Treasury Today Country Profiles in association with Citi

SAP’s FSN: more questions than answers

Photo of a satellite dish antenna

SAP’s Financial Services Network (FSN) involves the great and the good in banking names, yet struggles in identifying exactly what its role is in helping improve the communication between SAP users and their banks. Treasury Today catches up with Bank of America Merrill Lynch (BofA Merrill) to shed some light on this question.

SAP’s Financial Services Network (FSN) initiative is supported by a number of major global banks but does it really offer anything new? Several months after the announcement there is still little to show, with more questions than answers surrounding this joint venture. Given the names involved – Citi, Bank of America Merrill Lynch (BofA Merrill), Deutsche Bank, Standard Chartered and RBS amongst others – it would be a good idea to keep an eye on the project as it picks up speed.

Ageing boy band

One of the more amusing aspects of this ‘partnership’ was the way it was launched at Sibos 2012 in Osaka. Journalists were invited to attend a roundtable which was hosted by seven senior bankers flanked by two SAP representatives, all sitting on high stools as if they were about to burst into song like an ageing boy band.

And their song had about as much ‘content’ as a boy band’s. In summary, the message was that they all believe in the cloud and support this new initiative which is going to make it much easier for SAP users to communicate with their banks. The irony was that this new service is clearly in direct competition to SWIFT’s various corporate access initiatives, such as SCORE or Alliance Lite 2, and yet here we were at SWIFT’s user conference talking about it.

But what exactly is ‘it’? In its simplest form it is a web-based service to allow SAP users to communicate with their banks or at least some of their banks, ie those that have joined the FSN.

So it is just a messaging service, like a SWIFT bureau? No came the reply, banks will build apps to make it much more than that. So Treasury Today talked to one of the banks about their plans to go beyond what is on offer today.

An initiative we want to support

Tom Durkin, Global Head of Integrated Channels at BofA Merrill, explains that it is an initiative they wanted to support, as many of their clients run SAP. “We would rather be leading the development of the formats and making sure it works for us,” he says.

His colleague, Francyn Stuckey, Global Head of Strategic Solution Delivery – GTS, points out technology and communications is now an essential and important part of every request for proposal (RFP). According to Stuckey: “Integration is a driver.”

They both see the FSN as a means of offering third party integration quickly and efficiently. By offering a hosted software-as-a-service (SaaS) solution, scaling is not an issue and the time-to-market is accelerated.

Competing with SWIFT corporate access

But there is no denying that SAP’s FSN does compete with SWIFT’s corporate access schemes. “A different car” on the same road was one way it was described. More like a different road as far as we can see, or even a different form of transport altogether – flying perhaps? The FSN makes no use of SWIFT and is effectively a private communications hub.

This is not, of course, the first time that such a bank-vendor partnership has been tried. SunGard and Trema (now part of Wall Street Systems) have both tried to set up communication hubs in the past, and many years ago even Citi tried to compete with SWIFT with its own proprietary communications standards. Those initiatives have had mixed success.

Different this time?

It just might be different this time around. The past few years has seen a huge proliferation of what is now being described as cloud technology. In addition to SaaS, platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) are also now on offer.

The success of the SAP FSN initiative will depend on two factors:

  1. Will it demonstrably offer a quicker, easier and cheaper way for corporates to connect to their banks? The main competition here is SWIFT’s own corporate access initiatives which are criticised (privately) by many as being too complex, too costly and not very user friendly. Hence the proliferation of SWIFT access bureaus.

  2. What value-added services (VAS) are going to be offered and how? Apps are mentioned, how will they meet corporate needs?

We are going to keep an eye on this cloud-based services platform and will talk to some of the other banks involved in order to try and get an answer to these and other questions.

SAP’s commercial objectives (and the banks?)

One of the biggest remaining questions is what is the commercial model here? Who is going to pay, to whom and how? Once again the question is clear but the answer less so.

SAP has a stated the objective of getting €2 billion worth of sales from cloud technology by 2015 and recently acquired supply chain manager Ariba, following the earlier acquisition of Success Factors who provide HR software. The FSN can be seen as part of this strategy.

The banks that are joining in have decided it is an initiative worth backing. But this is not exclusive and they are all offering the FSN as just one of their communication channels. BofA Merrill, for example, is involved in an initiative with SunGard which overlaps in some respects.

However, Durkin says that this initiative does not overlap with FSN, but “hits at the same core theme”, which he believes is easing the client experience.