How Banks Can Hold the Control:

In today’s banking world, control is everything—but it’s getting harder to hold onto.
The demands are relentless: regulatory pressure from BEPS 2.0 and CSRD, sustainability mandates that turn ESG into more than just a buzzword, and growing expectations from shareholders to deliver profitability in an uncertain market.

For many banks, these pressures feel like opposing forces. Focus on one, and the others slip out of reach. But what if there was a way to bring them all together—to align performance, compliance, and sustainability, and manage them as one?

That’s where Enterprise Performance Management (EPM) with SAP Profitability and Performance Management (PaPM) steps in.

The Turning Point: When Traditional Tools Fall Short

Most banks already have tools for reporting, planning, and compliance. But they’re often fragmented, reactive, and slow.

One of the large European retail banks recently faced this exact issue. Their executive team needed to understand how upcoming ESG regulations would impact profitability at the business unit level—and fast. But between siloed systems, delayed data, and rigid planning models, they couldn’t get a clear answer.
What they needed wasn’t just another dashboard. They needed a new way to steer the bank.

Enterprise Performance Management (EPM) isn’t just about better planning—it’s about better decisions. It connects financial data with operational drivers, risk exposure, and ESG performance.

With SAP PaPM at the core, banks can integrate real-time data from across the enterprise:

•    Revenue and cost structures
•    Risk-weighted assets
•    ESG metrics and sustainability indicators
•    Regulatory requirements like BEPS 2.0 and CIT

The result? A single platform where CFOs, risk officers, and sustainability leads work from the same playbook.

Making the Complex Measurable: Profitability Meets ESG

Let’s now turn back to the situation with the retail bank we mentioned earlier.
Using SAP PaPM, they modeled their loan-to-deposit ratio and interest margins—not just for profitability, but also factoring in ESG-relevant lending decisions. They ran simulations to see how green loan products would affect their net interest margin, risk profile, and compliance with the EU Taxonomy.

What they discovered surprised them: ESG-aligned products weren’t just compliant—they were profitable.
 

They started using PaPM to:
•    Map profitability down to the product and customer segment level
•    Track KPIs like Cost-Income Ratio (CIR) and Return on Risk-Adjusted Capital (RORAC)
•    Flag underperforming segments and redirect capital to high-value, low-risk, ESG-positive areas

Now, sustainability has become a value driver, not a cost center.

Planning That Can Actually Keep Up

Regulators move fast. Markets move faster. Most banks can’t keep up because their planning processes are static and disconnected.

SAP PaPM changes that. It enables real-time forecasting, scenario analysis, and what-if simulations across the bank—aligned to the overall strategy.

The same tools can be used for ICAAP/ILAAP stress testing, ESG target modeling, and strategic capital allocation—all in one platform.

Compliance That Doesn’t Kill Agility

Tax regulations, accounting standards, risk frameworks—they’re not getting simpler. But compliance can’t come at the expense of performance.

SAP PaPM helps banks comply with:
•    BEPS 2.0 and Corporate Income Tax (CIT)
•    IFRS 9/17, MaRisk, and other global standards

It centralizes tax modeling and allocation, ensuring auditability, traceability, and transparency—while still supporting profit-driven decisions. A global bank used PaPM to optimize its tax position across business units, while staying fully aligned with RWA and capital requirements.

Internal Pricing, Reimagined

Behind the scenes, internal pricing models are where strategy either takes off—or falls apart.
With SAP PaPM, Operational Transfer Pricing (OTP) and Funds Transfer Pricing (FTP) are no longer black boxes. Banks can allocate shared service costs like Treasury and IT fairly, simulate interest rate impacts, and set internal pricing that drives the right behavior across the enterprise.
 

Benefits include:
•    Accurate profitability per business unit
•    Transparent internal cost structures
•    Performance-linked capital steering
•    Fair modeling of risk and liquidity premiums

This precision pricing integrates planning, risk, and profitability—all under one roof.

One Platform. Full Visibility. Better Decisions.

SAP PaPM creates a unified EPM foundation that gives banks the tools to lead—not react. Key outcomes:

•    Integrated control of finance, sustainability, risk, and planning
•    Real-time data across products, business units, and ESG dimensions
•    Regulatory readiness from BEPS 2.0 to CSRD
•    Strategic agility to simulate, adjust, and act—instantly
•    Sustainability embedded across lending, investing, and capital flows

The Takeaway: EPM as a Competitive Advantage

With SAP PaPM at the center of their EPM strategy, banks are turning complexity into clarity—and making performance management their competitive edge.

The platform integrates operational, strategic, and sustainable performance management to inform decisions that enhance overall enterprise value.

The question is no longer can you manage it all? It’s how fast can you adapt?
Want to learn how SAP PaPM can transform your bank’s performance strategy? We are happy to be your partner on this journey. Contact us for more information.