Download - 12.11.2001/01
VR Kreditwerk AG12.11.2001/01
24th World Congress of Housing Finance24th World Congress of Housing Finance
November 11 - 14, 2001November 11 - 14, 2001Washington DC.Washington DC.
Housing Finance in an E-Evolving World:
Using Technology to Improve Housing Finance
Herbert Otten Real Time Business Around Housing
by Cooperative Banks in Germany
VR Kreditwerk AG kreditwerk
VR Kreditwerk AG12.11.2001/02 VR Kreditwerk AG kreditwerk
Revolutionary means of information technology require of new value-added activities
Effects on clients, markets and of financial service providers
Trends and consequences for financial service providers
Technological support plays a central role
Housing finance markets in Europe and Germany
Cooperative banks in Germany and service providers “Around Housing”
Service provider “VR Kreditwerk AG”, Germany
Range of Services “Around Housing”
Distribution channels and technology
IT-strategy and IT-architecture (IT-map)
IT-strategy is a matter for the top management executive committee
Managing the financial investments in technology
Originator-client-benefit: “quick-face” to the customer
Conclusions / trends / outlook
Summary: E-Evolving World Urging on Change
VR Kreditwerk AG12.11.2001/03 VR Kreditwerk AG kreditwerk
contactcontact
Herbert OttenCEO
VR Kreditwerk AG
Gertrudenstrasse 2
D-20095 Hamburg / Germany
Phone: +49-(0)40-822 22-2201
Fax: +49-(0)40-822 22-1011
Mail: [email protected]
Internet: www.kreditwerk.com
VR Kreditwerk AG
... with
... lead to
... result in
... create
... destroy
... require
new types of network technologies explosively increasing network connections
new behavior of people new forms of communication between people
new types of business connections
extreme competitive pressure high speed
long established value chains
new value chains ==> the fundamentals of business strategy have to be over-thought==> business structure has to be renewed fundamentally==> new business models have to be created
Revolutionary means of information technology
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E-Evolving World Urging on Change
VR Kreditwerk AG
Market transparency increases drastically
Options for customers explode
Navigators, assistants, brokers and financial service providers create
additional profit
Customers stick to their software rather than to their bank
Effects on customers
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E-Evolving World Urging on Change
VR Kreditwerk AG
Markets are newly aligned
New business models come - old business models die
Existing competitive advantages fall off
Sinecure holders become victims
Existing value chains are further split up
Effects on markets
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E-Evolving World Urging on Change
VR Kreditwerk AG
Financial service providers have to cope with increasing pressure on services and costs
=> classical price wars in superseding competition
=> new service providers with new cost structure enter the market
=> consulting becomes an autonomous marketable service
=> finance companies are not that important any more
Funding and portfolio management (mortgage bonds, mortgage-backed securities - MBS -)
are part of value chain
Advantages of volume decide to an increasing degree at all steps of the value chain
(Economies of Scale)
=> classical value chains of integrated suppliers break down
=> processing service providers are low-cost producers in all new value chains
Effects on financial service providers
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E-Evolving World Urging on Change
VR Kreditwerk AG
suited to the occasion
at the same time the questions connected
solve all resulting problems immediately
strong wishes, high demands and are idle
the more price orientated the better they have themselves
pre-informed
the point of action (place, time, speed)
... act
... include
... want to
... have
... are
... decide about
e.g. purchase of a house
e.g. financing
e.g. “around housing”
Trends: Customers ...
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E-Evolving World Urging on Change
VR Kreditwerk AG12.11.2001/09
Securing the value chain by division into:
consulting <=
financing <=
funding and portfolio management <=
processing <=
Consequences for financial service providers
new business cases
profit EBIT ROI
process optimization
economies of scale and synergies
technological support
“around housing” (RUDI)
E-Evolving World Urging on Change
VR Kreditwerk AG12.11.2001/10
E-Evolving World Urging on Change
Technological support plays a central role
Within the framework of a well thought-out IT-strategy
Migration scenarios: the way is the goal
Degree of technology vs. manpower is to get into balance
technology
resources
manpower
IT + processing
VR Kreditwerk AG
The German market is the largest in Europe and the third largest worldwide
Private real estate is strongly subsidized (threshold households),
increasingly also as part of private provision for old-age
The ownership share of about 40 % in Germany is still too low
EU and EURO create new market situations
Finance need in Germany 2001: 80 Billion €
Stock of financing in Germany 2001: 900 Billion €
Housing finance markets in Europe
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VR Kreditwerk AG
Housing finance markets in Germany: Intensive competition and low profit
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• fixed rate credits
• variable credits
• bonds
• MBS
• derivates
36% 20% 6%38%
privatebanks
publicbanks
cooperativebanks
insurances
40 million customers
4 groups of service providers
products
treasury
VR Kreditwerk AG
Cooperative banks in Germany in 2001
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1.600 retail banks
home saving contracts and mortgage loans are key products
Bausparkasse Schwäbisch Hall AG = home savings bank
Deutsche Genossenschafts- Hypothekenbank AG
= mortgage bank
= service provider
IT + processing
11 million contracts
portfolio
7 million clients
VR Kreditwerk AG12.11.2001/14
Service providers in “business around housing” in Germany
VR Kreditwerk AG, Hamburg - Schwäbisch Hall (Cooperative Group)
DePfa Hypotheken-Management GmbH, Wiesbaden (DePfa-Group)
Prompter AG, Mainz (Commerzbank)
Stater Deutschland GmbH & Co. KG, Bonn (Stater B.V. in NL)
VR Kreditwerk AG
History of kreditwerk: Competitive advantage by technology in Germany
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our situation 1989: strong competition, low profits, too high costs, too slow
our vision 1990: new business model with new rules by technological support
starting 1991:
settlement 1999: 50 thousand real time contracts with 600 cooperative retail lenders
increasing 2000: new company kreditwerk since July 2000 in a new market in Germany
Hypofix with pilot banks
VR Kreditwerk AG12.11.2001/16
• customer service
• products
• sales
processing
• financing
• portfolio management
information
technology
the value-added the value-added
process is process is
completely coveredcompletely covered
cooperativebanks
fieldservice
internetportals
client 1 client n
private builder-ownersprivate builder-owners
client 2 client 3
computingcenters
Customer-orientated integration of IT and processing
VR Kreditwerk AG
Company Background: VR Kreditwerk Hamburg - Schwäbisch Hall AG
12.11.2001/17
processing
front office support• saving with a home savings bank• mortgage credits• insurances• portfolio management• mortgage management services
information technologyfront-office
Rudi Schnell
• basic IT and service
• software development
• internet plattforms
A joint venture of the Bausparkasse Schwäbisch Hall (No. 1 of the home saving banks in Germany) and the DG HYP (No. 5 of the mortgage banks in Germany)
The new value chain of the FinanzVerbund (finance cooperative)
clients (IT and processing):clients (IT and processing): 2020
potential processing partners:potential processing partners: 5757
IT-partners: IT-partners: 2525
portfolio: portfolio: 11,2 million 11,2 million contracts contracts
employees: 2.300employees: 2.300
locations: Schwäbisch Hall, Hamburg, Kiel, Berlin locations: Schwäbisch Hall, Hamburg, Kiel, Berlin
turnover (in 2001 expected):turnover (in 2001 expected): 230 million EURO 230 million EURO
EBIT (in 2001 expected):EBIT (in 2001 expected): 6 million EURO6 million EURO
equity capital (in 2001):equity capital (in 2001): 10 million EURO10 million EURO
• reaching scale and synergy effects
• marketing of key competences: Information technology and processing
• gaining market shares
• profitable value chains, distribution strength
• strategy
VR Kreditwerk AG
“Around housing”
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public development funds public development funds
Service provider
real credits
personal mortgage credits
real credits
personal mortgage credits
mortgage banks
cooperative banks
building saving contracts
building saving loans
building saving contracts
building saving loans
insurance loans
capital / risk live insurance
building / household contents insurance
building / estate third party insurance
insurance loans
capital / risk live insurance
building / household contents insurance
building / estate third party insurance
Schwäbisch Hall
Products “around housing”Products “around housing” Product suppliers
e.g. KfW (public credit bank)
(insurance company)
VR Kreditwerk AG
Fields of business / Spectrum of activities: We do the work
Processing
front office support– complete application processing (scoring, clients, objects)– evaluation of solvency and risk– credit contracts and
prolongations– payments– data transfer into client systems
portfolio management– stock management– credit worthiness– clients and objects
(rating support) mortgage management services
– for mortgage bonds, MBS, bank debenture bonds
• basic IT and
application service
• software development
• back office systems for
Information technology
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Front office systems
Rudi Schnell
– home savings banks
– mortgage banks
VR Kreditwerk AG
Extended spectrum of activities
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Data warehouse for...
...customer relationship management (CRM)
...marketing activities
...risk management (expert systems, risk analysis)
Consulting (IT, processing, process cost analysis)
Additional processing of credits with impaired performance
Additional processing of dishonored credits
Support to gain outsourcing permission
Supplementary servicesSupplementary services
VR Kreditwerk AG12.11.2001/21
as of 30/07/2001
Management portfolio
• paperless
• workflow controlled
• electronic file
fully automatic
without record
Components
Real credits and other mortgage credits
Building saving contracts
Building mortgage loans
Insurance loans
Life insurance (risk)
Total portfolio
Number- in thousands -
414
7.235
2.165
26
1.321
11.161
Processing aktivities
technology based
service platform
technology based
service platform
VR Kreditwerk AG
Distribution channels and technology: Cooperation of frontend and back office
InternetMobile
bankingSB
toolsCall
CenterCooperative
partnerMobile
distribution OTC
work-place
Frontend
channels
Backoffice
systems
RUDIbackend
Fiducia (NBS)GAD (BB3)(computer center
providers)
R+V(insurancecompany)
Others
Interfaces
Product controlling
Integration platform of software components
bankcredits
buildingmortgage
loans
mortgagecredits
insurances fondsbuildingsaving
contracts
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VR Kreditwerk AG
Map of the application architectureMap of the application architecture
Dat
a bu
s
Operational data processing
Integration
Offi
ce a
utom
atio
nba
sic
serv
ices
Basicsystems
product machinepartner system
contract manager
Buildingsaving
contract
Mortgagecredit
Processingactive /passive
business
Front office / back office Customer Interface Multi-channel distribution
Elektronic file
Data warehouse
Data martsPlanning, management, controlling
Customer relationshipmanagement
Insurance
Workflow management
RUDI: The integrated cooperative system
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VR Kreditwerk AG
IT-architecture example:
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Continuous actualization of the map of components
data warehouse
IT-infrastructure
Technical sub-systems
data storageframework
connection framework
workflow bus framework
visualization management ofdocuments
framework of services
operating system networks hardware
Operational fields
security
product
object
contract
account
partner
settlementof commission
Sub-systems of professional sections
private builder owners services investors capital market
IT-products
capital market system
information system
building saving loan system credit system negotiation products
information systemclient system
distribution controlling investor system
VR Kreditwerk AG
IT-strategy is a matter for the top management executive committee
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Demands on successful projects
IT-strategy has to follow strongly the business strategy
customer‘s benefit has always to be qualified and quantified
time advantage are always to be quantified
competitive advantages have to be laid down significantly
business cases have to fulfill all demands
projects may only be started if they meet all these criterions!
VR Kreditwerk AG
Managing the financial investment in technology
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Demands
professional concepts based on business case (ROI)
IT-developments (market-based)
client - service provider: role understanding also within internal projects
strict project management (key words: milestones, reviews, budgets)
strict controlling of the time schedule
VR Kreditwerk AG12.11.2001/27
Originator - Client benefit: „Quick-face“ to the customer
Result
acceptances within3 minutes (3 minutes contracting)
./. 30 - 50%
customer adjusted range
of products
Factor of
success
goal
costs
customer
consulting
Effect
competitive advantages
(origination)
cost advantages by economies
of scale + synergy
profit advantages and increasing
market shares
VR Kreditwerk AG12.11.2001/28
Conclusions: Service provider kreditwerk
... serves professional banks and insurances
... produces high quality and security (including data protection)
... is fast, cheap, and customized
VR Kreditwerk AG
Mortgage finance institutions cooperate closely with service provider
The combination of the financial lender expertise and processing know- how
of the service provider increases profit, reduces costs, optimizes the use
of technology
User-friendly frontend systems promote acceptance by clients and client
advisors in real time business
High-integrated systems that can rapidly be suited to the market will
decide upon success or failure
Trends / Outlook
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E-Evolving World Urging on Change