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I am deputy editor at The Banker, a Financial Times publication. I joined the magazine in August 2015 as transaction banking and technology editor, which remain the beats I cover. Previously I was features editor at Profit & Loss, an FX and derivatives publication and events company. Before that I was editorial director of Treasury Today following a period as editor of gtnews.com. I also worked on Banking Technology, Computer Weekly, and IBM Computer Today. I have a BSc from the University of Victoria, Canada.

Friday, 15 November 2013

SAP’s FSN: the difference a year makes

October 2013

During last year’s Sibos in Osaka, Treasury Today attended the launch panel of SAP’s Financial Services Network (FSN). One year on, we caught up with Sanjay Chikarmane, SVP and General Manager of FSN, at the event in Dubai to gain a better understanding of what is on offer.

Last year’s launch of SAP’s Financial Services Network (FSN) at Sibos in Osaka left more questions than answers as to what made this connectivity initiative different from those that came before it. As reported in an earlier Insight, despite the big banking names involved – including Bank of America Merrill Lynch (BofAML), the Bank of Tokyo-Mitsubishi UFJ (BTMU), Deutsche Bank, Nordea, Standard Chartered, Citi and the Royal Bank of Scotland (RBS) – there was a lack of clarity on what exactly ‘it’ was.

Developments this year seem to have shed more light on the question, especially since the solution was made available to financial institutions and their corporate customers in March. According to Sanjay Chikarmane, Senior Vice President and General Manager of Enterprise Information Management (EIM) and FSN, speaking to Treasury Today at this year’s Sibos in Dubai, the FSN sits in the SAP HANA Cloud between a corporate and a bank, enabling the corporate’s SAP enterprise resource planning (ERP) system to send transaction files to the FSN, which in turn transforms them into any bank format and routes them to the bank, and vice versa. The secure network is owned and managed by SAP as an on-demand offering.

Banks can benefit from a simplified approach to electronic service development, deployment and delivery. Corporate treasurers will be interested because it solves the issue of multiple banks and formats, at a time when most are looking to cut costs. “The FSN has a zero IT footprint,” Chikarmane says. “Corporates don’t need to upgrade their ERP systems to join the network. It is a rapid deployment solution, taking just a few weeks to configure, and we have developed a package onboarding service.” SAP will use a scalable pricing model, based on the number of transactions, so that corporates of all sizes can benefit from the solution.

The FSN also leverages SAP’s 2012 acquisition of Ariba, the cloud-based network that connects 730,000 buyer and suppliers, to solve three other persistent problems for corporates: poor reconciliation, staying up-to-date with master data and gaining visibility across an organisation’s cash position. “Reconciliation can be a problem for corporates, as there is often not enough information in the ERP system to reconcile transactions. With thousands of suppliers on the Ariba network, which is connected to the FSN, it is possible to merge reconciliation information with the bank statement – providing an automated ‘touch-less’ reconciliation,” explains Chikarmane.

Secondly, when dealing with thousands of suppliers, many corporates’ vendor master data can fast become out of date. “We capture vendor data through the Ariba network, so can provide our corporate clients with up-to-date master data.”

Thirdly, many corporates run different ERPs across different regions which makes it difficult to have true global visibility over their cash position. SAP is planning to launch a cash visibility application in 1Q14, which will route all transactions through the FSN.

The real test will come when the first banks are operational on the network in 1Q14. Although currently aimed at the top banks, with each bank identifying two corporate clients to pilot the programme, Chikarmane says that SAP intended the solution to scale down to the smaller banks. Once SAP has what it considers to be enough banks on board, then it will take its offering directly to the corporate community.

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