From SAP Core Banking to S/4 Transactional Banking, your questions answered

Arguably, banks have access to more data and insights about an individual than any other organisation. They know where they live, where they work, what they like to do on the weekend, how often they go on vacation and how much money they save. Yet this valuable behavioural data is rarely processed in a way that makes the lives of the end customer easier. In this article, we explore some of the most pressing questions about S/4 Transactional Banking from SAP Fioneer and how it can allow banks to uncover new behavioural insights that lead to better marketing, more sales and faster innovation.

What is S/4 Transactional Banking?

S/4 Transactional Banking (S/4TRBK) from SAP Fioneer is a newly released version of Banking Services 9.0. An open Core Banking platform based on an architecture that ensures real-time processing and continuous availability for financial institutions. It offers a wide range of functions for retail and corporate banks on a micro to enterprise level.

The new landscape enables Central Business Partners across the different applications to create unique profiles which can be used to uncover unseen customer insights by combining analytical and transactional data, and provide personalised offers with a lesser data footprint. It supports accelerating business and efficiency by taking advantage of next generation processing and leveraging new developments such as intelligent enterprise capabilities. Not forgetting, a state-of-the-art user experience and award-winning user interfaces.

While it shares many components with its predecessor, specific S/4TRBK experience is scarce in the market. Outside of the experience held by SAP Fioneer, bancon are one of the only partners to have significant exposure. bancon has been working on S/4TRBK since its foundation, helping SAP to deliver its standard roadmap and codebase – as with earlier versions of SAP Banking Services.

Who is S/4 Transactional Banking for?

S/4 Transactional Banking is for financial institutions who want to make technology the strategic backbone of their business. The new Intelligent Suite and digital platform for Core Banking runs on S/4HANA providing faster innovation, seamless API integration with SAP Cloud Platform and Open Banking, improvement to online payment processes and back-office processes, while also facilitating customer journey mapping so banks can suggest products and services based on behavioural triggers. Running on an intelligent SAP Transactional Banking suite, opens up new insights that can allow for more relevant customer experiences, while reducing risk through more informed data-driven decisions.

What are the main differences between SAP Core Banking and S/4 Transactional Banking?

The main difference between the two is the platform in which it sits; S/4HANA, which provides further deployment options like single stack deployment S/4HANA Finance and S/4HANA TRBK running on a single NetWeaver stack, among other benefits or managed services via SAP Fioneer’s Cloud4Banking proposition.

While S/4HANA TRBK shares many enterprise grade features of its predecessor, SAP Banking Service 9.0, it has been significantly enhanced through its move to the S/4HANA platform which allows for;

1. S/4HANA in-memory database, which enables fast data access, ’on-the-fly’ calculations for analytical purposes and next generation processing with amendments such as advanced open item management and simplified data model. It reduces data storage through compression and uses a simplified data model and processing simplification.
2. The introduction of back-office dashboards based on SAP’s award-winning SAP Fiori, this leads to increased employee satisfaction as more focus is put into usability and reduces speed to serve rates as time to execute tasks is reduced. For employees new to SAP it speeds up the learning process as it is more user friendly for non-technical employees. The light codebase means SAP Fiori capabilities can be extended with low effort.
3. Embedded Machine Learning and Artificial Intelligence allow clients to decrease the amount of time dedicated to manual tasks by increasing automation of processes and directly decreasing time to serve rates. For example, leveraging Machine Learning to match broken loan payments with respective loan accounts.

Already running SAP Banking Services? What are the common misconceptions associated with transitioning to S/4 Transactional Banking? 

The most common misconception we’re seeing is when it’s simply considered as an upgrade of the software components, where the processes and products remain the same. Without consideration to the broader business growth strategy, deployment possibilities and the evolution to a digital customer-centric organisation becomes limited and doesn’t allow for full potential.

Even if it is possible to convert a legacy Core Banking solution like Banking Services 8 or 9 (its predecessor) to S/4TRBK while keeping the same business functionality, it would mean investing considerable resource on improving the tech stack without really generating the greatest ROI from it.

The transition to S/4TRBK should not be evaluated based on the price associated with the technical transition but on what that investment will do for new business, accelerating product innovation, streamlining back-office processes, having flexible deployment options and automated processes with best-in-class user experience.

We are seeing a hesitation from financial institutions to be the first to make the change and having no case studies to support the transformation. There are two ways to look at this; take the leap with the support of the expert team at bancon and capitalise on market share before your competitors do, or delay the decision of what will be an inevitable transition when SAP Fioneer discontinue the support for SAP Core Banking.

Why should financial institutions make the transition from SAP Core Banking to S/4 Transactional Banking?

In order for banks to survive and thrive in today’s world, the experiences they offer must mirror those of the tech giants, who are allowing consumers to shop, watch and stream anywhere at any time.

New standards in customer experience are forever being set, while the banking industry lags behind with complex customer journeys due to outdated back-office processes. As new banking disrupters enter the market with a digital first mindset, the more traditional financial institutions lose market share and crucially, hundreds of years of customer trust becomes eradicated almost overnight.

In today’s world, consumers want access to instant-loans so dreamy vacations can be paid for in instalments, they want tailored offers based on past purchases and for credit card or premium banking applications to be accepted without having to manually fill in forms containing information the bank already has.

However, a mere aesthetic revamp is not enough. If banks are serious about wanting to transform for the future, they must look at a strategic structural reshaping and digitalising of legacy products. The industry must adapt to cultural shifts in consumer behaviour and expectations which cannot be performed with isolated digital initiatives or without sufficient technological infrastructure such as S/4 Transactional Banking.

How can financial institutions best prepare for a shift to S/4 Transactional Banking?

Our key learnings are taken from our experience in delivering S/4TRBK transition assessments, traditional S/4HANA transitions and upgrades of predecessor SAP Banking Services.

1. Before business transformation can take place, the mindset of the organisation must shift from a branch focus to a digital focus. The Intelligent Suite is designed to support that journey. Integrating the Core Banking system with the rest of the SAP Ecosystem is easier when running S4TRBK. Both the Core Banking system and the Intelligent Suite can be run on a single stack, resulting in an architectural simplification and platform harmonization.
2. A clear vision of what outcome you want to achieve following the transition. The transition to S/4TRBK builds the pillars to support a broader digital transformation strategy, therefore consideration must be made to the wider business growth strategy and how the digital transformation as a whole will future proof the business. Whether you are transitioning to achieve standardization through the decommission of custom objects, to remain within the standard OEM maintenance cycle or to prepare for a wall-to-wall transformation, the vision must be clear and the scope matching. We have learnt that going into a project without aligning on the purpose and scope leads to never ending project replanning, overly interconnected dependencies and budgets being spent on rectification and not innovation.
3. The transition approach is the biggest factor to consider. With three transition methods - conversion, greenfield migration, Selective Data Transition and System Shell Copy – It’s essential the correct approach is identified. With a clear vision of the outcome and following a detailed analysis the viability of each option can be assessed. During this time, risks should be accurately recorded, efforts validated and approach suitable based on the target state architect to be achieved. bMigrationEngine is a proprietary tool from bancon that helps facilitate the migration from SAP Core Banking to S/4TRBK.
4. As the transition to S4TRBK is technically an installation of a new product which improves the integration of different components and simplifies processes, the consulting team would need to first carry out a technical and functional analysis of the current implementation, identify the processes which need to be relocated in S/4TRBK and redesign them to fit the new model. Changing from SAP Banking Services to S/4 Transactional Banking is a great opportunity to review the custom code and modules which have been continuously added over many years and move to as many standard solutions as possible. By simplifying the back-office processes, the Intelligent Suite can facilitate a much smoother transition.
5. The right expertise and knowledge are critical. S/4 Transactional Banking experience is scarce, so with businesses internationally considering a transition in early 2024 the market will be hot and obtaining talent will be tight. Being one of the early adopters may seem like a risk, however, in our opinion this was one of Alberta Treasury Branche’s, the first to undergo an S/4TRBK transition (Aug 2022), biggest assets. While it wasn’t an easy ride ATB achieved success by being bold, getting their approach right and being laser focused on their goals. All supported by some of the world’s greatest minds under the umbrella of SAP’s Early Adopter Program.

What steps should financial institutions expect from a partner consultancy like bancon, when making the transition from SAP Core Banking to S/4 Transactional Banking?

Clients can expect a 3-step approach; transition assessment, transition planning and transition execution. What you can expect at each stage:

Step-1: Transition assessment workshops to understand your strategic priorities and business requirements and for us to advise on the best S/4 transition approach (System Conversion, Greenfield Migration or Selective Data Transition). This includes a full technical and functional analysis of the current system to analyse deployment options. From the assessment, we’ll be able to identify the key findings in terms of critical success factors that could impact the move to SAP S/4HANA for example, highlight custom code that is now supported by standard S/4TRBK functionality, or is partially supported and therefore requires the process to be redefined.

Step-2: Transition planning to convey a S/4TRBK migration strategy by leveraging the assessment findings and any roadmap developments, to create an overall project plan for the transition journey and target landscape architecture. This will include a project with documented milestones, skillset(s) required throughout the program, toolset and/or accelerators required and determine the involvement needed from the financial institutions core team.

Step-3: Transition execution, enacting against the plan defined in the transition planning stage. Whether this is an end-2-end delivery, advisory and/or ad-hoc support, together we will work to deliver the S/4TRBK migration.

Why trust bancon with your S/4 Transactional Banking project?

bancon have supported over 75 banking partners worldwide with their core banking requirements and implementing S/4 Transactional Banking or earlier SAP Banking Services. Our global reach enables us to advise on best practices from around the world, apply our wider experience to help deliver market first implementations, connect clients to share knowledge and provide critical insight into lessons learnt from previous projects.

We differentiate ourselves through our close partnership with SAP and SAP Fioneer built over many years of joint projects. Our co-founders and early employees formed the original group of developers and architects of the foundational SAP Banking platform. This personal connection gives us unique access, understanding and foresight on the product set and stakeholders thinking. Since SAP Fioneer’s foundation, bancon Group have been an essential enablement partner globally which has allowed us to increase connectivity between client and OEM, gain a deeper insight into SAP Fioneer’s roadmap and most importantly meet clients’ ambitions as one team.

We have a full suite of bTools that provide ‘‘out-of-the-Box’’ S/4HANA Transactional Banking templates to accelerate all stages of an S/4TRBK migrations. These, coupled with executing multiple S/4TRBK assessments together with SAP Fioneer & SAP and enabling them to deliver their S/4TRBK development roadmap, enables us to uncover the unknowns when undergoing an S/4HANA migration.

If you’d like to chat to us in more detail about an S/4TRBK transformation project, get in touch.