vidéo en anglais
Title: The Financial Platform of Sopra Banking Software by James Powell, Head of Asset & Consumer Finance
James Powell - Head of Asset & Consumer Finance - Sopra Banking Software
Thank you, Eric. Good morning. Good afternoon everybody. I'm going to talk for a few minutes about auto finance, mobility and the role that Sopra Banking Software plays now and in the future 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.
Slide: Specialized Finance Market SBS Positionning finance.
James Powell
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 formed strategic partnerships with those companies. In many
cases we're supporting their operations in multiple countries. To give you examples, BMW in twelve countries in Europe and Asia Pacific.
MercedesBenz mobility, 15 countries in Europe and North America. Crédit Agricole, I think six countries now in Europe. And that's a very typical way that we engage with our customers supporting 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.
Slide: Automotive Industry Transformation
James Powell anking Software
All enabled by the Sopra Cloud Platform. So, coming onto the industry, a lot of change going on in the 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 transition,
the evolution from traditional automotive finance to future mobility. So the first thing to say is that I think in 50 plus years, the models 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 aftermarket secondhand market for vehicles and very mature in that area. But largely speaking, the financial products haven't really changed in this area. We're talking leases, loans and 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 has been in place for many, many years. But what we're not seeing is that through changing consumer behavior, similar to the way it is in the wider financial services sector, things like the customer needing to be digital, reluctance
to go into bricks and mortars, so reluctance to go to dealers and into the bank, but also sustainability, both from a consumer perspective and also on the corporate agenda in the boardroom.
But probably the biggest driver, and we're seeing this increasing and accelerating now, is technological advancements, both in terms of digitization of the current process, but also in terms of 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 I think has accelerated all of 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 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 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 meet that changing world. Also a really significant
thing and it's been talked about for the last five or six years 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 there subscription being a very
important thing as we go through now the lenders are really struggling to find the right balance between bringing these models in, meet the consumer needs but also manage the risk and other aspects of their business.
The final point to make there is really around fleets. We see that 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 you even think about 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 that's going to change. We're going to see new entrants come in, we're maybe see dealers that kind of evolve into
larger fleet operators. So all of that as I say, has created a challenging opportunity for the lenders and the OEMs.
And what we've seen really is two phases. The first phase which has been in place now for a number of years is about digitalization of the current processes in place and we've been going over the last ten 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 big one. And it's worth mentioning that one of the major obstacles 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 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 a service where the lenders and the OEMs need to be understanding how they can support
the consumers needs, not just for vehicles, but their wider mobility needs. We see that emerging and that really is where new business models are going to be required for all the key players. So what's the role that Sopra Banking Software plays in
this?
Slide: SBS Strategy Key Principles: Focus on Core Competence & Operating Model
James Powell
The strategy really is to focus on our core competence and those are some of the traditional competencies 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 end game here for us is the ecosystem platform. I'll talk about that a little
bit more detail in a 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. So it was a
natural evolution for us to move into Cloud and into SAS. A huge amount of investment has gone into Cloud over the last five years.
Again, not enough time to get into that in detail, but maybe some questions later. And what that means for us in terms of Cloud is leveraging economies of scale, delivering value to our customers through bringing cloud services. But really the ultimate
culmination of that cloud investment has been on the SaaS side. So around about two years ago we launched what I've described as a true SaaS product and Eric mentioned it earlier. The way I defined true SAS is Cloud native, multitenanted and evergreen
software.
And that last one is really important because it removes the need for big upgrades. We initially developed that offering for small companies, startups, finance companies, and the interest in evolution for us is our second customer was BMW Financial Services.
So that proves I think, that SaaS is applicable to larger organizations, albeit initially their smaller subsidiaries where they're looking for time to market, low TCO and just general speed and lack of disruption. But we see in the future that being
more applicable to large organizations across the industry. Subscription is obviously a very key component that Eric mentioned earlier about subscription.
Slide: SBS Strategy Key Principles: Focus on Core Competence & Operating Model
James Powell
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. OpenAPI is really an absolute no brainer, so 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 wider ecosystem. And as I said earlier, the big challenge that we have is to bring all these components together. We think we're pioneers in the SaaS area inside
the automotive finance industry.
Slide: SBS Strategy Ecosystem Platform: Support a new business model enabling ecosystem centrality & customer value creation
James Powell
We need to bring all this together into an ecosystem platform to take us to the next level. So I'll finish up by getting into a little bit more detail 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 piece you see in the middle there is where we've all come from in terms of our sophisticated, flexible financing engines. And those continue to be the core that sits in the middle of this platform.
But what we've increasingly been doing is investing in the digital engagement piece. And so that blue area of digital engagement around the digital processing is really where we're focusing on our core competence, and that's really engagement with our
customers, with their customers and their partners to bring added value. So examples of that being portals that are accessing out to dealers and OEMs and other stakeholders 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 meets our core competence or where there's a best of breed solution out there already, then 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 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 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.
I guess the final comment I would make around the ecosystem platform is that it's really to enable a new business model that positions Sopra Banking 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 I mentioned earlier that we have subscribers, we've been doing subscription for 20 plus years with the lender. But the idea is, with the ecosystem platform, is that we sit in this central position.
We move from being a technical hub where we're connecting up all these different services and other components, to being a contractual hub where we are the center of the ecosystem 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're subscribing in one place to gain all the benefit from these services. And the benefit for us is that it puts us in the middle. So with that, I'm going to hand back to Nicolas to conclude the day you.