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Chair of Information Systems IV (ERIS)
Institute for Enterprise Systems (InES)
IS 604: Contemporary Issues in IS
Banking Enterprise Systems
Prof. Dr. Alexander Mädche
Chair of Information Systems IV
Institute for Enterprise Systems
Lecture
supported by:
Agenda – Session III
Agenda
1 B2tec Company Overview
2 Introduction to SAP Banking Services
3 SAP Business Partner
4 Contract Management
5 Product Configuration
6 Financial Conditions & Pricing
… …
IS 604 Banking Enterprise Systems
2
3 Financial Conditions and Pricing
Corr
espo
nd
en
ce
Pe
riod
ic
Pro
cessin
g
Double,
Triple,
Quadruple
Control
Archiving
Product Configuration
Accounting
Financial Conditions/Pricing
Contract Management
Financial
Customer
Information
Management
Reporting
Collateral
Insurance
Order Management/
Business Operation
Posting Control Processing/
Exception Handling
Open Item Management
Combined Settlement
Payment Distribution & Monitoring
Master Contract Management
Posting Lock
Management Settlement
Currency
Conversion
Cash Flow Item Management/
Payment Services
Billing and Invoicing Payment Distribution
Pooling
Credit Facilities
IS 604 Banking Enterprise Systems
Financial Conditions and Pricing 4 F
ron
t-O
ffic
e
Mid
-Off
ice
Ba
ck-O
ffic
e
Contact Advisory Offer Deal Mainte
nance
Create BP
Create
Account
Maintain
BP
Maintain
Account
Settle
Account
Create
Product Maintain
Product
Maintain
Conditions
Create
Conditions Assign
Product
Define Ind.
Conditions
Manage
Payments
Maintain Product
Pricing List
Create Product
Pricing List
Account
Settlement
Posting
Control
Business
Processes
Business
Events
Business
Transactions
Book on internal
accounts Reporting
Account
Closure
Current account life-cycle
Order
Management
Payments
IS 604 Banking Enterprise Systems
Financial Conditions and Pricing
IS 604 Banking Enterprise Systems
5
Describe the function of conditions and cash flow
calculator
Understand the financial conditions model from SAP
Banking Services
Describe the differences between standard
conditions and individual conditions
Define replacement possibilities of Standard
Conditions by Individual Conditions
Explain time-dependency of conditions
Understand levels of Pricing
GOALS OF THIS UNIT
Agenda: Financial Conditions and Pricing 6
IS 604 Banking Enterprise Systems
Agenda
1 Financial Conditions
1.1 Condition Model
1.2 Cash Flow Calculator
1.3 Creation of New Condition
1.4 Standard and Individual Conditions
1.5 Time Dependency of Conditions
2 Pricing
2.1 Pricing
2.2 Product Pricing List
Financial Conditions 7
IS 604 Banking Enterprise Systems
Financial requirements (conditions) form the basis for the contract agreed upon
between the bank and its customers.
The Financial Condition component in banking services from SAP provides functions
that can be used to define the contracts between banks and its customers.
The Financial Conditions component gets and saves all data required for calculation
and evaluation of financial transactions or cash flows in a set of rules. Some of
this data is imported to the Cash Flow Calculator, so that calculations can be
made.
Condition Model I 8
IS 604 Banking Enterprise Systems
SA
P
Pre
defined
Custo
miz
ing
Applic
ation
Condition Group Category Condition Category
Condition Group Type Condition Type
Condition Group Condition
Ex.: Settlement Ex.: Settlement interest
Ex.: Settlement current account 1 Ex.: Credit interest
Settlement current account 1 Credit interest 2,50 %
This level describes the basic functionality of the conditions, i.e. how conditions are calculated. Condition
categories and condition group categories are SAP predefined and cannot be modified or extended.
Any number of condition types and conditions group types can be flexibly configured on the Customizing
level. They can be defined new or based on SAP delivered templates.
Conditions and condition groups are created in the application. Conditions are created based on
condition type and assigned to condition group.
Structure of conditions in banking services from SAP
Condition Model II 9
IS 604 Banking Enterprise Systems
SA
P
Pre
defined
Custo
miz
ing
Condition category
Upper level element central for financial conditions
Determine the basic functions of the conditions that are based upon them
Defines how a condition (for example, settlement interest) is calculated
Each condition category is assigned to a specific condition group category
Condition group categories and condition categories are fixed and predefined by SAP
Condition type
Middle level element, which can be seen as templates that need to be defined according to
the business needs
Used for creating specific conditions in the application
Condition types are grouped into condition group type according to the assigned
condition category
It is possible to customize any number of condition types and condition group types
Custo
miz
ing Condition
A financial transaction or a contract which usually has been agreed on upfront when signing
the contract
The concrete, temporal expression of a condition type
Conditions are created based on condition types as templates in the application
Conditions are grouped into the condition group
Condition Model III 10
Dependencies in the condition model:
In order to prevent random combinations of condition categories condition group categories are defined.
Furthermore condition group categories are assigned to condition group types in the customizing,
which are templates for condition groups in the application.
Example of usage of condition model in the system:
For the account XY bank sends quarterly bank statement with all turnovers that took place during the period.
Each dispatch is viewed as an event by the system and triggers check of the Event Condition Group
Category. Thus, if the account has a condition:
IS 604 Banking Enterprise Systems
Condition Types Condition
Categories
Conditions Condition Types
are specific forms of
are specific forms of
then, it can be charged according to
condition ‘Bank Statement Charge’,
every quarter for sending bank
statement.
Condition ‘Bank
Correspondence
Charge – EUR 5’
Condition Group
‘Correspondence
Current Acct’
Condition Group
Type ‘Event
Current Acct’
Condition Group
Category ‘Events’
Is contained in
Has assigned
Has assigned
Condition Model IV 11
Condition Group Categories
Settlement Contains condition categories that are used for interest and charge
calculation
Transaction Contains condition categories that are used as a direct result of
executing a particular payment and are used to define the value date of
a payment item
Event Contains condition categories that are applied based on a certain event,
for instance creating of a standing order or account closure
Card Contains condition categories that are used in connection with a card,
but that are not posted (for information only)
Bundle Pricing Calc. Contains condition categories that are used in combined settlement for
Master Contracts
Payment Contains condition categories that are only used by loan accounts to
simulate expected payments
Automatic Waiver Contains condition categories for automatic waiver conditions, for
example, fee waiver in a settlement per
Not Contract based Contains condition categories that are independent of a contract, such
as a consulting fee
Interest Reimbursement Contains condition categories for refund interest in cross currency
notional pooling scenarios
IS 604 Banking Enterprise Systems
Condition Model V 12
Condition Model Summary:
Classification and grouping options for conditions
Condition model can be used for SAP Deposit Management, Loans Management,
and Bank Analyzer
Great degree of flexibility
Standard conditions are maintained and managed separately from the contract
Individual conditions are possible for each contract and overwrite standard
conditions
Conditions are time-dependent
Standard conditions of some condition group types (settlement, bundle pricing,
calculation, payment and interest reimbursement) can be charged retroactively
Link between standard conditions and contract can be defined through:
Product
Product Pricing List (standard conditions will be derived via several rules)
Business Partner (definition of a business partner standard price)
IS 604 Banking Enterprise Systems
Cash Flow Calculator 13
Condition processing
Conditions check
Administration of conditions
Processing, administration, and
merging of standard conditions
Display of merged condition
Release of conditions
Financial Conditions
Controls calculation of:
Interest
Effective Interest
Settlement Charges
Installments
Cash Flow
Transaction charges and event
charges
Cash Flow Calculator
Deposit
Management
Loans
Management Bank Analyzer
IS 604 Banking Enterprise Systems
The Financial Conditions component supplies the conditions and the Cash Flow Calculator
determines the results. Cash flow calculator is a foundation for interest and charge calculation in
banking services from SAP.
Create New Condition 14
• New condition is defined in the application level. It must be assigned to one condition group,
which is also created in the application. However, conditions and condition groups are
created based on templates. For this reason condition type and condition group type have
to be configured beforehand.
• Condition group types with relevant condition types are configured on the customizing level.
SAP delivers some predefined condition types and condition group types, which can be
changed and extended or they can be used as a basis while creating new ones.
Example:
The bank defines own condition group type for the settlement conditions and assigns relevant condition types
necessary for the new product. Only the assigned condition types are allowed for accounts using this product.
IS 604 Banking Enterprise Systems
Settlement
_Current Account
Young
Professional
Debit Interest
Overdraft Interest
…
Step 1 Step 3 Step 2 Step 1. Define condition group
type
Step 2. Define condition types (or
use SAP predefined condition
types)
Step 3. Assign the necessary
condition types to condition group
type
Given three steps are done on
the customizing level
Create New Conditions 15
The new product needs except settlement conditions also specific conditions for transactions and specific
conditions for events. These two condition group types belong to the categories ‘transaction’ and ‘event’.
Thus, two more condition group types have to be defined with relevant condition types.
Step 4. Define condition group types
Step 5. Define condition types
Step 6. Assign condition types to one condition group type
Step 7. Assign condition group types with condition types to the product
Given steps are done on the customizing level
IS 604 Banking Enterprise Systems
Product: Current
Account Young
Professional
Settlement _Curr.
Acct. Young
Professional
Transaction_Curr.
Acct. Young
Professional
Event_Curr. Acct.
Young Professional
Debit interest
Overdraft interest
Acct. Maintenance charge
Direct charge
Bank Statement charge
Closure charge
Transaction charge
Value date
Step 4 Step 5 Step 6
Step 7
Create New Conditions 16
In the Application, the bank has to define specific condition groups it needs and the particular conditions with
exact values. In a condition group, only one condition of a same condition type is allowed at the same time.
Step 8. Define condition group
Step 9. Define conditions
Step 10. Assign conditions to one condition group
Given three steps are done in the application
IS 604 Banking Enterprise Systems
Settlement Current Account
‘Young Professional’
Settlement Current Account
‘Corporate Clients’
Debit Interest 12%
Overdraft Interest 15%
Acct. Maintenance
Charge €4
Debit Interest 10%
Overdraft Interest 13%
Acct. Maintenance
Charge €4
Step 8
Step 9
Step 10
Standard and Individual Conditions 17
Difference between Standard Conditions and Individual Conditions
Condition Criteria
Standard Condition
Individual Condition
Is valid for all contract with the same condition
group
Is managed centrally
Conditions of one condition group are valid for the
contract as long as the condition group is assigned
for this contract
The condition is valid for precisely one contract
The condition is created or changed in the
contract
The validity of the condition for a contract is
defined in the individual condition
Permitted Replacement Categories Set of Rules:
Replace Completely Absolute Markup Relative Markup Selective Replacement
IS 604 Banking Enterprise Systems
Standard and Individual Conditions 18
IS 604 Banking Enterprise Systems
Example of Replacement Category: Replace Completely
An individual condition replaces or overwrites the standard condition in a defined area and is created for a
specific contract.
Only the standard condition is valid in the first period, only the individual condition is valid in the second
period. After the individual condition expires (third period), the standard condition is valid again
Standard and Individual Conditions 19
IS 604 Banking Enterprise Systems
Example of Replacement Category: Absolute or Relative Markup/Markdown
An individual condition can be defined as a markup or markdown of the standard condition (markup
condition)
Calculation for absolute markup conditions: amount of the individual condition is added to the amount of
the standard condition (for a markdown condition, also set a minus in the field)
Calculation for relative markup
conditions: the amount of the
individual condition is multiplied
with the value of the standard
condition: An individual
condition with 80% means:
standard condition (for example
10%) * 0.8 = 8%. The Individual
condition is calculated as being
80% of the standard condition.
Time Dependency of Conditions 20
IS 604 Banking Enterprise Systems
The valid-from date of the next period condition restricts the previous period condition. The validity end of the
previous period is then the valid-from date of the next period minus one calendar day.
Time Dependency of Conditions 21
IS 604 Banking Enterprise Systems
Individual conditions usually have a valid-to date, since they are often temporary. In the example below an
account has assigned standard credit interest condition of 5%. However, to the same account was assigned
temporary individual credit interest condition of 6% with validity period from July 1st - to August 31st, which
overwrites standard condition. After validity end of the individual condition the standard condition will be valid
again.
Agenda: Financial Conditions and Pricing 22
Agenda
1 Financial Conditions
1.1 Condition Model
1.2 Cash Flow Calculator
1.3 Creation of New Condition
1.4 Standard and Individual Conditions
1.5 Time Dependency of Conditions
2 Pricing
2.1 Pricing
2.2 Product Pricing List
IS 604 Banking Enterprise Systems
Pricing 23
Pricing defines product related and business partner related prices that can
be standard prices or customer negotiated prices for business partners
and contracts, as well as the rules of how these prices are combined and
inherited.
Pricing is relevant for all Financial Service price bases, for example settlement,
transactions, and events.
Pricing offers the bank a central point for price definition and maintenance for any product.
Pricing is used for bank services, deposits, loans, product bundles, and so on.
There four levels of pricing:
The result of one level can be
overwritten by the next level (first
level has the lowest priority and
fourth level has the highest
priority)
BP Default Price
Product Pricing List
BP Standard Price
Pricing Agreement
Individual Conditions
First level (a)
First level (b)
Second level
Third level
Fourth level
IS 604 Banking Enterprise Systems
Product Pricing List 24
Product Pricing List - is a list of possible prices for a single product or a product
group. Depending on different criteria, the conditions for a contract are
determined dynamically.
Enables a bank to consider different prices for identical products
The conditions are no longer assigned directly by a product, they are derived by using rules
The requirements for deriving conditions must exist in the contract and may be derived
along the hierarchical list
Ex.: Product Pricing List based on the Geographical Regions
Product Curr Account
Worldwide
Region EMEA
Region AMERICA
Country = Germany
Country = Austria
IS 604 Banking Enterprise Systems
Financial Conditions and Pricing 25
Financial conditions are the basis for a contract agreement
between the customer and bank. The Financial conditions
component in SAP BaS gets and saves all data required for
calculation and evaluation of financial transactions or cash flows in
a set of rules.
A Condition model provides an overview on the structure and
layering of the conditions in SAP BaS. The first layer is SAP
standard, where condition categories and condition group
categories cannot be changed or extended. On the middle
customizing layer condition types and condition group types can
be configured based on the condition categories and condition
group categories. On the upper level in application end-user can
flexibly define any number of conditions based on the configured
templates from the middle layer.
The difference of individual conditions from standard conditions is
that individual conditions are defined only for one contract,
managed individually and can overwrite standard conditions.
Pricing in SAP banking services defines product related, business
partner related or contract related prices and rules of how these
prices inherited and combined.
IS 604 Banking Enterprise Systems
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