SAP LOAN MANAGEMENT

1. Loans Management with SAP
Joerg Oser
Business Solution Architect
Global Banking Line of Business
Bensheim, 16th January 2008

2. Customer Base
Functional Overview
Introduction Loans Management
AGENDA
Conclusion

3. Agenda
© SAP 2007 / Page 3
Customer Base
Introduction Loans Management
Functional Overview
SAP Loans Management
Conclusion

4. SAP Loans Software History - Customers
2000 - 2002
1991/2 1995 1997 2005
Loans
Management
C ore Banking
M ortgage
L oans
TR easury
LO ans
IS – IS
Darwin
700
Customer
s
New:
Consumer-
Loans
2007
L O A N S - Management

5. SAP® for Banking
© SAP 2007 / Slide 5
SAP Analytical Banking
SAP ERP
SAP Transactional Banking
Loans
Deposits
Collaterals
Leasing
Payments
Customer Information
Syndications
Customer Relationship Management
Master Contract Management
Financials
Human
Resources
Procurement
Corporate
Services
Regulatory
Reporting
Risk Profitability Accounting
Produce banking products and manage
customer interactions
Run the
organization
Understand analyze and decide

6. SAP® for Banking
SAP Analytical Banking
SAP ERP
SAP Transactional Banking
Loans
Deposits
Leasing
Payments
Syndications
Customer Relationship Management
Master Contract Management
Financials
Human
Resources
Procurement
Corporate
Services
Regulatory
Reporting
Risk Profitability Accounting
© SAP 2007 / Page 6
Collaterals
Customer Information

7. Common Product Enablers
© SAP 2007 / Slide 8
 Common real-time solution for retail,
commercial and corporate banking
 Multi-currency and cross-currency
 Multi-language user interfaces and
correspondence languages
 Multi-channel with equal access to processes
and data
 Multi-bank, multi-entity, multi-business unit, multi-label
 Multi-country, cross-border
 Multi-time zone with specific scheduling of cut-off time
 Real-time 24x365 access and High Availability architecture
 Scalable solution for both small and large banks (ratio volume : sizing)
 Process definition through parameterization
SAP Transactional Banking
Loans
Deposits
Collaterals
Leasing
Payments
Customer Information
Syndications
Customer Relationship Management
Master Contract Management

8.  100+ banks
 60+ insurance companies
 700+ customers
Banks in different areas: retail, wholesale, universal banks, real estate
banks, credit factories, specialised banks
Renowned banks all over the
world (in Americas, across
Europe, Africa, Asia)
SAP Financing Customers - examples

9. SAP Loans Customers 2007
280
330
400
434
459 479
504
538 558
589
623
0
100
200
300
400
500
600
700 2007: over 700

10. Integration SAP Loans Management
Loans Management
Collaterals Management
Guarantees
CMS
Financial Accounting Legal Reporting
Analytics
SAP – Business Partner
CIM
Frontend
/
Gui
Data
Warehouse
Corres-
pondence
Securisation
ABS
Asset
Backed
Securities

11. Agenda
© SAP 2007 / Page 12
Customer Base
Functional Overview
Introduction Loans Management
SAP Loans Management
Conclusion

12. SAP® Loans Management - Products
SAP Loans Management is a functionally
comprehensive module for the mapping of
different kind of loans (secured and unsecured)
such as
 Personal Loans (e.g. installment loans)
 Corporate Loans including senior loans, junior
loans, mezzanine loans.
 Mortgage Loans such as fixed and variable rate,
equity release
 Special Loans (policy loans, employee loans etc.)

13. Business Process: Product Setup
Definition of loan products:
Definition of loan products:
Product
Conditions
 Comprehensive product
specific parameters
 Flexible condition concept

14. Product Configurator

15. One Solution for Customers with Different
Business
 Real Estate
 Consumer Loans
 Universal Bank
 Credit Factory
 Corporate Financing
 Specialised
 Project Financing
© SAP 2007 / Page 16

16. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
• Disbursement
• Integration Financial Accounting and
Cash Mgmt
• Correspondence
• Payment transactions
• Incoming payment post-processing
• Transfer postings
• Reversal
• Dunning / Interest on arrears
• Accruals/deferrals
• Rollover
• Borrower change
• Payoff/ unscheduled repayment
• Waiver
• Parallel valuations
• Archiving
• Reports
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
© SAP 2007 / Page 18
Portfolio
Collection
Execution
New
Business

17. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
New
Business
© SAP 2007 / Page 19

18. SAP Customer Information File
as Central Anchor
Proven solution with more than 100 banking customers
Comprehensive and
Centralized
Customer Data
Distribution to and
from Other Systems
Enhancement of
Data and Screen
Design
Central Address
Management
Management of
Relationships
Role Concept
© SAP 2007 / Page 21

19. Partner Hierarchy
Nordic Trading
BP: 50292
Loan: 10001656
Trondheim Technology
BP: 133
Loan: 10001708
Bergen Shipping
BP: 132
Loan: 10001702
Trondheim Securities
BP: 50313
Loan: 10001710
Trondheim Computer Chips
BP: 50312
Loan: 10001709
Oslo Electronic
BP: 131
Loan: 10001701

20. Business Partner: Relation Ships

21. Business Partner: Total Commitment

22. Total Commitment
SAP
SAP
non
SAP
SAP
SAP
SAP
View of all the
business with the
customer
Possibility to take into
regard customer
entitities (holding etc)
Configurable layout

23. Loans-Contract
SAP-Loans
Business
Partner
Correspon-
dence
Product
Collaterals
Guarantees
Basic Data
Contract: Master Data - overview
Conditions

24. Percentage of defined
base amounts
Fixed amounts
Proportionally per
disbursement
Total amount with first or
final partial disbursement
Commitment interest / charges Discount / premium calculation
Repayment forms
Installment repayment
Annuity repayment
Maturity repayment
Fixed Interest
Variable Interest
Formula-based interest
Interest calculation
Conditions and Structuring - Overview
© SAP 2007 / Page 29

25. Fixed Interest Period
from 10.01.YY
09.30.YY
Fixed Interest Period
from 10.01.YY
09.30.YY
Charges from
10.01.YY
50 €
Repayment
from 10.01.YY
1150 €
. . . Condition header
Condition items
Interest
from 10.01.YY
5.5%
Loan
basic data
Condition header
Cash flow
Condition
items
-----------------------------
Master data
Loan contract
Interest
from 10.01.YY
5%
Calculate
effective
interest
Calculate
payment
plan
Condition Concept
Planned records
© SAP 2007 / Page 30

26. Cash Flow
© SAP 2007 / Page 31

27. New Business: Highlights
© SAP 2007 / Page 32
 Comprehensive master data
 Powerful condition features
 Integrated functions for
 Customer Management
 Collateral Management
 Account Origination

28. SAP® for Banking
SAP Analytical Banking
SAP ERP
SAP Transactional Banking
Loans
Deposits
Collaterals
Leasing
Payments
Customer Information
Syndications
Customer Relationship Management
Master Contract Management
Financials
Human
Resources
Procurement
Corporate
Services
Regulatory
Reporting
Risk Profitability Accounting
© SAP 2007 / Page 33

29. Collateral Management System
Reporting
Central
document
management
Statutory
reporting /
risk mgmt
Communi-
cation system
Customer Information
Real estate
Movable property
(incl. ship, car)
Security Account
…
Collateral object
management
Collateral management
Asset
value
Collateral
agreement
Receivables
Transaction
management
Loans
Other financing
Current accounts
Trading
transactions
Guarantees
Inventory
Object Bundle
Other
…
Rights
(incl. patents,
insurance)
© SAP 2007 / Page 34

30. Some SAP Collateral Management Customers

31. Example Reporting: Customer – Collateral Overview
Branch to
transaction
Collateral given
Secured transactions
Details
“At a glance”: free
collateral, collateral
shortfalls etc

32. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
• Disbursement
• Integration Financial Accounting and
Cash Mgmt
• Correspondence
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
Execution
New
Business
© SAP 2007 / Page 37

33. Payment Processing
Outgoing Payments
 Partial disbursements possible
 Deductions
 Gross – net
 Future preposting capability
 Automatic generation of outgoing payments
 To borrower
 To third party, such as property developer
Flexibly definable payment details
© SAP 2007 / Page 38

34. Integration LOANS with SAP FI – Financial
Accounting
Loan Contract: Cash-flow
01.05.JJ 150.000,00 Loan Disbursement 0001
0001
30.06.JJ 1.720,83 Interest debit position 0110
0110
30.06.JJ 639,05 Amortisation 0125
0125
FI-Schnittstelle
Financial Accounting
Amortisation-
Receivable
Interest-
Receivable
Other
Incomes
Depreciation Deferments
Realtime Posting
of flows
FI-Interface
© SAP 2007 / Page 40

35. Mass run
Correspondence
Standardized
Correspondence
Single run
Individual
Correspondence
Correspondence

36. Example Partner Solution for Output Management
STREAMSERVE: SAP Certifications since 1998
 Raw Data Interface (BC-RDI)
 SAP Smart Forms (BC-XSF)
 IDOC ALE Converter (CA-ALE)
 Assured device delivery (XOM)
 BAPI Integration
 Powered by SAP® NetWeaver
 SAP-endorsed business solution
A long time SAP® Software Partner, StreamServe has attained multiple SAP® certifications,
which ensure seamless connectivity with SAP® business solutions.

37. Leveraging Financial Statements To Increase Loyalty
Summary and Detail
information for
Checking, Savings,
Investments,
Loan/Mortgage,
Insurance, etc.
Dynamic, personal
message content
from nearest branch
manager specific to
customer’s account
Dynamic,
segmented
Up-Selling
messages
Segmented
Cross-Selling
messages
Dynamic lease and loans
branding
”prior to using StreamServe for communications on customer correspondence
we had a 25% customer turnover rate; today it is estimated to be less than 5%.“

38. Mortgage Statement Embedded Offers
Cross-Sell and Up-
sell Messaging

39. Execution: Highlights
© SAP 2007 / Page 51
 Fully integrated accounting
 Rich disbursement features including payments to
several parties, partial payments
 Plausibility checks
 Flexibly definable correspondence or usage of external
correspondence tool

40. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
• Disbursement
• Integration Financial Accounting and
Cash Mgmt
• Correspondence
• Payment transactions
• Incoming payment post-processing
• Transfer postings
• Reversal
• Dunning / Interest on arrears
• Accruals/deferrals
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
© SAP 2007 / Page 52
Collection
Execution
New
Business

41. Payment Processing
Incoming payments
 Several payment media such as direct debit or bank transfer
 Creation of over- and underpayments
 Post processing features
Flexibly definable payment details
Outgoing Payments
 Partial disbursements possible
 Deductions
 Gross – net
 Future preposting capability
 Automatic generation of outgoing payments
 To borrower
 To third party, such as property developer
© SAP 2007 / Page 53

42. Incoming payment
No Incoming payment
For example, auto debit,
bank transfer, etc.
Contract Receivables
1,500
Contract Receivables
1,500
1,500
Contract Receivables
1,500
Contract Receivables
1,500
15
Payments Due
Clearing of
Receivable
Due Payments
Dunning/Interest
on Arrears
Dunning
Letter
Dunning/
Arrears List
© SAP 2007 / Page 54
Incoming Payment Processing and Dunning

43. SAP Loans Back Office: Highlights
© SAP 2007 / Page 55
 Rich functional support of rule defined payment
allocation
 Fully fledged post processing of incoming payments
 Support of follow-up activities including dunning

44. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
• Disbursement
• Integration Financial Accounting and
Cash Mgmt
• Correspondence
• Payment transactions
• Incoming payment post-processing
• Transfer postings
• Reversal
• Dunning / Interest on arrears
• Accruals/deferrals
• Rollover
• Borrower change
• Payoff/ unscheduled repayment
• Waiver
• Parallel valuations
• Archiving
• Reports
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
© SAP 2007 / Page 56
Portfolio
Collection
Execution
New
Business

45. Loan Business Activities
Examples:
 Payoff / unscheduled repayment
(full and partial payoffs)
 Charges
 Single postings
 Borrower change
 Capital transfer
 Deferrals, waivers
Application:
 Structured, user-friendly entry of business
activities
 Status management of business operations
 Reversal function
 Release function
© SAP 2007 / Page 57

46. Business Process: Product Setup
• Business Partner
• Contract creation
• Conditions
• Collateral /Objects
• Disbursement
• Integration Financial Accounting and
Cash Mgmt
• Correspondence
• Payment transactions
• Incoming payment post-processing
• Transfer postings
• Reversal
• Dunning / Interest on arrears
• Accruals/deferrals
• Rollover
• Borrower change
• Payoff/ unscheduled repayment
• Waiver
• Parallel valuations
• Archiving
• Reports
Customer Request
Contract Conclusion
Contract
Disbursement
Accounting
Contract Processing
Contract Default
Contract Closing
Contract Analysis
Portfolio
Collection
Execution
New
Business
© SAP 2007 / Page 59
User
Authorizations

47. Release Procedure in SAP Loans
Release control:
Release can be set up using the control parameters
company code, product type, contract status, threshold
value and currency
Double, treble or quadruple release control can be
implemented

48. SAP Loans: Reporting
Standard
reports
Drilldown
Reporting
Queries
SAP
Business
Warehouse
Other
Reporting
Systems
Mature technology
makes it possible to
easily fulfil specific
information
demands via
adapting existing
queries as well as
creating new ones.
SAP Loans is fully
integrated with the SAP
Business Warehouse.
SAP Business Warehouse
includes standard content
for Loans information.
The SAP Business
Warehouse allows flexible
reporting including cross-
reporting.
Rich features in order
to create easily new
reports via
configuration.
The reports can be
defined ad-hoc with
drilldown functionality,
in list form or in
graphical form
A large set of reports
delivered with the
systems covering
areas such as
position, workflow
control, balance
information, revenue
analysis, accounting,
commitments
SAP Loans offers an
interface in order to
feed data to other
external systems
such as risk
systems.
© SAP 2007 / Page 61

49. SAP Loans Standard Reporting

50. SAP Reporting: Export to MS-Office

51. Agenda
© SAP 2007 / Page 64
Functional Overview
Customer Base
Introduction Loans Management
SAP Loans Management
Conclusion

52. Customers worldwide
mySAP Banking-Solutions
 More than 350 Implementations
 In over 20 countries
Implementations of SAP Loans
 More than 700 Implementations
 In over 50 countries
Loans-Banking Customers
 Increase of Customers
ca. 25% p.a.
 40 of the most imortant german
Banks
 Famous Banks in America,
Europe, Asia, Afrika

53. LOANS – Customers Examples

54. SAP® Loans Management –
Deutsche Postbank AG
Implementation Highlight
 25 million accounts (loans, deposits, checking)
Key Benefits
 Significantly reduced IT costs
 Replacement of 14 legacy system with 1 SAP system
 Process and system complexity reduced by 80%
 Day-end processes 2x faster
 Post-processing efficiency increased by 30%
 New products within a few weeks
© SAP 2007 / Page 68
QUICK FACTS
Deutsche Postbank AG
 Location: Germany
 Industry: Banking
 Products and services: Retail business and
corporate banking
 Revenue: €190 billion (2006)
 Employees: 22,000
 Customers: 15,5 million
 Solutions and Services: Applications from
SAP for Banking solution portfolio,
including SAP® Loans Management, SAP
Basel II, and SAP Deposits Management;
SAP MaxAttention™ support option; SAP
NetWeaver
“With SAP solutions, we aim to achieve
the lowest processing costs and
fastest time to market in retail
banking.”
Dirk Berensmann,
CIO and COO
Deutsche Postbank AG

55. SAP® For Banking – HSH Nordbank
Key Factors
 Integration of new applications in existing architecture
of crucial importance
 Reduced expense for development and production
 Increased implementation of standard software
 Increasing core competence of IT department
- Support of technical departments
- IT architecture
- Project management
© SAP 2007 / Page 71
QUICK FACTS
HSH Nordbank
 is a strong commercial bank in its core
region of Northern Europe
 Location: Hamburg
 Industry: Banking
 Products and services: the leading
provider of financial services in the
transport sector and the world’s largest
provider of ship finance, market leader in
the corporate customer segment, real
estate
 Employees: 4,431 (2006)
 Branches: represented in 17 foreign
locations in the Baltic Sea region, South-
East Asia and in the key international
financial centers of New York, London and
Luxembourg
 Revenue: EUR billion 189 (2006)
 SAP® Solution and Services: SAP Loans,
CMS, BCA, SAP BP, SEM Banking

56. SAP® For Banking – DG HYP
Results
 15% to 20% reduction in it operating costs expected
 20% reduction in processing times expected in retail
area
 Complete mapping of all commercial products in the
standard system Reduction of maintenance costs
 Improvement in data quality
 Easier introduction of new commercial products
 Clearer mapping of data and group structures in the
sap financial customer information management
application,
a central business partner module
© SAP 2007 / Page 72
QUICK FACTS
DG HYP
 is the largest real estate bank within the
German cooperative banking sector
 Location: Hamburg
 Industry: Banking
 Products and services: the provide finance
for residential and commercial real estate,
extend loans to local authorities, securitize
credit risks and issue Pfandbriefe (asset-
covered bonds)
 Revenue: EUR 85.7 bn (2006)
 Nationwide market presence: 1,250
cooperative banks with about 12,500 local
branches
 Employees: 594 (2006)
 Number of customers: 220,000
 SAP® Solution and Services: SAP for
Banking, including SAP Financial
Customer Information Management
Since implementing SAP for Banking
solutions for its commercial loan
business, DG HYP has increased data
quality, reduced IT costs, and set up a
technology base for fast introduction
of new products.

57. SAP® For Banking - DZ Bank
Implementation Highlights
 One of the largest SAP Loans Management projects in
terms of scale and data volume
 Reliable data processing at peak times
Key Benefits
 Faster processing of credit data: four hours instead of
three days
 Excellent operational reliability
 Single account view for subsidized loans
© SAP 2007 / Page 73
QUICK FACTS
DZ Bank
 is the fifth largest bank in Germany
 is the central bank for 1,100 Volksbanken
and Raiffeisenbanken and is a Verbund-
oriented commercial bank in Germany and
abroad
 Location: Frankfurt am Main
 Industry: Banking
 Products and services: has a strong
position in one-stop financial services
 Revenue: $m 574,750 (2006)
 Nationwide market presence: 1,250
cooperative banks with about 12,500 local
branches
 Employees: 24,154 employees (2006)
 SAP® Solution and Services: SAP for
Banking
“The integrated set of solutions, SAP
for Banking, offers us the level of
reliability we need for processing our
one million credit agreements.”
Manfred Salber
Head of Credit Management
DZ BANK AG

58. Agenda
© SAP 2007 / Page 75
Functional Overview
Conclusion
Introduction Loans Management
SAP Loans Management
Customer Base

59. Key capabilities
 Easy configuration of new products
 Open items handling
 Automated processes (e.g. approval of data)
 Mass processing features
 Business rules driven automated collections processing
 Multi currency, multi language, multi client features
Business process cost reduction through
standardization and automation
Reduced IT operations costs through
reduced interface maintenance efforts
Higher transparency and information
quality
Accelerated time to market for new
products
1
Up to 30% reduction of IT development
and change costs with SAP NetWeaver*
2
3
4
5
SAP Value Proposition Loans Management
Value impact
Source: SAP Projects
*) Expert Estimation

60. Thank You for Your Time
Questions
© SAP 2007 / Page 77

61. © SAP 2007 / Page 78
Thank you!
Joerg Oser
Global Banking Line of Business
SAP AG
Headquarters
D – 69190 Walldorf / Germany
T +49/6227/7-609 52
Joerg.Oser@sap.com
www.sap.com