Identifying the Scope of a Bank Integration with SAP Multi-Bank Connectivity (16R)

Objectives

After completing this lesson, you will be able to:

  • Manage the bank integration with the SAP Multi-Bank connectivity
  • Use the Bank Integration with the SAP Multi-Bank connectivity

Bank Integration with SAP Multi-Bank Connectivity

SAP Multi-Bank Connectivity directly connects corporates with financial services institutions.

The solution provides corporates with a multi-bank, digital channel between their ERP systems and their banks. Besides that the solution also offers embedded SWIFT connectivity.

This corporate cloud banking network provides measurable improvement to the accounts payable and accounts receivable functions through automation of all the manual and error-prone steps associated with the execution and reconciliation of payments, order-to-cash applications, and order entry documents.

The use of SAP Multi-Bank Connectivity results in improved control, efficiency, and transparency of the financial accounting process. As the solution automatically updates payment status and cash positions in the ERP system once updates are available from the banks it further improves and streamlines the company's treasury operations.

In monitoring, you can supervise the status of the payment instructions and see which bank statements are received and which expected bank statements are still missing. The monitoring is only available with the Advanced Cash Management license.

The onboarding to the solution is straight-forward and delivered as a private cloud-owned service managed by SAP that is secure and partitioned by each customer and their network of banks.

Bank Integration with SAP Multi-Bank Connectivity Process

The SAP Multi-Bank Connectivity offers a complete end-to-end integration from SAP's digital core to banks for incoming and outgoing payment processes, benefiting all key areas.

The key functionalities of outgoing payments, payment status delivery or statement reconciliation are covered. All of that is securely connected with encryption.

Use Bank Integration with SAP Multi-Bank Connectivity

We now turn to the challenges that financial services providers and corporates face on a day to day basis in connecting with each other. While corporates have to deal with a dozen or so connections, banks are faced with the cost of supporting up to hundreds or even thousands.

These proprietary solutions are hard to extend such as when there is a need to offer new services, and any change takes a long time to roll out to all the corporate customers.

There is also the challenge of understanding where all the working capital is, across a multitude of connections and banking relationships.

Looking at the challenges, corporates on the other hand are pressured by internal and external factors to reduce costs, improve efficiency or cope with new regulation.

As new technologies are rolled out enterprises must be prepared to react quickly foster simplicity and automation.

Next Generation Integration

What we call the first generation of integration, still very prevalent today is the practice of uploading payment instructions and other financial messages to a bank site on a periodic basis. This is typically a manual activity, sometimes semi-automated to occur at particular times. While this works initially for a lot of corporates, over time this becomes hard to sustain as the company's business scales, and becomes very manual and tedious process, with a lack of up-to-date visibility and transparency. From a bank's perspective, too, it is harder to offer new services.

The second generation of solutions are the "host-to-host" solutions provided by banks typically custom developed by the banks in conjunction with the ERP vendors. We have helped several banks on these initiatives. Essentially, the bank with the help of an ERP vendor deploys a system - hardware and software - which is installed at each corporate that provides some degree of integration with their ERP, which then connects back to the bank.

These solutions have proven to be very expensive for both banks and corporates.

So, building on robust new third-generation cloud-based technology, we have the next generation solution, which involves a single connection point across multiple services, multiple corporates and banks, eliminates complexity from the corporate and finally is a solution that SAP sees as strategic and fully supported.

The overall process spans from the SAP S/4HANA Cloud System through the SAP Multi-Bank Connectivity to the external bank.

In the SAP S/4HANA Cloud system the invoice is maintained and the payment process is initiated. The SAP Multi-Bank Connectivity transfers this instruction to the external banks and routes the confirmation transfer back to the corporation's SAP S/4HANA system.

Also, the Bank Statement information is mapped and transferred via the SAP Multi-Bank Connectivity back to the corporation's SAP S/4HANA Cloud system.

The SAP Multi-Bank Connectivity agnostic solution flexibly connects to multiple banks through real-time, batch, or manual upload/download.

Benefit from improved visibility and centralization on a global basis to enhance cash management

You can also make use of new services leveraging the integration to SAP S/4HANA and SAP ERP. Furthermore, bank-specific services can be delivered by SAP Custom Development.

Onboarding

Here we show how the SAP Multi-Bank Connectivity on-boards, activates and runs the relationships between two network members.

SAP has identified a simple three step process to using SAP Multi-Bank Connectivity where the first step involves the on-boarding to the network enabling connectivity, security, and message type mapping or transformation where needed.

The second step is achieved once two network members wish to connect with each other for the interaction of services, or in simple terms, the exchange of messages. The individual members confirm with SAP that they wish to connect and SAP Multi-Bank Connectivity Operations activates the service between the members and informs the pair they are now ready for an end to end test. Once end to end testing is complete the product level connection is activated for productive usage.

Once information is now flowing between members, SAP runs and manages the inter-connectivity to ensure seamless and smooth running of the network delivering real-time messages between the different parties.

Security

Private Cloud

The network is based on a cloud that is owned and operated by SAP. Further there is a separation of data and processing by each bank and corporate participant, as well as digital signing and encryption of data, ensure that integrity, security, and authentication are complete. The membership and connectivity is not open to the public.

Isolation and Authentication

Each network participant has a unique virtual machine or "tenant" for processing and a unique partition (with unique encryption) for data storage.

Tamper-proof hashing algorithms generate proof or origination values.

Data is encrypted in transfer using the following methods:

  • Point-to-point transport level security (TLS/SSH)
  • Message level security (PKCS#7, PGP)
  • Optional VPN

Data is encrypted at rest using the following methods:

  • DB encryption (AES 128)
  • Message level security (PKCS#7, PGP) on SFTP server

How to Integrate with SAP Multi-Bank Connectivity

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