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SAP has announced that in a joint venture with the investment firm Dediq GmbH they have set up a new unit dedicated to the financial services industry. As part of the new venture SAP will create a suite of products targeting commercial banking and insurance operations.

Dediq will be investing $500 million and providing development expertise. SAP will transfer many hundreds of staff to work on this new area of their business portfolio, which will be based on existing SAP software. The FSI Unit will offer solutions built on SAP technologies such as SAP HANA, S/4HANA and SAP Business Technology Platform.

SAP CEO Christian Klein said: “Through partnering with Dediq, we will significantly increase our support for the digital transformation of customers in the financial services industry and deliver innovative cloud solutions at an accelerated pace that help them transform their business holistically. Financial services is a key industry for SAP, and today we not only reiterate but also reinforce our commitment to this market.”

While SAP solutions have already been chosen by 80% of the top 1000 banks and insurers, this new extension to the SAP portfolio will cover the in-depth operations processes of the banking and insurance sectors: integrating data and giving these customers the option of moving these processes to a version of SAP Business Technology Platform in the cloud that is specific to the industry.

Luka Mucic, CFO and member of the SAP board pointed out that the FSI market represents a huge opportunity: “ To unleash this potential, we will use our unique capability to provide enterprise-grade solutions. Jointly, we will extend our existing FSI portfolio to cover banking and insurance processes end to end. Helping our customers to become more agile through digital business innovation and cloud technology will be front and centre for our new FSI Unit. The new unit will be very flexible and customer-centric with full autonomy to set its strategic direction. At the same time, it will be a strong member of the SAP family. Customers will benefit from SAP’s leading technology and the FSI Unit’s agility and focus on their specific needs.”

The type of service that SAP is seeking to provide will include, for example, lending solutions for banks that reduce IT cost and complexity in the operation of origination and credit risk assessment, through to re-financing and bank management, by keeping all data accessible in one location.

The new FSI unit should be operational in the 3rd quarter of 2021 pending anti-trust approval, with preparations beginning over the next month.

This partnership serves to augment SAP’s comprehensive industry cloud portfolio strategy which provides tailored solutions for 25 industry sectors.

In his assessment of this new branch of SAP, the vice-president of IDC Financial Insights said:

“Today’s financial services industry is challenged to balance agility and innovation with risk, resiliency and scale. With this announcement, SAP is responding to the needs of its clients to improve speed of innovation while continuing to provide enterprise-class and mission-critical products and services to the industry.”

The Managing Partner for Dediq, Matthias Thomann commented: “We see the future of FSI software solutions in the cloud. SAP’s platform has unrivalled potential when it comes to supporting the core operations of large-scale businesses like banks and insurers as well as new emerging ecosystems. Making this vision a reality in financial services is highly exciting to us.”

For more New and Insights from Ignite SAP click here.