DEUTSCHE POSTBANK

BROAD DEPLOYMENT OF SAP FOR BANKING SMOOTHS INTEGRATION

QUICK FACTS

The wall-to-wall implementation approach has significantly reduced the effort and cost of integration versus a component-based approach.
Dirk Berensmann, CIO and COO, Deutsche Postbank AG

Company Name: Deutsche Postbank AG Location: Bonn, Germany Industry: Banking Revenue: 4.3 billion Employees: 21,500 Web site: www.postbank.de Implementation partners: SAP Active Global Support and SAP Consulting organizations Challenges and Opportunities Reduce integration effort and cost Increase flexibility for handling rapid product design, evolving business processes, and new regulatory demands Reduce number and complexity of back-office processes Eliminate cost for maintaining and servicing multiple IT systems Objectives Replace multiple custom-built solutions with world-class solutions on a single platform Consolidate operations and processing locations Implement highly scalable solutions to accommodate future business growth Make solutions globally deployable SAP Solutions and Services SAP for Banking solution portfolio including the SAP Loans Management, SAP Basel II, and SAP Deposits Management applications SAP MaxAttention support option SAP NetWeaver technology platform

Implementation Highlight Phased, wall-to-wall implementation involving 4.5 million checking accounts, 300,000 consumer loans, and 17 million savings and deposit accounts Why SAP Strong global references Long-term commitment to banking industry Worldwide acknowledgement as a technology leader Benets Streamlined processes for mergers and acquisitions Reduction of business processes from 120 to 35 and cost of complexity by 30% Reduction from 14 regional installations to 1 central core-banking system for checking accounts Handling of record 30 million start-of-year postings in 2 days Significant reduction in IT costs and processing errors Reduction of time to market for new products from several months to several weeks Enhanced ability to spot industry trends and opportunities Improved insight into customer data Enhanced insourcing capabilities Existing Environment SAP R/3 software, functionality now found in the SAP ERP application Third-Party Integration Database: DB2 Hardware: IBM z/OS 1.8 and IBM AIX 5.3

SAP Customer Success Story Banking

Following a phased-in implementation of the SAP Loans Management, SAP Basel II, and SAP Deposits Management applications, German retail banker Deutsche Postbank AG (Postbank) acquired BHW, a German home-mortgage lender. The IT portion of the merger was remarkably smooth largely because BHW had also run its operations on SAP software.
In replacing its core banking solutions, Postbank made a clear commitment to use standard software from a single vendor that could provide most of the functionality it needed. The wall-towall implementation approach has significantly reduced the effort and cost of integration versus a component-based approach, says Dirk Berensmann, CIO and COO of the Bonn-based firm. The new functionality has greatly improved operational efficiency and enhanced the banks competitive position. With 14.4 million active domestic customers, Postbank is one of the largest retail banks in Germany. It is the market leader in direct banking, with 2.9 million Internet checking accounts and 3.7 million telephone-banking customers. Assets under management totaled more than 203 billion in 2007. Like most of the worlds largest banks, Postbank had managed its accounts and product lines with multiple corebanking systems and processes the result of years of usage of a legacy package built for smaller banks in less volatile environments. In a market that demands around-the-clock service, real-time transactions, and multiple sales channels, such landscapes have become extremely cumbersome and costly. When it deployed SAP for Banking, Postbank became one of the first large retail banks in Europe to handle account management, transaction processing, and product configuration using a single, standardized, real-time solution. efficiency, and services. Through this program, Postbank intended to: Reduce the number, complexity, and cost of its back-office processes Consolidate a complex, multi-instance environment Replace inappropriate legacy software with standard software Deploy scalable solutions to accommodate future growth Implement real-time, straight-through processing Finding no standard solution to meet its requirements, Postbank approached SAP about developing retail corebanking software in a cooperative setting. Postbank wanted a global technology leader with strong industry experience that could give the bank a competitive edge in its market and support its new technology for the next 15 to 20 years. Initially called SAP Account Management, the powerful new application developed by SAP and Postbank has become part of the standard software within the SAP for Banking solution portfolio. To minimize migration risk, Postbank opted for a phased implementation that started with a central application for storing and managing all customer master data. Postbank subsequently

Broad Deployment Suits Aggressive Business Strategy

Streamlining software integration is part of an ambitious business plan that the bank has undertaken. In an industry facing lower profits, ongoing regulatory changes, and large-scale consolidation, Postbank hopes to outpace its peers by offering top-quality customer service in a high-volume environment, being quick to market with innovative products at the lowest possible cost, and correctly positioning those products. The banks real-time, multichannel sales strategy includes telephone and online banking, a branch network through German post offices, and third-party partner sales. In addition, Postbank provides payment services for Germanys Deutsche Bank, Dresdner Bank, and HypoVereinsbank. To support this strategy, Postbank launched a comprehensive transformation program to maximize savings,

With SAP, we knew we had a provider we could rely on in the long run.

Dirk Berensmann, CIO and COO, Deutsche Postbank AG

converted an additional 4.5 million checking accounts and more than 300,000 consumer loans to the SAP software platform, followed by another 17 million savings and deposit accounts.

Increased Efficiency Boosts Response Times and Reduces Total Cost of Ownership
In the year following the implementation, Postbank reported its best financial results ever and attributed a major part of its success to improved backoffice efficiency and reduced IT costs. SAP for Banking has helped Postbank meet the strict performance and large-

Secure, real-time processing has streamlined Internet transactions, ATM withdrawals, call-center transactions, and payments and has increased consumer confidence in those transactions. It has also made account statements, cash forecasts, and other information more readily available. In addition, the ability to process large transaction volumes in the shortest possible time has made Postbank an attractive outsourcing partner. SAP for Banking has helped Postbank streamline approximately 70% of its business processes which allowed the bank to reach a break-even point for the new software by the time it

channels. The software connects 6,000 branches, 1,600 ATMs, and 800 callcenter agents in real time with zero downtime. Nearly all payments are processed without paper or manual data entry. Day-end transactions are performed twice as fast as before. With fully automated functions for rulebased posting control, manual intervention for exceptions is now necessary only for specific business reasons such as the personal handling of VIP customers. A reduction in errors has significantly freed operational resources for other tasks. Tools for new product configuration have minimized manual efforts for defining and managing products, further increasing resource capacity. By implementing SAP for Banking, Postbank has replaced 14 separate Siemens Kordoba systems with a single platform and cut its system costs. Enhanced abilities for outsourcing should further improve economies of scale and leverage the new operational efficiency.

With excess capacity and easy configuration, the new core-banking architecture will help Postbank achieve its goal of turning many operational functions from cost centers into profit centers.
Dirk Berensmann, CIO and COO, Deutsche Postbank AG

volume transaction requirements of a top-tier bank. It supports highly automated rule-based posting-control functionality, rapid definition and management of new products, the creation and management of customer accounts, processing of account transactions, and management of account balances. Other functionality includes account settlement (which enables the calculation and posting of interest and fees), the generation of customer account correspondence, and the management of credit card master data. The software also increases visibility across products and cash accounts.

went live. Through process standardization, Postbank has cut the number of discrete processes from 120 to 35. This has significantly reduced process redundancy and helped the bank quickly adapt to a changing business environment. Postbank has harmonized business processes across product lines and eliminated paperwork for each process area. Greater system availability has provided greater flexibility for processes and maintenance scheduling and reduced operational labor costs. SAP for Banking has further improved operational efficiency by supporting straight-through processing for various

Improved Service, Rapid Time to Market

SAP for Banking has also helped Postbank significantly improve its customer service. A single, detailed view of customers data provides greater insight for service staff and decision makers, helps Postbank maintain strong ties with customers, and reveals profitable cross-selling opportunities. Easy access to customer-specific documents helps Postbank employees further enhance service. These documents

www.sap.com /contactsap

include account contracts, identification information, and various types of scanned information. Customers benefit from simplified access to Internet banking and from a 24-hour telephone call center. The flexible product configuration functionality in SAP for Banking has helped Postbank configure new products across its traditional product lines including interactive products. Faster product design and implementation means timely, competitive offerings that boost profitability and organic sales growth. Within a year and a half after the implementation, Postbank had cut its time to market for new products from several months to several weeks. The template-based approach for product development in SAP for Banking has helped us launch several new products each year since the implementation, Berensmann says. Among these is a savings account with an interest rate that is tied to stock market performance.

real time. The open architecture of SAP software makes it easy for Postbank to leverage its initial investment by installing additional SAP applications on the base platform. With excess capacity and easy configuration, the new core-banking architecture will help Postbank achieve its goal of turning many operational functions from cost centers into profit centers, Berensmann says. Postbank expects the new system to facilitate integration between institutional systems more quickly in future mergers and acquisitions, further improving profitability. Postbank continues to work with SAP in developing standard banking software. At present, the two companies are developing solutions that support transactions that fall under rules for the new Single Euro Payments Area. Software for a broad array of other payment transactions is under development as well. Says Berensmann: With SAP, we knew we had a provider we could rely on for the long run.

Scalable Solutions for Continued Growth

With the SAP NetWeaver technology platform, Postbank has built up a highly scalable environment. The solution handles transactions for 14.4 million customers, 6.4 million debit cards, and 5.2 million checking accounts all in

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