How Deutsche Pfandbriefbank (pbb) transformed and streamlined the lending journey with Credit Workplace

Setting the scene:

We found a situation at pbb that we regularly observe at comparable, long-standing institutions with extensive existing IT:

• A fragmented IT landscape with different levels of support in the overall process: There was no consistent support for the overall process , but a wide variety of IT solutions in sales and subsequent loan processing processes.
• IT at the end of the life cycle: In some cases, IT systems were in use that had reached the end of their life cycle and whose modernization was therefore difficult to justify economically. This meant that manual process-related workarounds had to be established with significant corresponding effort.
• Poorly integrated IT with numerous EUCs (End User Computing): Many business functions were supported by stable and appropriate computing cores (e.g., pricing, rating, balance sheet analysis, cash flow analysis). In addition, numerous EUC solutions (including Excel and Word) were used for data processing and the loan approval process. The existing computing cores and EUCs were usually not integrated.
• Numerous media discontinuities: Due to inadequate integration, processes were heavily document-based, requiring (sometimes repetitive) high-effort manual data extraction from one system for data entry in another.
• Inconsistent data: For a significant part of the data, no unique source of truth was defined. The result was inconsistencies in terms of time and content, which to resolve required significant additional effort and extended quality assurance measures in the context of data entry and data update processes.
• Employees’ desire for improvements: The numerous manual process-related workarounds for data transfer and time-consuming data quality loops led to employee dissatisfaction. There was a desire for up-to-date solutions and processes for the cross-team and cross-border processing of business transactions.

The challenge: efficiency optimization

In the past, pbb has modernized and consolidated large parts of its IT landscape. In bank management and loan management, the bank relies heavily on a comprehensive, stable, and mature SAP/SAP Fioneer platform. However, an analysis confirmed that the degree of digitization and IT support in sales and risk management processes could be significantly improved. The aim was to leverage this potential and to achieve a significant improvement in efficiency in the central credit processes (mainly sales and loan processing); as well as an increase in employee satisfaction through modern IT support and processes.

The solution: Targeted co-innovation

It quickly became clear that there was no off-the-shelf solution available on the market that would support the entire loan lifecycle end-to-end (from initiation to processing to repayment/exit) and that would be well integrated with the underlying portfolio management systems.

However, both requirements could be optimally met through a joint co-innovation that combines the technical expertise and industry overview of SAP Fioneer with the technical expertise of pbb in a standard product: Credit Workplace (CWP).

CWP provides a comprehensive, integrated solution for the bank’s employees and is therefore the central expert workplace for sales staff (origination and underwriting), but also for the experts in portfolio management and credit risk management in commercial real estate financing. In addition, other areas, such as real estate experts and back-office employees, benefit from the solution. The Credit Workplace addresses the needs of the users with pinpoint accuracy.

In addition to the broad coverage (end-to-end) and the high range of functions, a few but fundamental basic principles were defined together with our co-innovation partner:

1. Clearly defined data sources: All data involved in the lending process originates from a single source of truth. Wherever possible, we use the portfolio-managing systems for data storage (especially for the frequently changing data of new business) and distribute this data to connected systems via automated interfaces. Only information that typically cannot be managed in the portfolio-managing systems (e.g. risk indicators such as LTV, ICS, DSC, or covenants and ancillary agreements as well as documentation of decision-making processes) is physically stored in CWP itself.
2. Data via documents: Of course, credit processes in commercial real estate financing require an extensive, internal and external exchange of documents. These documents are also managed and archived centrally. In CWP, however, the employee always works on the data and not on the documents. All internal, paper-based processes are consistently replaced by interactive views of data. This applies in particular to all decision-making documents such as credit decisions or annual reviews, and at all levels (employees, management, board of directors, and supervisory board). Interactive dashboards are being used instead of document-based decisions.
3. Transparency: All tasks are organized via a task and event concept. An event (e.g. a credit decision) is assigned clearly defined tasks that can be added and adapted in the system as required. The corresponding need-to-know principle ensures that every employee concerned has maximum transparency about the status of a deal at all times. Above all, this makes it much easier for different teams to work together and delegate tasks.
4. Integration: CWP is based on the principle of “open core”. This allows bidirectional integration with existing peripheral systems. Manual interfaces and the repetitive entry of data can be reduced to a minimum. Native integration with the SAP or SAP Fioneer backbone avoids cost-intensive, customer-specific integration solutions.

The result: Fioneer Credit Workplace

The solution was achieved with a very high delivery reliability in just 18 months. The anticipated potential benefits, in particular an efficiency increase of approximately 20% over the entire process became a reality and the Credit Workplace has already proven its importance in operations. Initial teething problems were quickly identified and rectified together with the experts from pbb. This puts pbb in a much better position than many comparable institutions, which are currently only able to create transparency in their sales and loan processing processes with a high level of manual effort.

CWP has been designed to support the financing of commercial real estate. Asset-based lending regularly covers other asset classes; therefore, an expansion of the solution (e.g., for financing of ships, aircraft, etc.) is reflected in the roadmap. In addition, an expansion in the direction of project and corporate financing is also planned (cash flow-backed lending). Last but not least, the comprehensive, quality-assured and structured data basis offers an ideal prerequisite for using artificial intelligence methods to leverage further efficiency potentials that are still denied to other institutions, which do not yet have their data under control.

The very positive response in the market shows that this co-innovation has struck a chord with the industry.

“CWP is more than just an off-the-shelf product: By combining standard and institution-specific adaptations, we were able to support both the processes in the store and those in the back office and significantly improve process efficiency overall.”

Andreas Hoschek, Director Operations and Digitalization at pbb