Why flexibility is so important in loans management

Traditionally, lenders were established high street banking institutions, enabling borrowers to make a variety of different purchases. However, since the late 1990’s banking institutions have faced stiff competition from new players including FinTech, e-Commerce, Retail and Challenger banks, all entering the marketing with one focus in mind - increasing their loan book through improving borrower experience including automation, slick user-experience and frictionless access to cash.

SAP Fioneer’s answer in enabling lenders of all types is S/4HANA Loans Management. In this article, we explore some of the most pressing questions about S/4 Loans Management and how it can allow lending institutions to automate their loan book to enable increased client satisfaction, more sales and faster innovation.

What is S/4HANA Loans Management?

S/4 Loans Management (CML) from SAP Fioneer is the latest version of their lending engine SAP Consumer Mortgage Loans. This industry leading lending platform is a proven solution used by more than 700 customers worldwide including banks, insurance companies and cross-industry companies. It’s established client base include well-known names such as DZ Bank, ING, Scania, Home Trust and NedBank.

With simple, compact architecture it offers ease of implementation, low total cost of ownership and caters for all lending types – Commercial, Consumer, Mortgage, Agricultural, Syndicated and Collateral Management.

What are the key benefits of the system?

Flexibility. The flexibility of the system is what sets it apart. As the industry is demanding the ability to handle different lending products in one system with the various permutations or structures within each product. The solution is able to address different lending markets with lesser time to market through flexible product configuration without the need for programming. It can fit to different loans businesses; banks, leasing, credit factories, real estate, asset finance and insurance and integrate with different customer servicing or CRM solutions. This flexibility extends to deployment models and is available on-premise, private cloud, managed service or SAP Fioneer’s Cloud4Banking.

Cost-efficiency. A cost-efficient solution, it has the capability to integrate to supplement core business lending and native integration with collateral management. With the added ability of machine learning it optimises support for business processes and streamlines business operations. These features, coupled with its low implementation timeframe and low-touch maintenance, enables lenders of all sizes and budgets to leverage the power of SAP marketing leading S/4HANA platform.

Speed to Market. Low production configuration time provides the ability to define and implement a product within days. Better still, it’s intuitive user-experience allows business users to become more independent and less reliant on IT or Technology teams. This agility is critical in an era where consumers demand instant results.

User experience. S/4HANA Loans Management is user experience agnostic, and has been integrated into over 30 different customer relationship management (CRM) and origination applications. It’s open architectural design and easy to consume API’s has enabled the product to establish itself well, at a time where lending institutions want to own the user experience, or leverage their existing user-journeys.

User experience was a trend topic mentioned in our latest meet the team interview with Marinda Fullard, Associate Director Financial Services “A trend, or rather necessity, is the focus on the customer journey. For too long the focus has been on the lenders, opposed to borrowers, where customer journeys are over complicated and often require the borrower to provide information which the institution already holds. This has changed significantly over the past 18 months, where we’re now seeing institutions invest more into innovating the front-end and putting extreme focus on the user experience. This plays to the strength of SAP Loans Management (CML) which, with its open architecture, enables it to be coupled with nearly all CRM or self-developed origination journeys.”

You focused on the flexibility of S/4 Loans Management. Why is flexibility such a hot topic in the industry at the moment?

With client expectation at an all time high, stiff competition from newcomers in the market and advances in technology, lenders require a platform that is scalable yet flexible.

The flexibility provides newcomers, such as eCommerce, the ability to scale their product portfolio as their business takes off, reducing the need to introduce multiple lending systems and the option to retain a simple architecture – in turn reducing operating costs. For established lenders, who typically operate across multiple segments, this flexibility enables them to consolidate their lending platforms and, in the process, operate their entire loan book on a single instance.

Flexibility in terms of speed to market proves to be a game changer. Having the ability to define and implement a product within days is crucial in an era where consumers demand instant results. During the height of the COVID-19 pandemic, our client Business Partners Limited were able to launch the COVID release loan within days of the government lockdown announcement, which proven the difference between liquidation or survival for many of their client base of small and medium enterprises was critical. This agility enabled them to get closer to their client base as they proved to be a valued partner to businesses who were counting on them when they needed them most.

Finally, flexibility allows for lenders to differentiate themselves. Either through the initial originations process, the variety of products they are able to launch or efficiency of servicing processes. Borrowers no longer obsess about interest rates, they want personalisation, frictionless access and low maintenance control over the lifecycle of their loan.

What are the key success factors for implementing a new loans platform?

With over 200 years combined experience within our lending team, leading over 30 SAP Loans Management implementations, here is what we have found to be critical success factors.

1. A clear vision of what outcome you want to achieve. Whether transitioning to achieve reduced cost of ownership and increased efficiency through the decommission of legacy lending platforms, keep up with more nimble competition or to prepare for a wall-to-wall transformation, the vision must be clear and the scope matching.

2. Team structure - an important success factor for the delivery of a complex SAP Fioneer Loans Management program is the definition of a high performing team. This is achieved by defining logical team structures who are multi-disciplinary across functional, technical and analytical skills and are collaborative and agile, allowing for flexibility to adapt to changes.

3. Integration capacity. In our experience it’s essential to deploy a strong integration capability to ensure an efficient and stable environment. It’s essential the team consists of experienced talent with an understanding of banking technology and integration protocols. In addition, integration principles and protocols are always evolving, and the team need to remain current with the latest trends.

4. Establishing the correct governance structure ahead of any project (or managed services) start is key. This, along with regular pre-scheduled retrospectives, will ensure a constant flow of feedback is provided allowing us to remain flexible in addressing scope, meeting regulatory changes or optimising processes.

5. Migration approach – a critical success factor is ensuring a well-defined migration strategy and approach is defined. With the correct knowledge and experience it is essential to know all viable options for a migration strategy and sometimes advisable to challenge the status quo and go against the advice of an OEM. So critical that bancon has invested heavily in a suite of migration methodologies and bTools specifically developed for S/4HANA Loans Management.

6. People readiness - preparing the wider business on newly implemented technology, products and service processes. Preparing people for these changes well in advance and including stakeholders as much as possible in the delivery of the solution will help to ensure there is buy-in from the business and technology teams in the changes that will impact them.

What can you expect from a partner like bancon when implementing or upgrading to SAP CML?

Not only will you get a team who have deep understanding for the technology at hand, you receive experts who have an understanding of the lending market, best practices from around the world, consumer habits and understand the important elements of specialised lending segments including development lending, micro-financing and agricultural lending. We aim to be more than a technology partner, enabling wider business change through our deep knowledge and passion for the lending sector.

More than a technology partner and more an honorary ‘member of the board’ whose experience you can lean on to validate ideas, challenge conventions or bring into ‘blue-sky-thinking’ sessions. We aim for our relationship to evolve to such a point where we can take an active role in helping you to define propositions, approaches, architectures and overall transformation strategies. A true partner who can help guide you through many of the hurdles we’ve experienced in other accounts across the globe.

On-going training is important to us as we remain committed to investing in our own services. Ensuring our people retain their expertise in their field and enabling them to stay ahead of the game. This goes far beyond understanding new features and functions within SAP technology stack and extends to applying the latest Agile principles, understanding current and up-coming consumer trends and adopting the most efficient tools for fast and safer delivery.

Fun. Working within the financial services sector is tough - a constantly evolving regulatory landscape and ever-changing customer demands. But who said we can’t have fun along the way? We’re a dynamic, growing and agile tech-consulting family, who enjoy what we do and the people we work with. Whether that’s joining us at casual social events, celebrating special occasions or starting the day with a short energiser session - together we have mountains to climb, commitments to keep and challenges to solve but we also leave time for fun.

Why choose bancon?

bancon group has 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 have been working on SAP CML and S/4HANA Loans Management since its foundation, supporting SAP to deliver its standard roadmap and codebase and shaping the future by supporting SAP Fioneer to plan. Our focus has seen us become one of the world’s largest privately owned SAP Loans Management & Collaterals teams spanning development, implementation, migration and application management support.

Check out some of our client success stories.