Insight & Analysis

Press release: Big Data-based loans developed by Commerzbank

Published: Jun 2018

5th June 2018 – The increased digital networking and automation of machines via the Internet of Things (IoT) in the age of Industry 4.0 makes it possible to access machine capacity and production data.

The Internet of Things refers to networked physical devices that communicate among themselves on their own via the internet. Mechanical engineers and operators, for example, can use it to optimise machine capacity, minimise downtimes and customise maintenance cycles to suit utilisation patterns. The objective is to improve the efficiency of use for capital goods. These new technologies also make new business models possible, such as pay per use, pay per part, equipment as a service, and more.

Commerzbank has now become the first German bank to develop a data-based loan solution for this purpose. At its core, the new “pay-per-use loan” is an investment loan whose repayment is linked to the usage of the machine. The loan repayment schedule is calculated based on the actual usage of capital equipment, which helps preserve the user’s liquidity. If machine utilisation is low, the repayment burden is also low. It follows, then, that if there is an increase in production – and a rise in turnover – the repayment rate for the pay-per-use loan also rises.

This innovative solution for corporate clients has been developed by Big Data & Analytics experts at Commerzbank. At the beginning of the year, Commerzbank founded the new group division Big Data & Advanced Analytics under the leadership of Kerem Tomak in order to perform focused analytics of big and complex data and their business usage.

The prototype for this new digital loan model was put together by Commerzbank with machine tool manufacturer EMAG GmbH & Co. KG in Salach (Baden-Württemberg). The networking of the machine tools at EMAG allow for a detailed look at their utilisation patterns, which in turn dictates the calculation of the loan repayment rate. KMB Technologie für rationelle Fertigung mbH, a company specialising in rationalised manufacturing and headquartered in Saxony-Anhalt, uses these types of machines for parts production in the automotive sector. The production cycle typical of the industry is well reflected in the repayment process of the prototype.

For Dr. Achim Feinauer, COO of EMAG GmbH & Co KG, the pay-per-use loan represents one of the few features of Industry 4.0 which has successfully been translated from theory into practice. “On the path to networked production many obstacles, very often mental ones, have to be overcome. Pay-per-use is characterised by a direct combination of usage, ie turnover and earnings, to the costs of the investment. The benefits to liquidity requirements are tangible on a daily basis and are an incentive to implement Industry 4.0 in practical day-to-day production.”

“Thanks to the ability of our machines to communicate information, we are creating additional benefits for our customers,” says Claus Mai, CFO of EMAG GmbH & Co. KG. “As a result of the cooperation with Commerzbank and the development of customised financing, these benefits are heightened for our customers. As one of the leading providers of manufacturing systems we are pleased that Commerzbank is taking such innovative paths together with us.”

“The pay-per-use loan from Commerzbank allows us to invest in a new generation of machines from EMAG,” says Sven Hartwich, Commercial Manager at KMB Technologie Gesellschaft für rationelle Fertigung mbh. “With the flexible repayment rates we can adjust our liquidity for production and turnover. This in turn allows us to lower our break-even point further in order to achieve better overall financial stability.”

Jan-Philipp Gillmann, Divisional Board Member, Segment Development & Digitalisation in the Corporate Clients business segment at Commerzbank adds: “With our new pay-per-use loan, as the leading bank for corporate clients, we are taking another major step towards Industry 4.0. We are delighted that our long-standing client EMAG as well as KMB were willing to take that step with us. The jointly developed solutions are an important new element in our digitalisation strategy. Following on from the fully digitalised advisory process for hedging products and the digital loan platform, the pay-per-use loan will be rolled out over the course of this year as the next innovation in financial solutions for small and medium-sized enterprises.”

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