

PaymentRun




B a n k

Situation without SAP Bank Communication

Management

ExecutePayment

Program

Create

Payment

Order

Import

Bank

Statement

Post/Processing

andClearing

Collect BankStatement

3rd PartySystem

SAP ERP

File

Server

Upload File

Security:

Author ization

Encryption

Digital Signature

Send Payment Orderto Bank

Security

Download

File



Process Flow with SAP Bank Communication

Management

ExecutePayment

Program

Create

Payment

Order

Import

Bank

Statement

Post/Processing

andClearing

SAP IntegrationPackage for SWIFT

SWIFT

All iance

Access /

Gateway

SAP NetWeaverProcess Integration

SAP BankCommunication

ManagementSAP ERP

Create Batch

Payment ApprovalWork List

Receive StatusMessages

Bank Statement

Routing

Mapping

Security

Encryption

Digital Signature

Resource Adapter

SWIFTNet

Security

(Approval Workflow,

Authorization, Digital

signature)



Features: Batching & Exception Handling

Batching of payments

Logical structuring of payment files

Flexible batching rules that can be enhanced

Automatic creation of unique identifiers

Exception handling

Visibility of errors in payment status monitor

Automatic generation of alert workflow items



Features: Compliance

Increased compliance

Multi-eye release procedures for paymentapprovals

Personal digital signatures for outgoing paymentsfor internal audit

Release of individual payments or entire batches

Flexible approval rules (low-value payments = only

one approver, for example) Approval, rejection, or resubmission of payments

Flexible sorting and structuring of approval worklist



Features: Integration to SWIFT and Banks

& Transparency

Integration to SWIFT and banks

Real-time integration with SWIFT via SAP Integration Package for SWIFT

Optional integration with banks with the adapters in SAP NetWeaver

Process Integration on a project basis

Increased payment-flow transparency

Payment status monitor with full status history

Processing of new ISO20022 payment status report and other status

messages (ACK/NACK) Drill-down to

documents and

master data

Display of generatedpayment formats



Enhancing SAP Bank Communication Management

with Central In-House Bank and Payment Factory

Corporate Client

Payments

Compliance

SWIFTNet

Subsidiary

Subsidiary

SAP

Bank

Communication

Management

SAP In-HouseCash

Accounts

Payable

AccountsReceivable

Treasury

SWIFTNet

Interface

HCM

SAP Integration Package for

SWIFT

SAP NetWeaver PI

SAP ERPSubsidiary



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Quick Facts –

SAP In-House Cash

SAP In-House Cash provides payment-related services

for a group of affiliated companies

Features

Central dispatching, routing, and processing ofpayments

Creation of account statements to account holders

Tracking of payment statuses

Support of various corporate group structures

Routing of payment orders to local subsidiaries toreplace cross-border payments

Internal bank accounts in any currency

Flexible condition and limit concept

Full integration with SAP Cash Management and SAPTreasury and Risk Management



Business Benefits

Reduce physical cash transfers by internal netting

Reduce number of bank accounts

Reduce administrative overhead

Minimize netting process times

Save bank fees for bank accounts and paymenttransactions

Avoid cost for external cross-border payments

Reduce float and value date losses

Gain more interest keeping cash within the group

Reduce hedging cost using economies of scale

Improve competitive position in external moneymarkets

Lowerinternal

cost

Lowerexternal

cost



1. Trends & Challenges

2. Solution Offering




4. Wrap-up

Agenda



What is SWIFT?

SWIFT stands for Society for Worldwide Interbank Financial

Telecommunications

A co-operative organization serving the financial industry

A provider of highly secure financial messaging services The financial standardization body

2.5 billion messages/year

8,830 financial institutions

209 countries More than 400 corporates

connected

Latest peak day:

16.5 m messages

(Status from 06/2009)

Country coverage




Integration to SWIFTNet with SAP Bank

Communication Management

Business Strategy & Initiatives

Bank Communication Yesterday Bank Communication Today

Simplification

Reduce the number of

proprietary payment standards

and bank-specific e-bankingproducts and setting up a single

communication channel to

SWIFTNet

Cost Reduct ion

Reduce maintenance cost

by communicating with all

the banking partnersthrough this one channel

Compliance

Enhance straight-through-

processing (STP) rates and

ensure traceability of thewhole business process




Status — Corporates on SWIFT

282

402

441

108

Registered corporates

181

Profile

Geographic spread

EMEA, Americas, Asia

Traffic

The Americas is theleading generator

Increasing number

Of smaller and mediumsize corporations

With fewer bankingrelationships (even 1)

Using SWIFT fordomestic transactions

2006 2007 2008 1Q2009 2Q2009

181

282

402

441471




Features: SWIFT Integration and

ISO 20022 support

SWIFTNet integration

Inbound and outbound support of FileAct and FIN

Integration with SWIFT architecture (SWIFTAlliance Access and Alliance Gateway)

Management of local authentication and integrity between SAP

NetWeaver Process Integration and SWIFTAlliance access and gateway

Standard mappings in SAP NetWeaver Process Integration forISO20022 messages

Customer credit transfer initiation

Customer direct debit transfer initiation

Payment status report

Cash Management Statement

Cash Management Advice

Tight integration with SAP software

Available for SAP R/3 4.6C and above (SAP Integration Package for SWIFT only)*

Easy adoption of mapping possible to support various of status messages in conjunction with

SAP Bank Communication Management (prerequisite: SAP ERP 6.0)

*SAP NetWeaver PI required




SWIFT Connectivity Options









4. Wrap-up

Agenda




SAP Bank Communication Management /

SAP Integration Package for SWIFT – Benefits

Improved communication between corporates and banks

SAP Bank Communication Management helps increase efficiency, lower

costs, and streamline processes

Single communication channel to SWIFTNet

Standardized and uniform Payment Gateway

More cash f low transparency and visibil ity of working capital

Enhanced straight-through processing (STP) rates

Companies get accurate and real-time view of their payment

transactions

Enhanced security and compliance

Transparent management of outgoing payments with no breaches on

internal controls

Reduced maintenance costs by using global payment

standards

Independency from proprietary payment standards and bank-specific

e-banking products

Readiness for SEPA and UNIFI/ISO20022 standard


f G & C G S




Adolf Würth GmbH & Co. KG Streamlines

Bank Communication with SAP ERP

QUICK FACTS

omp ny

Name: Adolf Würth GmbH & Co. KG

Location: Künzelsau, Germany

Industry: Global trade

Products and services: Fastening andassembly technology

Revenue: € 814 million in 2006

Employees: 4.500 (Germany)

Web site: www.wuerth.com

SAP® solution and services: SAP Ramp-Up

program, SAP enhancement package forSAP ERP 6.0

Implementation partner: SAP Consulting

“SAP Bank Communication

Management and the SAP Integration

Package for SWIFT have streamlinedour banking communications into a

single, efficient channel that makes

payments and deposits to our

accounts simple and direct.”

Claus Wild

Project Manager Financials Adolf Würth GmbH & Co. KG

Challenges and Opportunities Standardization and automation of

Corporate to Bank communication

Optimization of processes and

increased payment flow transparency

through status monitoring

Objectives

Fewer bank connections and

enhanced straight-through

processing rates with end-to-end

SWIFTNet integration

Support systematic tracking during

the whole payment life cycle

Implementation Highlights

Full implementation within 6 months

including SWIFT infrastructure Complete support from SAP

Consulting in deploying the new

functionality throughout the

organization

Why SAP? End-to-end integration paradigm

Most relevant functionality available

on the market

High attention and support due to

ramp-up program Ease of integration with existing

SAP software

Benefits

Enhanced straight-through

processing (STP) rates More cash flow transparency

and visibility of working capital

Reduced maintenance costs by

using global payment standards

Increased security and compliance

Readiness for SEPA and

UNIFI/ISO20022 standard

C t R l




Current Release

Enhancement Package 4 for SAP ERP 6.0

Improved Service Enabling

Enhanced ISO20022 /SEPA support

ENTERPRISE SOA

Capability to assignadditional approval users

for dual control

Enhanced encryptioncapabilities

Security

Indicate urgent payments inthe payment monitor

Automated triggering offollow up activities

Simplification

Enhanced reportingcapabilities

Integration to CashManagement

Functional

O tl k




Outlook

Enhancements planned for 2010 and beyond

Payment Formats and Instruments SEPA Credit Transfer

Update according to EPC Rulebook 3.2 (see SAP Note 1305012)

SEPA Direct Debit

Update to EPC Rulebook 3.3 (Core) and 1.2 (B2B)

IDOC Enhancements

Enhance PEXR200x with new segment for SEPA related fields

In-House Cash – SEPA Enablement

Evaluation of global ISO20022 shipment for payment initiation based on pilot customers /banks feedback

Focus countries outside EURO zone

Enhanced support of CAMT messages

Evaluate direct import of XML messages to SAP ERP Evaluation of additional ISO20022 message services such as

Electronic Bank Account Management - EBAM

SEPA E-Mandates

O tl k C t O t t f P tf li Pl i




Outlook - Current Output of Portfolio PlanningIn-House Cash and Bank Communication Management

Initiate

payments

Batch &

Approve

payments

Process

Bank

Statements

Send payment

media and

Update Status

Monitor

Create

payment

media

Web ChannelStrategy

Processing

by

In-House

Bank

Management

of Bank

AccountSignatures

Importpayment

files from

external

systems

Support

of

ISO20022standards

Enhanced

monitoring

capabilities

Support

of IDOC

paymentformat

ReversalPostings

on

payment

rejection

SEPA

Support

Integration

of non-SAP

systems,

supportof MT

messages

Bankconnectivity

w/o SAP

NetWeaver

Process

Integration

Improve

securitycapabilities

A d









4. Wrap-up

Agenda

7 K P i t t T k H




7 Key Points to Take Home

Treasury applications from SAP are an integrated part of SAP

ERP Financials SAP provides comprehensive applications to manage your

payment and cash processes

Using an integrated treasury solution supports the overall IT

trend of harmonizing the system landscape and the application

variety

The application SAP Bank Communication Management helps

streamline payment processing, strengthen compliance, and

achieve straight-through processing across multiple banks.

It enables the standardization and automation of corporate-to-

bank communication and helps increase payment flow

transparency through status monitoring

You can reduce maintenance costs by using global payment

standards and if the application is ready for SEPA and

ISO20022

Implementing SAP’s treasury applications leverages your overallSAP investments you have made

F th I f ti




Further Information

SAP Public Web

http://www.sap.com/treasury

SAP Service Marketplace (log-on required)

https://service.sap.com/erp-treasury

Enterprise Services WIKI (BCM)

http://wiki.sdn.sap.com/wiki/display/ESpackages

Documentation on SAP Help Portal

http://help.sap.com(SAP ERP >> SAP ERP Central Component >> SAP ERPEnhancement Packages)

Training / SAP Education

http://www.sap.com/education

User Groups

http://www.dsag.de

http://www.sap.com/communities/usergroups.epx for more

Contact Your SAP Account and Consulting Engagement Manager



http://wiki.sdn.sap.com/wiki/display/ESpackages/Bank+Communication+Management

http://help.sap.com/

http://help.sap.com/

http://wiki.sdn.sap.com/wiki/display/ESpackages/Bank+Communication+Management






Thank you!



Bank Communication Management

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