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What is SAP Fioneer: SAP is expanding its Financial Services practice by partnering with Dediq GmbH to help boost SAP’s efforts to gain more traction in the FS sector by supplying innovative applications for end to end banking and insurance processes.

  • Dediq GmbH has invested over 500 million euros in the newly formed unit and will receive an 80 percent share in return. SAP brings its products, organizational units and the sales network into the business and holds 20 percent of the shares.

  • The JV unit has been named SAP Fioneer in May 2021. SAP Fioneer will be the part of SAP’s high-potential industry-cloud solutions and will focus on core FS areas of commercial lending, transactional retail banking, core insurance, as well as insurance finance and bank management, to develop new fintech products for banking and insurance business customers.

  • SAP Fioneer is expected to be operational in the second half of FY2021.

What is the Goal of SAP Fioneer?

The new solutions under SAP Fioneer will cover the full cycle of banking and insurance operations processes and help meet regulatory requirements They will be based on integrated data and provide an opportunity to move FSI processes to the SAP Business Technology Platform in the cloud.

SAP Fioneer seeks:

  1. To deliver innovative cloud solutions at an accelerated pace for customers in the Financial Services Industry to transform their business holistically.

  2. SAP wants to offer tailored solutions that can cover the entire processes of banks and insurers and will run on SAP HANA, SAP S/4HANA, the SAP Business Technology Platform in the cloud

  3. SAP wants customers to be more agile through digital business innovation and cloud technology will be front and center for Fioneer.

What the spin-off really means for SAP?

SAP is expecting gains from licensing its core database and cloud technology to Dediq. SAP will contribute intellectual property in return for a 20% stake. SAP Fioneer will have full autonomy to set its strategic direction. SAP seeks to shift its Financial Services customers more quickly into the cloud and, stay relevant at a time of digital disruption and hence, they are going to transfer a triple digit number of staff to SAP Fioneer.

This strategic alliance is much more than just a mere financial investment, it is aimed at developing the premium financial service offering that would reflect SAP's strategic priorities towards their FS customers, and eagerly setting the pace in the high-change tech industry.

Through this JV, SAP wants to advance their position in the FSI space and this partnerships with Dediq is important in every sense because Dediq’s portfolio includes Convista Consulting, that has unique expertise in SAP financial solutions (TRM, CML, FPSL Israel localization) as well as in integration solutions using SAP PI/PO and other various SAP technologies.

Why the increased focus on FS industry by SAP?

The separation of the FSI unit from the group structures of SAP will allow the establishment of a focused company to respond swiftly to customer needs and to expand the breadth and depth of the product portfolio more quickly in line with changing market requirements.

SAP seeks to double down on their commitment to industry cloud solutions in this dynamic market. The increased and focused interests toward FS industry is natural and simple because the FS sector has undergone an extraordinary transformation over the last year and SAP has already a proven track record in the fintech industry. Over 80% of the top 1,000 banks in the world and insurance companies are SAP clients.

Tapping the Unlimited Opportunities in the FS Industry:

The Financial Services and Insurance market offers a huge opportunity for SAP to extend their existing FSI portfolio to cover end to end banking and insurance processes.

  • FS Customers demand Innovation: In financial services, the shift toward cloud has been well underway for years - the pandemic accelerated this shift as new capabilities were needed to respond to new customer demand under newer circumstances presented by the pandemic. Every year, FS companies in the industry have accelerated their allocation of their IT budgets to cloud-based technologies. Customers increasingly demanded improved ways to engage with their banks, to access their assets via multiple channels. Banks will become a platform for digital services that reflect a wide range of capabilities — both banking- and nonbanking-related.

  • Increased adoption of Cloud by FS sector: The analysts firm IDC suggests, most banks were spending roughly 20 percent of their budgets on cloud-related expenses until 2018. By 2020, that figure was up to 33 percent. As per a latest Nutanix report (Enterprise Cloud Index for Financial Services), the adoption of hybrid cloud by BFSI sector is set to grow 39% in next 5 years. More than 50% of financial services companies reported that covid-19 led them to increase their investments in Hybrid Cloud.

  • SAP’s FS customers and their Cloud journey has been extremely exceptional in ways more than just operational gains. Some of SAP and Dediq’s customers and early-adopter partners such as Google, Microsoft, EY, Vast Bank, and Berlin have already expressed their support to the SAP FSI strategy. Google Cloud has partnered with SAP’s FSI Unit to deliver AI and ML-based innovations for financial services customers including delivering capabilities to scale-out SAP S/4HANA for Financial Products Subledger on Google Cloud. Vast Bank is looking forward to collaborating closely with SAP’s FSI Unit to drive SAP industry solutions into the US market.

Hence, the formation of SAP Fioneer is a next huge step towards SAP’s evolution of its large Financial Services business away from its on-premises foundation and toward its all-cloud future. SAP will now be able to address the cloud-oriented digital needs of the massive financial-services industry through SAP Fioneer to better serve the rapidly changing banking and insurance industry.


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