Banking Services

BAS Overview
Chapter 5 : Condition Management

ABA
Advanced Banking Academy
 Chapter objectives

After this lesson, you will have acquired an introduction to:

•Understand the condition model of Banking Services from SAP

•Understand the structure of Financial Conditions
•Difference between standard and individual conditions
•Manage condition groups and conditions

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Cash Flow Calculator
Financial Conditions

This component provides:

•Functions that you can be used to establish business connections between the bank and its
customers.
•Calculation and update of interest and charges in account settlement
•Design of date conditions for payment transactions. For example
 Value date
 Date for calculation of remuneration
 Subject to final payment periods

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 Cash Flow Calculator
Financial Conditions and Cash Flow Calculator

Functions of the Financial Conditions:

•Process conditions (create, change, display and delete conditions)
•Technical , logical and business checks (Check conditions)
•Administrates conditions (storage and get data from the database)
•Process, administrate and merge standard conditions (conditions groups) and
individual conditions.
•Display of merged conditions.
•Release of conditions

Financial Conditions Cash Flow Calculator

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 Cash Flow Calculator
Cash Flow Calculator

Definition: The Cash Flow Calculator is the foundation for interest and chargers in Banking
Services from SAP.

Functions of the Cash Flow Calculator are the calculation of:

• Interest
• Effective Interest
• Settlement charges
• Installments
• Cash flows
• Transaction charges and event charges

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 Cash Flow Calculator
Cash Flow Calculator: Usage

Bank Analyzer

Deposits
Cash Flow Calculator
Management

Loans
Management

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Financial Conditions Model
Condition Model: Structure of Financial Conditions

Condition Category Condition Group Category

n m Settlement
Settlement Interest Transaction
Transaction Charge Event
SAP
Event-Controlled Conditions Card
Bundle Pricing
1 Payment 1
Waiver

Condition Type Condition Group Type

n n m n
Customizing Debit Interest Settlement
Credit Interest Current Accounts
Overdraft Interest 1

Conditions Condition Group

1 n
Application Debit Interest 10 % Settlement n
Data Overdraft Interest + 3 % Current Accounts Privates
Credit Interest 2%

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 Financial Conditions Model
Condition Model: Relationship

• The condition type heritage the functionalities of the correspondent condition category
• Any number of condition types can be defined in addition to the existing ones. Each condition
type is assigned to a condition category.
• Example:

Condition Group Category Condition Group Type Condition Type

Debit Interest
Settlement
Current Account Credit Interest
Corporate Customers
Settlement Overdraft Interest

Settlement Debit Interest

Current Account
Private Customers Overdraft Interest

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 Financial Conditions Model
Condition Model: Condition Group Categories
Condition Group
Condition Categories
Category
Settlement Conditions categories for interest and charge calculation
Conditions categories are used as direct result of executing particular
Transaction
payments and to define the value date of the pay. item.
Conditions categories applied to certain events, for example creation of a
Event
standing order or account closure.
Card Condition categories related to cards, only for information.
Bundle Pricing Calc. Condition categories used in combined settlement for Master Contracts.
Condition categories used by loan accounts in order to simulate expected
Payment
payments.
Condition categories for automatic waiver conditions, for example fee waiver
Automatic Waiver
in a settlement period.

Not contract based Conditions categories independent of a contract, for example consulting fee.

Condition categories for refund interest in cross currency notional pooling

Interest Reimbursement
scenarios.

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 Financial Conditions Model
Condition Model: Date Category

• A date category is the time component of a condition.

• For specific calculations the frequency and the dates are specified.
• For example, if you want different calculation periods and due periods for a specific condition
type.
 Calculation period: monthly on the 31st, Date category: calculation
 Due period: monthly on the 1st, Date Category: due date.
• Therefore, it is possible to calculate interests not only at the end of the month but also in
advance.

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 Financial Conditions Model
Condition Model: Condition Type

• Condition Types are the basis of the definition of conditions in the application. In order to
define a condition type it is necessary to assign a condition category to the condition type.
Therefore, the condition category inherits the properties of the condition category (for
example the amount, date, differentiation categories)
• Some properties of a condition type:
 One amount category
 Several date categories
 At most five differentiation categories
• There are also other settings in the condition type: screen sequence, FIMA calculation
category and other applications. These are the ones that specified the properties, the exact
calculation, the characteristics and business use of a condition that is based on the condition
type.

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 Financial Conditions Model
Condition Model: Condition Group Type

• Condition Group Types are a bank-specific group of condition types that you can define in
Customizing depending on their business use.
• Condition types can be used in different ways, so in order to prevent condition types used in
different ways from being grouped together under one condition group type, it is necessary to
assign one condition group category to each condition group type.
• Therefore, condition types can only be in a condition group type that has the same condition
categories.

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 Financial Conditions Model
Condition Model: Definition of new conditions

Create Condition
Create Conditions
Group

• Choose the condition group type • Choose the favored condition

• Define numerical key for the type
condition group • Create the new condition
• Define description for the
condition group

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 Financial Conditions Model
Condition Model: Example

• There are some predefined

condition group types, but the
Define Condition Group customer usually defines his
Type own condition group types
and assigns the necessary
condition types

Define condition types

(or use the predefined
condition types)

Assignment of the
condition types needed
for the condition group
type

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 Financial Conditions Model
Condition Model: Example

• After that the bank has to define the condition groups needed and the particular conditions. In
the condition group, only one condition of the condition type is allowed at the same time.
• A condition group belongs only to one condition group type. So, for every condition group type
we need an own condition group. Only then the conditions can be defined.

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 Financial Conditions Model
Financial Conditions

Conditions Standard Conditions Individual Conditions

Criteria • Valid for all contracts that have • Valid only for one account
the same condition group • Can be created or changed in
• Central management the account
• The conditions of one condition • In the individual condition is
group are valid for the contract defined the validity of the
as long as the condition group condition for the contract.
assigned for the contract,
provided that the condition
itself must be valid for this
period.

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 Financial Conditions Model
Financial Conditions: Standard Conditions

Standard Conditions and Contracts:

• The newly defined condition group type and condition group must be assigned in the attribute
hierarchy.
• In Customizing for a product, you can define which conditions groups are allowed for the
product.
• The settings ‚condition group, settlement type and condition group type‘ are important in order
to find the correct condition group.
• Therefore, all contracts based on the product have the standard conditions contained in the
condition groups.

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 Financial Conditions Model
Standard Conditions: Replacement categories
• It is necessary to choose a replacement category that specifies how individual conditions are
going to be processed. (Set of Rules tab page)
• Set of Rules:

Replacement Category Description

The standard condition is completely replaced by the individual condition,

Replace Completely
therefore the standard condition is ignored.
On one hand, the individual condition is a markup condition, this means
Absolute Markup that it is added to the standard condition as an absolute amount. On the
other hand, if it is a markdown condition a minus sign must be entered.

In this case the individual condition is a markup condition which is

Relative Markup
multiplied with the valid standard condition as a relative amount.
Some fields are defined that replace the fields defined by the standard
Selective Replacement
condition. The other standard condition fields remain valid and are used.

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 Financial Conditions Model
Standard Conditions: Individualization

• A standard condition is individualized if the replacement category “Selective Replacement” is

chosen. In this case, the standard condition settings merge with the individual condition
settings.
• Some attributes of the standard condition can be individualized, these are defined by rules set
up on the standard condition level. All the other attributes in the individual condition are taken
over from the underlying standard condition.

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 Financial Conditions Model
Financial Conditions: Individual Conditions
• Replace Completely: Individual conditions overwrite standard conditions

Standard condition

In this case the Individual

conditions overwrite
(replace) the standard
Individual condition
conditions for a specific
contract.

Conditions for
settlement

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 Financial Conditions Model
Financial Conditions: Individual Conditions
• Absolute or Relative Markup / Markdown: You can define a markup or markdown on standard
conditions

Standard condition
Individual condition
In this case the Individual
conditions are defined as
a markup on the
standard conditions for a
specific contract.

Conditions for
settlement

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 Financial Conditions Model
Financial Conditions: Individual Conditions
• Zero Condition

Standard condition

In a contract, you can

also deactivate a
standard condition by
Individual condition
setting “zero condition”
as individual condition.

Conditions for
settlement

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 Financial Conditions Model
Financial Conditions

Calculation of Percentage Markups/Markdowns

•Standard conditions
− As well as fixed markups and markdowns on reference interest rates, you can also choose
percentage changes (relative markup/markdown)

Examples: Reference interest rate: LIBOR = 5%

•Debit interest = LIBOR + 2% 7 % (fixed)
− Debit interest = 110 % of LIBOR 5.5 % (percentage)
•Individual conditions
− As well as fixed markups and markdowns on standard conditions or reference interest rates,
you can also choose percentage changes

Examples: Reference interest rate: LIBOR = 5%

•Debit interest rate is 80 % of standard condition
Standard condition = 7 %  5.6 %
•Debit interest rate is 120 % of LIBOR
LIBOR = 5%  6 %

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 Financial Conditions Model
Financial Conditions

Condition Indicator
•Statistical Condition
 If you set the statistical condition indicator for a condition, the condition can be used for
statistical purposes only as it cannot be used for a calculation. If a contract only contains
statistical conditions (standard and individual conditions), the contract has no conditions
that can be used for interest and charge calculation.
•Zero Condition
 If you flag an individual condition as a zero condition, then the standard condition is
overwritten for that particular period. No interest in calculated.

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 Financial Conditions Model
Financial Conditions: Time Dependency

Standard Credit
Interest p (%) Specify reason for the time limit!

Period 2 Period 3
One condition
with
several periods
3.5
3.25
3.0

01.08. 05.08. 08.08. Time axis t

Valid to (old) = (Valid from (new) – 1)

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 Financial Conditions Model
Financial Conditions: Time Dependency

Standard Credit Contract with Standard and

Interest p (%) Individual Condition.

3.5
3.25
Individual
3.0 Standard Condition Condition

01.08. 01.10. 31.10. Time axis t

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 Financial Conditions Model
Financial Conditions: Changes of Conditions

•The conditions of the condition group types: Settlement, Bundle Pricing Calculation, Payment
and Interest Reimbursement can be changed in the past. The requirement is Backdated changes
for already settled/billed periods are allowed in Customizing.
•In the case of the condition group types: Transaction, Event, Card and Not Contract Based, their
standard conditions can be changed in the present and in the future.
•The standard conditions of the condition group type: Automatic Waiver changes in the past,
present and in the future, depending on the pricing conditions that are to be waived.

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 Financial Conditions Model
Financial Conditions: Backdated changes

Backdated Change

Already settled/billed Current posting

periods date

No Backdated
Change
Current posting
Already settled/billed
date
periods

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 Financial Conditions Model
Financial Conditions: Currencies for Conditions

Currency Description

Contract Currency The currency in which the contract is managed.

Condition Currency The currency of a condition

It has the conditions for contracts for no explicit conditions (contract currency =
Cross-Currency condition currency) are created in the relevant condition group. Therefore, these
conditions have no condition currency.

A currency that is different from the condition currency. This currency is used in
Payment Currency
charge conditions, amount limit conditions and interest conditions.

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 Financial Conditions Model
Financial Conditions: Currencies for Conditions

•Standard conditions can be created with and without a condition currency.

•Individual conditions always have the contract currency.
•The payment currency can be different to contract currency and condition currency.
•All cross-currency conditions must have a payment condition, except interest conditions. Interest
conditions with tiered/interval calculation and condition determination can need a payment
currency for their defined capital amounts and balances.
•Currency Conversion: if the payment currency and the contract currency are different, it is
necessary to convert the calculated changes into the contract currency. An exchange rate must
be assigned to every condition type in Customizing to convert the amount.

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Exercise Create new condition group types and assign the conditions types
Exercise

In this exercise you will practice to:

•Create a several condition group types

•Assign existing condition types to these condition group types.

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Types of Calculation
Differentiation Categories

•A differentiation category is a property of a condition type that enables additional differentiation of

a condition.
•Differentiation categories are used to select the currently valid condition.
•Differentiation categories are assigned to the condition types.
•They are used to control the utilization of a condition dependent on some factors in the contract.
(Transaction type, capital, for example).
•The conditions that are used, are determined at runtime according to the differentiation defined. If
a settlement condition with differentiation is changed, the next settlement of the condition will be
affected. At the end of the period a differentiation value is used for the whole settlement period.
•You can only assign one differentiation value to the condition of each differentiation category.

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 Types of Calculation
Differentiation Categories

•You can create additional differentiation categories at any time, apart from the ones provided by
the system. Prerequisites:
o Differentiation values must be supplied by a customer-specific program (BAdI
FICO_DEFINE_DIFF) at runtime, or be read from a customer-specific table.
o To enable the relevant application (bank statement, settlement, account closure,....) to
interpret the differentiation category, an appropriate BTE must be programmed.
Example: Settlement provides the BTE 'Specify differentiation value for condition
determination'.
o Differentiation categories are assigned to condition categories - this enables you to assign
the differentiation categories during definition of condition types.
•The differentiation category allows a condition to be used in certain cases only, which enables
you to define a single product for several contracts. Up to five differentiations are possible for a
condition.

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 Types of Calculation
Calculation Bases

•Calculation Bases are the ones that define the balances to which the interest calculation is to be
applied.
•The system provides calculation bases, these can only be displayed, not changed. But the
customer can also define individual calculation bases. The Formula Editor in Customizing helps
the customer defining individual calculation bases.
•For interest conditions different calculation bases are used. In the case of charge conditions, the
calculation bases can be applied for the condition determination.
•The Formula Editor provides different fields (info objects, system fields), pushbuttons for the
operators and for manual input, and then more functions. Therefore, the customer uses this
Formula Builder to process mathematical formulas within different applications.

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 Types of Calculation
Reference Interest Rate

•Definition: A reference interest rate is an interest rate to which the contract interest rate refers in
the condition items. It is used in the formula for the calculation of the contract interest rate or it is
adopted as the contract interest rate in the context of variable interest calculation.
•The customer has the option of designing interest calculation based exclusively on reference
interest rate.
•It is also possible to design an interest calculation as the combination of reference interest rate
with absolute or relative markups or markdowns, and also minimum and maximum rates.

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 Types of Calculation
Reference Interest Rate
• Reference Interest Rate can be set in Customizing or in the application.

• One market area at least should be created

• Categories for Reference Interest Rates must be defined, because
they limit the number of reference interest rates that can be used with
a condition group type.
Customizing • Calculation bases must also be defined. It is possible to specify
that reference interest rates should be used only for specific calculation
bases.
• Reference interest rate is also defined . ECB key interest rate s (EONIA) or
In-house rates for a bank.

• Reference interest rate is also defined . ECB key interest rate s (EONIA) or
In-house rates for a bank.
Application • Reference interest rate can be edited ( date, interest rate)
• Display Reference interest rate

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 Types of Calculation
Condition Form

•A Condition Form defines the purpose for which a condition is used. For example, statistical
condition and zero condition explained before. Other examples are:
 Clear Participant Markups: this condition form is used in Master Contracts. The markups
on Reference Interest Rates, or normal markup conditions used in the participant contract,
are cleared during interest compensation for the participant contract.
 “Blank”: it means no entry, therefore “regular” condition, interest/charge will be calculated
and posted.

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 Types of Calculation
Tiered, Interval and Combined Calculation
• Tiered Calculation: Only one of the existing condition items is used for the total balance or all
items.
• Interval Calculation: Each existing condition item is used for the part of the balance or item
assigned to it.
• Combined Calculation: Tiers and intervals can be mixed. Interval calculation is used for the
balance in the last tier and tiered calculation is used for the other tiers.
• Upper (valid to) or lower limit (valid from) can be defined. The percentage and the
absolute/relative markup are also defined.

10.000
7% 7% 7%

2.000
6% 6%
500
5%
0

Tiered Calculation Interval Calculation Combined Calculation

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 Types of Calculation
Tiered, Interval and Combined Calculation

Item Charges: Special Features

•Free Items: it defines the number of posting items for which no charge is made in a settlement
period. During the account settlement, this number is subtracted from the item counter and fewer
items are calculated accordingly. For tiered/interval and combined calculation, free items are not
possible, they can be used for “no tiered/interval calculation”.
•Maximum number of Items: it specifies the maximum number of items for which charges can be
made in a settlement period. Charges for items that exceed this number will not be calculated. If
the number of free items has been entered, it is taken into account. Then the maximum number of
items is used for the remaining posted items.

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 Types of Calculation
Condition Determination
• It allows the customer to form products in the area of interest and charge conditions. The
period of use and calculation period can be selected to define the period for which the amount
is to be calculated. Then the system finds a condition dependent on this amount.
• The following options are available for condition determination:
o Period of use: it defines the intervals at which you want charges to be calculated. The
following rules apply:
• The start date for the first period of use is the start of the settlement period.
• The period of use can be the same as or shorter than, but no longer than the
settlement period.
• The settlement period must be a whole number multiple, not fraction, of the period use.
o Reference Date: it is the from which the system calculates the shift of the period use for
the first settlement period.
• The start date of the period of use is the same as the start of the settlement period.
The distance of the shift can be entered, for example 2 months, and a key date can
also be entered. The key date is the day of the month that is set as the start date for
the period use.

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 Types of Calculation
Condition Determination

o Calculation Period: it describes the period of time over which the condition is determined.
o Turnover class: it specifies which portion of the turnover for the calculation period is used
by the system for condition determination. The system uses the value date balance for
condition determination, if no turnover class is specified.
• The field calculation basis can be used in the place of turnover class and the fields
balancing method, the balance category and basis of balance. It is necessary to enter
either the turnover class or the calculation basis.
o Charge Calculation Method: it defines whether and how you want charges to be
calculated for periods in which a contract has only existed for part of a period.

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 Types of Calculation
Condition Determination

Settlement Period

December January February March

t
Period of use Period of use Period of use

Calc. Period Calc. Period Calc. Period

Settlement Period: 3 months

Period of use: calendar month
Calculation period: calendar month, shifted at 1 month

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Customizing Settings
Posting Settings

• When a condition is created, it is necessary to specify how the results will be posted on the
account.
• A Posting Type must be specified. The posting type determines how the calculated results are
posted.
• There are 3 posting types that can be assigned to a condition type:
 Posting type (Credit Interest)
 Posting type for positive adjustment to previous period (Plus Credit Interest)
 Posting type for negative adjustment to previous period (Minus Credit Interest)
• In the case that several condition types have the same posting type, the calculated results are
posted as one total.
• The system provide several posting types for interest, charges and taxes, but more can be
defined in Customizing.
• To every posting type it is necessary to assign a Transaction Type for the posting item. The
reason is that transaction types are relevant for payment transactions.

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 Customizing Settings
Posting Settings

• When it comes to transactions and event charges, it is possible to assign own transaction
types for every condition. This is used to control the posting of charges to customer and
general ledger accounts. Also the transaction type is used to determine the posting text.

Cond. Type Diff. Cat. 1 Diff. Value Text Diff. Cat. 2 Diff .Value Trans. Type Text

Transact. 001 002 110010 Transaction

Charge charge

Transact. 001 022000 Express yyyyyy Charge for

Charge Bank Express Bank
Transfer Transfer

Loan Payoff 006 065 110260 Charge for

Charge early payoff

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 Customizing Settings
Charge and Interest Calculation Period

•It determines whether a charge or an interest is calculated for the last day of a settlement period
in the period to be settled or in the next period.

o Inclusive/Exclusive: the last day of the period to be settled becomes the first day of the
following period (current accounts, savings accounts, fix-term deposits)
o Exclusive/Inclusive: the last day of the settlement period is included in the period to be
settled, not in the following period (current accounts, savings accounts)
o Settings in the condition are relevant: these are needed to determine interest calculation
periods for loan accounts. Therefore, the time period view is in accordance with the
settings in the conditions. The time period view can be set to inclusive or exclusive in the
period data for conditions.

The value date of the settlement posting is affected by the interest calculation period:
Inclusive/Exclusive -> value date = end of the settlement period
Exclusive/Inclusive -> value date = end of the settlement period + 1 day

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 Customizing Settings
Charge Calculation Method
• It is possible to define whether and how charges want to be calculated for periods in which a
contract has only existed par of a period.
• For the following subperiod types, entries are necessary for the processes “account
settlement”, “account closure” and “accrual”:
 Subperiod with event contract start date
 Subperiod with end date of period of use
 Subperiod without end date of period of use
• Clearing Type for Subperiods: it specifies how the system handles charges and free items in a
subperiod based on the entry in the charge calculation method matrix. The values are:
 Full – the complete amount or the total number of free items is used by the system for the
subperiod
 Pro Rata – the amount pro rata is calculated by the system or the system evaluates the
setting in the rounding type for number of free items field for calculate the pro rata free
items.
 None – no amount or no number of free items for the subperiod are used by the system.
• In Customizing, the column “Rounding Type for Number of Free Items” specifies how the
number of free items are distributed by the system to the subperiod.

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 Condition Management - Agenda

● Cash Flow Calculator

● Financial Condition Model
● Exercise Create new condition group types and assign the
conditions types
● Types of Calculation
● Customizing Settings
● Exercise Create condition groups and standard conditions / create
individual conditions

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 Exercise Create condition groups and standard conditions / create individual conditions
Exercise

In this exercise you will practice to:

•Create condition groups

•Create standard conditions
•Assign the created condition groups to a product
•Create individual conditions

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 Chapter summary

Now you have acquired an introduction to:

• The condition model of Banking Services from SAP

• The structure of Financial Conditions
• Difference standard and individual conditions
• Manage condition groups and conditions

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 Thank you.
bankinkgacademy@axxiome.com

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Advanced Banking Academy