Banking giant Absa is revamping the Vehicle and Asset Financing division of its business, the former Bankfin, as one of the first stages of a five-year, implementation of SAP's enterprise resource planning (ERP) software.
The project is the first deployment of SAP's new Asset Finance and Leasing solution yet undertaken in South Africa, and is scheduled to go live by the end of March 2005.
The solution helps leasing and asset financing institutions to reduce origination and processing costs, relieve margin pressure, and increase profitability.
These are among the key benefits which attracted Absa, say the banking group's Peter Mageza, Group Executive Director. It will also allow Absa to develop products faster in the highly competitive leasing marketplace, grow its commercial and corporate business, and to move into previously unfinanced sectors of the population.
A consortium consisting of SAP Africa and IBM is currently defining new business processes for the bank's Vehicle and Asset Financing division. The consortium will work closely with Absa IT in integrating the system with Absa's core banking, financial systems and methodologies.
SAP Asset Finance and Leasing is a product which integrates lease accounting with enhanced customer relationship management. It supports the entire lease life cycle, from origination pricing and contract generation to financial reconciliation and customer service based on mySAP CRM's enhanced capabilities.
SAP Africa's General Manager of Financial Services, Lloyd Chisholm, says the benefits include reduced origination and processing costs, less margin pressure and increased profitability.
"The leasing market has grown too complex for old-fashioned customer acquisition, processing, and asset-management methods," says Chisholm.
"With the solution, companies can expand product portfolios more readily, integrate new portfolios and enable further penetration into the client base, while decreasing operational costs. It makes for better collaboration with business partners while allowing customers to realise cost efficiencies that improve the bottom line."
Absa's Mageza says the overall plan for the company-wide ERP implementation will be mapped out by mid-2004. This includes work streams looking at compliance with generally accepted accounting practices and the International Accounting Standard (IAS/AC133), Basel II, management accounting, procurement, real estate requirements, architecture enablement and common financial language.
"The implementation will include a traditional ERP implementation with procurement, property and finance modules, and SAP's Bank Analyser, which will satisfy Basel II and IAS/AC133 requirements, as well as the sourcing of information from traditional core banking systems," he says.
Mageza says the real benefits of the SAP implementation will only be seen after four years, but they'll be worth waiting for. They include improved efficiency, flexibility, improved maintenance, fewer interfaces and applications, and compliance with regulatory issues.
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