SAP spins out financial services operations in deal with Dediq
German multinational software firm SAP is spinning out its financial services division, handing control over to new partner Dediq.
Pending regulatory approval, the deal will see the formation of a new entity. Dubbed the Financial Services Industry (FSI) Unit, SAP will hold 20% stake in the venture.
Both SAP and Dediq will provide the FSI unit with funding, technology, and connections to partnership networks. Dediq is investing €500 million into the venture.
SAP says the move will better serve the rapidly changing banking and insurance industry.
The two companies say they will “jointly expand SAP’s financial services portfolio” with a “significant investment” in new solutions.
The new FSI Unit will focus its investment on core areas such as commercial lending, retail banking, core insurance as well as insurance finance and bank management. The new solutions will be built as part of SAP’s industry cloud solutions, based on SAP technologies and applications such as SAP HANA, SAP S/4HANA, SAP Business Technology Platform and others.
“Through partnering with Dediq, we will significantly increase our support for the digital transformation of customers in the financial services industry,” says Christian Klein, CEO, SAP.
“Financial services is a key industry for SAP, and today we not only reiterate but also reinforce our commitment to this market.”
The new unit is set to have full autonomy when it comes to strategic direction. SAP says that it will remain a “strong member of the family” going forward.
SAP executive board member, Luka Mucic, expects the FSI portfolio to be expanded to include banking and insurance processes “end to end”.
The deal closes in Q3 2020, with the unit going into full operation in January 2022. SAP will continue to sell and support SAP solutions, and existing customers will remain SAP customers.
According to Forbes, the German vendor strongly denied in a press conference that the move means a backing away from financial services.
Dediq echoes that sentiment. “We strongly believe in the strategy of the new FSI unit,” says the firm’s managing partner, Matthias Tomann.
“We see the future of FSI software solutions in the cloud. SAP’s platform has unrivalled potential when it comes to supporting the core operations of large-scale businesses like banks and insurers as well as new emerging ecosystems.”