What’s the Buzz around SAP’s Financial Services Network (FSN)

I met Andy Hirst, VP Banking Solutions and Robert Grimes, solution manager at SAP Labs at SWIFTs Sibos conference in Dubai back on September of 2013 to talk about SAP’s plans for the FSN.  At the time, they had seven banks as co innovators – Deutshe, Citi, RBS, BAML, to name four.  The pitch is all about corporate connectivity to banks (large corporates with multiple banks globally) to not only automate financial transactions, reduce payment exceptions and improve visibility to cash by getting Intraday statements, etc. but do this all in a single view. That is certainly nirvana.

Andy mentioned it was painfully slow with the banks.  I am not surprised.  The banks world is upside down with new regulations and increasing compliance.

Essentially FSN is a cash management driven initiative, focused on a multi-bank solution for the largest corporates. As a multi-bank capability, SAP FSN connects the corporation to their banking group to automate financial transactions, reduce rejections and facilitate reconciliation of bank balances globally.  It is bank-agnostic and with a single connection, corporates can link their A/P, A/R and Treasury systems to their bank financial providers.

Think about this for a second.  A large multinational may have more than 500 bank accounts in 30 currencies with 70 banks - so solving issues around cash visibility, FX hedging, strategic credit relationships, cash management, etc. take priority over many other things.  Having the ability to do much more sophisticated cash forecasting enhances working capital management.

From a technology partner perspective, SAP partners with Volante to manage the MT798 message mapping that needs to be done.  Recall from a previous post the importance of the MT798 - see The slow extinction of paper based tools for trade finance.  SAP generates idocs which need to be converted to this format to communicate with banks.

Andy also spoke about third party applications once you get past the integration layer and security and authentication.  Here is where it gets interesting.  FSN plans to host third party services, such as cash management tools and advanced analytics.

So where does Visa fit in?

Sanjay Chikarmane, senior vice president and general manager, Information Management and Financial Services Network, SAP. “We anticipate companies will be able to benefit from connecting to the SAP Financial Services Network and make Visa transactions via the network. Integrating Visa’s payables solutions with ERP and finance systems via the SAP Financial Services Network is expected to help ease reconciliation and increase up-to-date visibility into cash.”

So far, it is still early days for multi-banking applications.  Other smaller vendors like @GlobalTrade and Bolero also have applications which are specifically focused on letters of credit and standby L/Cs, instruments large multinationals typically use with many banks.

As the battle wages with corporate to bank connectivity and corporate to B2B Network connectivity, banks cannot continue to think their corporate and commercial clients want to continue to use the banks own platforms to exchange documents, data, and information (both structured and unstructured) through them.

I would certainly never bet against SAP as they are the accounting guts for many corporates globally.

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