Our main topics at present
FlexFinance is a component-based solution that covers the whole process chain of lending operations.
Including loan applications, life cycle management, account management, financial accounting, bank management, IFRS accounting, regulatory reporting and process optimisation. Blueprints that describe the various processes on the basis of standardised, individually deliverable components/services are available for each topic of the process chain.
Each subject area can be implemented as a standalone solution, in addition to the full coverage of the process chain.
The availability of alternative components/services allows individual solutions to be created.
The continuous renewal approach generates quick wins and reduces project risks.
This type of partial approach is by no means unusual for us. On the basis of our continuous renewal approach, we are able to support our customers, if requested, even in small tactical projects in order to modernise the existing system landscape at one point or another.
All applications at a glance
Please click on the topic in the loan life cycle to discover more about the functions.
Business Types Supported
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Financial Accounting
The multi-GAAP-capable financial accounting includes all functions required for the creation of financial reports and notes. This includes calculations relevant for the initial and subsequent measurement as well as financial bookkeeping of accounting transactions which cover the entire life-cycle of financials and non-financials. The embedded Accounting Rules Engine generates journal entries for all accounting transactions. Financial Statements such as balance sheet and notes are supported. Alternatively or in addition debit/credit entries can be provided for a separate general ledger in SAP, Oracle or any Core Banking System.
Collective Impairment Stage 1 and Stage 2
The ECL Workbench is a modular solution that calculates probability-weighted Expected Credit Losses (pwECL) in line with IFRS 9 requirements. This includes the calculation of 12-month pwECL with PD, LGD und EAD as well as lifetime pwECL for assets assigned to stage 1 or 2.
Impairment Stage 3
For financial assets with objective evidence of impairment, the Customer Impairment Workbench ensures that specific provision (SP) and lump-sum specific provision (LSSP) are dealt with in line with IFRS 9 requirements.
The Customer Impairment Workbench is a modular solution that covers all valuation and accounting requests linked to stage 3 impairment.
Hedging
The aim of hedge accounting is to eliminate the net influence on the profit and loss account. Comprehensive regulations on hedge accounting are required due to the valuation concept in IAS 39 and IFRS 9, which values some financial instruments at fair value and some at amortised cost, and also due to the different effects on profit and loss.
White Paper "Balance sheet forecast for banks"
Although someone once said that the balance sheet of a company is like the three body shapes of a woman – one shape she has, another one she shows, and yet another one she wants to have – we have succeeded in developing a software that makes it possible to generate reliable forecasts of the bank balance sheet for future booking days. In accordance with the FERNBACH procedure, both balance sheet truth and balance sheet clarity are maintained in the forecasted balance sheets.
Omni-channel Sales
FlexFinance provides a modern front-office system with omni-channel processes throughout all sales channels. In this way, a customer can check the lending conditions and finalise an agreement via any sales channel; either online, self-service, app, mobile device or in the conventional manner, at a branch office.
Since a bank has access to a customer’s status at any time, it can specifically support and target customers. If a customer wishes to switch to another sales channel, e.g. from online to a personal service at the branch office, all the data are available in the system, thus allowing banking staff to focus directly on advisory services.
Experience has shown that specific omni-channel processing of “grey-area” applications, which would be rejected in a regular online application process, can result in a successful conclusion.
Consumer Loans
FlexFinance covers the whole process ranging from the loan application, risk calculation and multi-level approval process.
Thanks to a workflow, the process is interactive and is transferred directly in the system. Staff at branch offices can inform a customer of the decision on a loan is just a few minutes. Suggestions for upselling and for a customer's maximum credit level can be provided to staff by the system.
The average time for processing an entire loan, including the application, the approval process and the signature, is less than 25 minutes, while unit costs per application are low and process quality is high.
Corporate Financing
Our experience in corporate financing has shown us that although every loan is different, the processing of lending operations has to conform to standardised processes and regulatory requirements. A business lending solution has to fulfil these somewhat contradictory demands effectively.
FlexFinance allows for a high degree of flexibility in the mapping of corporate financing and syndicated loans. The decision-making guidelines for credit committees are clear and transparent. Loans, collateral, syndicate members, individuals, institutions and companies are included in the scope of the workbench.
Loan application via Conversational Banking - interaction via Messenger and AI Chatbot
For their banking transactions, customers are less and less likely to go to a bank branch, but instead use online banking. It is also possible to check loan conditions or to conclude a loan agreement online without any problems. With our lending solution, bank customers can submit their loan application via Messenger and AI Chatbot. Not only will this result in satisfied customers, it will also allow the bank to save 80% of the costs in the lending business.
Continuous Renewal of Lending Technology
The lending business is gaining more and more importance for banks. Is your lending technology up to date or are you already thinking about modernisation? There are advantages to both a "big bang" project to introduce a new software package and a gradual update of the existing one. In order to benefit from improved agility, flexibility and efficiency, we recommend our project method "Continuous Renewal". You receive a component system that is independent of any manufacturer and uses state-of-the-art technology.
You can use FlexFinance to reduce your cost-income ratio
Existing lending contracts are processed quickly, efficiently and, to a great extent, automatically for management purposes.
All process steps for monitoring and adjusting lending contracts are provided, including the consideration of extraordinary events and problems. Future payment and repayment processes can be processed flexibly and adapted to current situations.
Extraordinary events:
- cancellation
- collateral
- special repayments, partial repayment, own or third-party complete repayment
- processing of claims
- estates, guardianship
- rollover
- specific impairment
Problem cases:
- termination
- comparison/write-off of claims
- liquidation of collateral
- resales
- write-off
Lending management - revolutionary: customer self-service with AI support
The self-service portal offers an additional service to customers and huge cost benefits to banks: payment holidays, early repayments, special repayments and much more. Introduce the self-service portal to your customers and cleverly link this to your management strategy.
White Paper “NPL servicing"
EBA has set out guidelines for integrating measures for processing problem loans into banking procedures. These focus on concessions to borrowers with regard to repayment methods when borrowers start to show signs of financial difficulties. These specifications result in operational requirements for organisational processes, risk classification as well as risk provisioning – we support you in the integration of appropriate forbearance measures.
White Paper “EBA Loan origination and monitoring”
The EBA’s guidelines on loan origination and monitoring represent the new standard for loans and advances in Europe. The Guidelines aim to improve lending processes and practices, limit NPL inflows and ensure fair consumer treatment. This results in enormous implications for data management, lending strategies and client relationships, and banks should respond quickly – are you well prepared for the challenges of the EBA guidelines?
Risks from turnaround in interest rates threaten mortgage business
No more negative interest rates, chance of higher savings rates – but costs are on the rise for debtors. Those who cannot afford their dream of a proper homestead anymore will cause problems for banks. Solutions based on artificial intelligence help identify probabilities of default early on and issue warnings of major damages in advance.
Breaking Down Complex Loans: An Opportunity for Automation
The banking of the future is digital and automated. In addition to satisfied customers, banks benefit from cost advantages through automated processes. This applies in particular to routine activities in the consumer credit sector. But when it comes to complex processes, which include corporate loans and project finance, the degree of automation is considerably lower. However, by breaking down a complex loan agreement and identifying the individual functions, the same processes can be automated as with retail loans.
The intelligent sub-ledger
The sub-ledger for loans is managed by FlexFinance. This can be used as a current account or operate directly with the existing current account.
In accordance with current legislation, incoming payments are divided into the asset subclasses of repayment, interest, charges or residual debt insurance. Special repayments as well as early pay-offs can be detected automatically and posted accordingly. Charges/expenses and interest models depending on the asset sub-class can be used in cases of impairment.
Account management is fully automated and the members of staff responsible are notified by FlexFinance when problems occur.
Easy-to-use, out-of-the-box Enterprise Risk Management
FlexFinance supports the treasury, risk management and liquidity planning. Not only the actual payments are analysed and calculated, but also cash flow scenarios, market data scenarios and business scenarios are supported and rounded off by stress tests.
IRRBB, interest rate gap analysis und sensitivity, PV, expected cash flows, net interest income, maturity gaps, LCR, NSFR, eligible liquid assets ratio (ELAR), concentration risk, counterbalancing capacity (CBC), VAR and much more.
FlexFinance Package for IFRS, ALM and Liquidity
With the introduction of IFRS 9 banks are required to consider possible expected credit losses during the entire life cycle of a loan.
But beside this fact expected credit losses are moving into ALM and Liquidity too as they impact expected future cash flows which form the basis for ALM and Liquidity analysis.
Therefore it becomes even more necessary than ever before to run IFRS, ALM, Liquidity on the same data for consistent and reliable results.
Universal reporting adapter for the local reporting system
FlexFinance meets the reporting requirements of EBA/FinRep/CoRep and AnaCredit. The requirements for countries outside Europe such as Indonesia, UAE etc are also fulfilled. The FlexFinance data marts contain all the values that have been laid down by the supervisory authorities.
The end of the nightmare of regulatory reporting
Putting an end to the nightmare of regulatory reporting involves a lot of time and resources. Our new technology, ‘Continuous Reporting’, which has been patented, will save you money, time and human resources.
Our software ‘Continuous Reporting‘ has reversed the principles of conventional programming for regulatory reporting activities.
Pricing, Scoring, Rating using Machine Learning
The credit spread is required for the credit application process. The credit spread should take into account the expected credit loss for an individual deal. As an alternative to conventional methods of scoring, rating and PD determination, Machine Learning can also be used, for this purpose, on the basis of a performance database filled with Deep Learning.
FlexFinance provides an API that can be integrated into the credit application process. We have other solutions for credit monitoring, accounting and backtesting.
Improve pwECL using Machine Learning
The most significant impact on overall bank management is caused by the introduction of the Expected Credit Loss approach to reflect credit risk in external accounting.
IFRS 9 calls for the segmentation of financial assets on the basis of similar credit risk characteristics. For each segment, the expected credit loss needs to be calculated taking probability-weighted macroeconomic scenarios into account.
In contrast to the conventional segmentation/portfolio formation of loans, FlexFinance offers the ECL calculation on the basis of machine learning.
Loan Monitoring, Early Warning using Machine Learning
The application monitors the loans for which contracts already exist. Not only are customers and contract data taken into account, but macro- and microeconomic factors that naturally influence credit management are also considered. Based on deep learning processes and machine learning, the EWS application identifies criteria that point to an adverse business situation.
The EWS application initiates a workflow when certain events occur. The events could also be the variance of the ECL, for example. The workflow actions could also be linked to contract deadlines in such a way that realistic options for action exist.
White Paper "AI solutions in the banking environment"
Artificial intelligence, or AI for short, is currently on everyone’s lips. We associate buzzwords such as machine learning, neural networks and self-learning algorithms with a modern trend technology that we already encounter all too often in everyday life: Be it voice assistants like Alexa, Siri, Cortana & Co, personalised advertising while surfing the internet, traffic jam reports from Google Maps or sense-based translation tools like DeepL.
But what about the use of AI solutions in the banking environment?
How secure are your recurring incoming payments?
Our AI knows the answer!
More and more companies are relying on business models with recurring payments in the form of subscriptions, instalment payments and the like. Defaults and/or delays in these payment flows often represent a considerable economic risk for the respective provider. Artificial intelligence (AI) has also found its way into the financial sector. FERNBACH has used AI to develop a solution that can be used to forecast the future payment behaviour of customers in arrears.
Artificial intelligence – best practice guidelines
We can show you how to implement a project for artificial intelligence without a security risk when the AI application is operated via a remote connection. Based on practical experience, we have developed a simple procedure model that can be easily used in a bank. Even without any knowledge of artificial intelligence and complex software development.