The Financial Platform of Sopra Banking Software by James Powell, Head of Asset & Consumer Finance

Thank you eric good morning good afternoon everybody um i’m going to talk for a few minutes about auto finance mobility and the role that software banking software plays now and in the future in the in that industry so the first thing to say is as to reiterate what eric said earlier is we created a global business unit inside of sopra banking dedicated to auto

Asset finance and that’s predominantly auto finance so you’ll see on the right hand side of the screen there a number of logos that’s not all of our customers but some significant global players in there as you can see and in all cases we’ve formed strategic partnerships with those with those companies in many cases we’ve uh we’re supporting their operations in

Multiple countries to give you examples bmw in 12 countries in europe and asia pacific uh mercedes-benz mobility uh 15 countries in europe and north america credit agriculture i think six countries now in europe and that’s a very typical way that we engage with with our customers supporting their their their core operations with enterprise applications eric’s

Already covered the software financing platform just to say really that we are from many of these organizations offering end-to-end solutions consumer finance commercial finance and other specialist lending products and increasingly investing and bringing digital engagement components i’ll come back to that later on all enabled by the sopra cloud platform so

Coming onto the industry uh a lot of change going on industry a lot of drivers for that change as you can see in the middle i’ll come back to that in a minute what i wanted to focus on is the the transition the evolution from traditional automated finance to future mobility so the first thing to say is that i think it’s 50 plus years is is the the model has

Remained largely unchanged where vehicles are manufactured they’re purchased they’re financed and then after sales services kick in and there’s a very sophisticated after-market second-hand market for vehicles um and very mature in that area but largely speaking the financial products haven’t really changed in this area we’re talking leases loans in the higher

Agreements and the way that the customer purchases a vehicle through a point of sale often a dealer and a close relationship between that dealer sometimes ownership from the oem and then the lender and sometimes captive finance companies owning the lender of course so that model’s been in place for many many years but what we’re now seeing is that through

Changing consumer behavior in similar to the way it is in the wider financial services sector things like the customer needing to be digital uh reluctance to go into bricks and mortar so reluctance to go to dealers and into the bank but also sustainability both from the consumer perspective and also in on the corporate agenda in the boardroom but probably the

Biggest driver and we’re seeing this increasing and accelerating now is techno technological advancements both in terms of digitization of the current process um but also in terms of the the vehicles themselves evs connected car autonomous which much talked about in the industry and then the final driver that i will mention here which has to be mentioned is

The pandemic which is i think has accelerated all of these these aspects good example being e-contracting which has been around for many many years as a thing but really gained traction in the last two years when people just simply weren’t able to go into dealerships and buy cars buying online and e-contracting so what does that mean for future mobility well

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In simple terms customers want choice they want flexibility they want more financial products creative financial products that kind of recognize the changes they want to be able to go to to have different channels to market they want direct to consumer you can see that there so these are all forming challenges and opportunities for the lenders and the oems to

To to meet that changing world also a really significant thing and it’s it’s been talked about for the last five or six years uh heavily in the industry is the sharing community is driving the transition from purchase and finance to usage and subscription so you see on the screen their subscription being a very important thing as we go through now the lenders

Are really struggling to to find the right balance between bringing these models in meet the consumer needs but also manage the risk in other aspects of their business the final point to make there is really around fleets we see that fleet the fleet market is going to expand if you think about the way fleets have operated in the past and the way they will in

The future are you even think about the the role of the dealer in this transaction is i think there’s going to be larger fleets that are going to be supporting that kind of moved more towards mobility and so so that’s going to change we’re going to see new entrants come in we’ll maybe see dealers that that kind of evolving into larger fleet operators so all

Of that as i say has created a challenging opportunity for the the the lenders and the oems and what we’ve seen really is two phases um the first phase which has been in place now for a number of years is about digitalization of the current processes in place and been going on for the last 10 years really accelerated but we’ve seen new products emerge we’re

Seeing new channels emerge as i say direct to consumer being a really really big one and it’s worth mentioning that one of the major obstacles to to the change in this industry has been it’s the second biggest purchase that any individual is going to make behind the house so people want to go and they want to sit inside a car and smell the leather that’s

Changing with the with the new world people are willing to buy cars online simple as that so we see that change but i think the more disruptive changes phase two which is taking us to genuine mobility as as a service where the lenders and the oems need to be understanding how they can support the consumer’s needs not just for vehicles but their wider mobility

Needs and we see that emerging and that really is where new business models are going to be required for for all the key players so what’s the role that software banking software plays in this um the strategy really is to focus on our core competence um and those are some of the traditional competencies um that are deeply embedded in our organization such as

Digital processing engines and also we are in a niche market here in automotive so a deep understanding of those business processes those are going to be key components of how we deliver value to our customers going forward and also integration so really the the end game here for us is the ecosystem platform i’ll talk about that a little bit more detail in a

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While but in order to be able to serve that new business model we need to be able to handle integration in a much more slick way going forward and then partner management becomes a crucial aspect again i’ll come back to that in terms of the components of the operating model i think it’s worth me saying that we’ve been doing asp application service provision

For 25 plus years um so it was a natural evolution for us to move into cloud and into sas a huge amount of investment has gone into into cloud over the last five years again not enough time to get into that in detail but maybe some questions later um and what that means for us in terms in terms of cloud is is leveraging economies of scale uh delivering value

To our customers through bringing cloud services but really the ultimate combination of that cloud investment has been on the sas side so around about two years ago we launched what i described as a true sas product and eric mentioned it earlier what what the way i defined true sas is cloud native multi-tenanted and evergreen software and that last one’s

Really important because it removes the need for big upgrades we initially developed that that offering for small companies startups finance companies and the interest in evolution for us is uh our second customer was bmw financial services so that proves i think that sas is applicable to larger organizations albeit initially they’re smaller subsidiaries

Where they’re looking for time to market low tco and just general speed a lack of disruption but we see in the future that being more applicable to larger organizations across the the industry um subscription is a obviously a very um key component that eric mentioned earlier about subscription um this drives both recurring revenues but the other thing that’s

Been really important for the success of our business in the past and will continue in the future is subscription models as a business model brings you closer to your clients and directly links their success to your success and that’s a really important aspect open api is really an absolute no-brainer so i won’t get into too much detail but we spent a lot of

Time ensuring that we can have our multiple engines talk to each other talk to obviously other components within the software world but also importantly to the the wider ecosystem and as i said earlier the big challenge that we have is to bring all these components together we we think we’re pioneers in the sas area inside the automotive finance industry we

Need to bring all this together into an ecosystem platform to take us to the next level so i’ll finish up by um get get into a little bit more detail on the on what the ecosystem platform is for us the first thing to mention is that it’s leveraging existing assets inside the business so the digital processing pc you see in the middle there is is where we’ve

All come from in terms of our sophisticated flexible financing engines um and those continue to be the the core that sits in the middle of this platform but what we’ve increasingly been doing is is is investing in the digital engagement piece um and so that blue area of digital engagement around the digital process is really where we’re focusing on our core

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Competence and that’s really engagement with our customers with their customers and their partners to bring added value um so examples of that being portals that are accessing out to dealers and oems and other stakeholders in in the in in the area but also in digital engagement we’re starting to bring some of the areas some of the functional components that

Would have been in the processing piece out to the front end so for example credit risk analysis and so on and business intelligence and then just as importantly as all of that is where we don’t think it it meets our core competence or where there’s a best-of-breed solution out there already then the the idea is that we partner with ecosystem partners and

That’s in order to bring added value to the customers that we wouldn’t otherwise bring so that’s the whole concept of of the platform is bringing all those things together and again all those components in the last slide around open apis as you can imagine will be very important the focus for us here though is is scalability speed is the thing people don’t want

To go through large two three-year projects to bring systems to market they want speed and that’s been the major focus for us i’ll give you maybe one example that brings together digital engagement and the partner ecosystem is that we’ve recently become an isv partner for salesforce and we’ve built some significant digital engagement components on top of the

Salesforce platform that’s been about speed to market as much as anything but also tco and obviously bringing value both to ourselves and our customers um i guess the final comment i would make around the ecosystem platform is that it’s really to enable a new business model that the positions sopra bank is software in the center of the ecosystem and allows

Our customers therefore to leverage that ecosystem by connecting it with us and the end game for us is we’ve i mentioned earlier that we have subscribers we’ve been we’ve been doing subscription for 20 plus years with the lender but the ideas with the ecosystem platform is that we sit in this central position we we move from being a technical hub where we’re

Connecting up all these different services and and other components to be in a contractual hub where we are the the center of the ecosystem with the uh with the ecosystem platform and that opens up then the possibility for us to have all the other key stakeholders in the ecosystem subscribing to us the benefit for them is that they they’re subscribing in one

Place to gain all the the benefit from these these services and the benefit for us is that it puts us in the middle um so with that i’m going to hand back to nikola to conclude the day

Transcribed from video
The Financial Platform of Sopra Banking Software by James Powell, Head of Asset & Consumer Finance By Sopra Steria