Financial Services Innovation in the Cloud

Business-to-business payments, and resolving transactions between banks and their corporate customers, remains a largely inefficient and often costly process today.

In an effort to solve some of those problems, SAP announced the release of its cloud-based Financial Services Network at the company's annual Sapphire conference this week. The platform's purpose is to connects SAP's banks and corporate customers. The network acts as a kind of payments hub, and is centralized in the SAP datacenter in Germany.

One of the first companies to partner with SAP on the network is San Francisco-based Visa. As a company that processes a large amount of corporate payments, and issues corporate cards, Visa was seeking to bring more efficiency and transparency into the overall payments system for its customers, said David Henstock, Visa's VP of global commercial solutions, at a panel discussion at the conference.

Visa's customers, explained Henstock, include corporate entities, as well as issuing and acquiring banks. After discussions with SAP for several months about the new network, Henstock said his company saw the value of "connecting SAP's corporates with Visa and our financial institution partners. By combining our relationships with financial institutions and SAP, we believe we have something that can be game-changing."

According to Sanjay Chikarmane, SVP and general manager of EIM solutions and the Financial Services Network at SAP, banks traditionally have had to build software for their corporate customers and build an on-premise solution to capture AP, AR and other financial data they needed. Often, he said, these proprietary bank solutions are not integrated into the ERP system. Further, since most corporate entities do business with more than one bank, multiples of these systems had to be installed on premise, he said.

"Also, another big benefit to the bank is that they can drive more business with SAP corporate customers, their ability to win new business is enhanced," he added.

Chikarmane further said the cloud-based solution makes it easier for banks to layer various services on top of the core service, such as enhanced credit card services and foreign exchange services.

One service Visa is rolling out using the Financial Services Network is virtual cards. These are different from standard-issued corporate cards in that they are electronically generated for each payment and have different card numbers for each transaction. These cards can be generate on a mobile device, but more likely are done by a person in the back office on a desktop, Chikarmane said.

Virtual cards can help with security, as they aren't physical cards that can be stolen or copied, said Chikarmane. But another benefit is faster payment processing with automated settlement, and alignment with detailed analytics tools so companies can better track spending, he booted.

[Related Content: Automating B2B Payments: The Next Frontier]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio