The FinTech industry no longer resembles the back-office financial department from which it has evolved. For example, by lunchtime, a medium-sized digital lender may already have conducted real-time payments in half a dozen jurisdictions, screened all transactions for fraud, and prepared for an audit.
Requirements for compliance become more complex every day, payment ecosystems become more complicated in their integrations, and boards require up-to-date reporting instead of last quarter’s.
Throwing fraud prevention and operational risks into the mix, one can understand why FinTech leaders are rethinking the underlying platform. The ERP system a company selects is not just an accounting application anymore, but also something that makes sure that risks are detected early rather than too late.
That leads to the main question of this article: when compliance, scalability, and risk management are imperative conditions, should a FinTech company use Oracle or SAP?
What Modern FinTech Firms Need From an ERP System
FinTechs require more from their ERP system compared to other companies, and the primary reason why is the extremely high price of failing when it comes to managing risk. An ERP system designed for FinTech needs to be able to provide:
- Visibility in real time regarding finances in all entities and products
- Compliance processes automated in such a way that no one needs to remember to manually check anything
- Risk management that identifies risks in real time rather than quarterly
- Accounting for multi-entities in case of operations in multiple locations or licensing structure
- Cloud scalability that can withstand sudden spikes in transactions without requiring any restructuring
- Analytics powered by AI to uncover things that might go unnoticed by human reviewers
- Strong security and governance controls in order to satisfy both internal auditors and regulations
- Integration with the payment ecosystem, as all FinTechs are dependent on it.
This change in perspective is significant. As soon as the ERP is required to be proactive about risk instead of passive about recording the transaction, the comparison between Oracle and SAP will not be about functionality but about their behavior in a regulatory environment.
Oracle ERP Overview
What Is Oracle ERP?
Oracle Cloud ERP, otherwise known as Oracle Fusion Cloud ERP, comprises Financial Management, Risk Management Cloud, and Enterprise Performance Management under one roof. According to Oracle, more than 11,000 companies in virtually all industries have already adopted Oracle Fusion Cloud ERP, with a suite of embedded AI capabilities covering finance, procurement, and operations.
Oracle strengths for FinTech
- Oracle Cloud ERP architecture is heavily skewed toward automation and real-time processing:
- Real-time analytics powered by Oracle in-memory database technology
- Automation via AI, featuring automated creation of narrative reports and cash forecasts
- Risk management features integrated with Oracle Risk Management Cloud, like segregation-of-duty analysis identifying conflicting roles, for example, when one person has the ability to set up vendors and pay out to them
- Continuous compliance monitoring rather than periodic, manual control testing
- Cutting-edge cloud computing tailored for maximum performance and security
For a digital payments platform handling thousands of transactions per minute, this kind of architecture becomes an essential requirement.
SAP Overview
What Is SAP?
The core offering from SAP includes the SAP S/4HANA Cloud product along with SAP Financial Management and SAP GRC Suite.
Strengths of SAP for FinTech
This is typically where SAP shines, especially in more complex and multientity governed organizations:
- High transaction processing performance thanks to the in-memory database of HANA – an area of strength for SAP historically
- Enterprise-level integration via SAP Business Technology Platform and huge partner network
- Compliance tools with GRC modules focusing on segregation of duties enforcement and continuous control management
- Analytics capabilities via SAP Analytics Cloud and integrated Fiori dashboards
- Large implementation partner ecosystem and industry-specific content available
If there is a need to comply with different regulation frameworks at the same time, for example, for lending platforms or larger banks, then this governance capability may be just right.
Risk Management Comparison: Oracle vs SAP
In view of the centrality of risk management within the requirements of FinTech firms, an in-depth look into both platforms is in order.
Oracle Risk Management Capabilities
Robust Access Controls: Oracle Risk Management Cloud constantly compares roles assigned to users against configurable rules to detect segregation of duties problems immediately as opposed to waiting for the next auditing cycle.
Risk Monitoring and Continuous Auditing: Transactions in the platform are monitored for suspicious activity, and continuous auditing is conducted in place of the sampling done by traditional systems.
Control Embedding: Transactions have workflow and policy monitoring integrated within them so that any breach is detected immediately.
Artificial Intelligence Enabled: Predictive risk analysis and anomaly detection have been increasingly enabled by the use of artificial intelligence conversational assistants which help to query the embedded AI capabilities of Oracle.
SAP Risk Management Capabilities
GRC Suite: The SAP GRC solution integrates Access Control, Process Control, and Risk Management components within the same environment for end-to-end visibility on risks across the entire company through one pane of glass.
Compliance Management: The SAP compliance solution is designed based on named regulations, where automated processes are set up and scheduled to execute periodically, while detected irregularities are sent straight into remediation workflows.
Fraud Detection: Leveraging the in-memory processing of HANA database, SAP can perform real-time monitoring of high-throughput transactions, thus transforming static batch processing checks into risk indicators.
Risk Analytics: Risk scoring and scenario planning can be enhanced due to the capability of the HANA database to perform large volumes without the need for lengthy batch processing required by the previous generation of GRC solutions.
The bottom line is that the difference might come down to the degree of automation: while SAP GRC solution is more comprehensive for formal governance structures, Oracle takes the lead when it comes to AI-powered conversation risk analysis within the finance workflows.
Compliance and Regulatory Readiness
The regulations faced by FinTech enterprises are more numerous than those of practically any other industry, making this part of the paper quite significant.
Examples of regulations applicable to FinTech firms: SOX, GDPR, PCI DSS, AML, KYC, and IFRS.
How Oracle Supports Compliance
Oracle’s compliance process is based on constant monitoring as opposed to periodic review, along with automation of controls which self-document and validate themselves. Dashboard for compliance integrates all such activities into one, providing visibility of controls’ health status in real time as opposed to quarterly reporting.
How SAP Supports Compliance
SAP relies upon governance procedures based on formal processes embedded within S/4HANA. The governance procedures have well-established audit trails which follow back decisions made in the context of compliance back to the originating transaction. Regulated reports are generated directly from the transaction without manual reconciliation of compliance.
AI, Automation, and Predictive Intelligence
Oracle
The company’s AI investments are particularly apparent through workflows that apply specifically to finance: close processes that use AI to speed up the process of closing the books, automated reconciliation that decreases the need for manual matching, and smart forecasting that uses both past and present data.
SAP
The methodology of SAP uses intelligent process automation which involves machine learning across all S/4HANA and allows identifying any strange behavior regarding payments or spotting any fraud cases. This approach is complemented by predictive financial planning that utilizes Fiori dashboards to help with understanding risks.
Cloud Infrastructure and Scalability
Oracle Advantage
The Oracle cloud story is all about Oracle Cloud Infrastructure, which is built on the foundation of high performance in-memory databases and a security-first platform. This approach usually appeals to businesses that prefer their infrastructure to be developed for speed and artificial intelligence processing.
SAP Advantage
The competitive strength of SAP is due to its Business Technology Platform and the extent of its deployment footprint worldwide. For businesses which are working across multiple countries and have strong local compliance regulations, the certified partner ecosystem and compliance content already available at SAP will be an added advantage.
Oracle vs SAP for Different FinTech Segments
Various segments of the FinTech industry are more inclined towards different platforms, primarily depending on the type of risks that dominate their respective businesses.
- Digital Payment Companies – Oracle is recommended for them as real-time transaction visibility and automation are key for this segment.
- Lending Platforms – SAP is recommended for these lending businesses due to their complex risk governance, which is where SAP has experience with its GRC solution.
- InsurTech companies – Oracle/SAP, depending on the existing technology ecosystem and compliance needs of various insurance lines of coverage.
- Neobanks & Digital Banks – Oracle is recommended as cloud-native capabilities and automation suit them best due to their digitally-led operating model.
Total Cost of Ownership (TCO)
Cost is one of the most frequently searched for issues related to both platforms. Several key determinants make up the total cost of ownership of the platform: licensing costs, service integration, customizations, maintenance, training, and ROI calculated based on closed cycle improvements and decreased manual effort.
Note: TCO greatly differs from one company to another depending on the company size, number of integration points needed, and complexity of compliance rules in the organization. Both platforms do not have a set price that would apply to all FinTech companies.
Migration Considerations
When Oracle May Be the Better Choice
- Organizations with cloud first and little legacy infrastructure to move
- FinTech startups growing at an accelerated pace
- Finance departments using AI and wanting predictive capabilities built-in
- Firms that have ongoing projects for modern infrastructure
When SAP May Be the Better Choice
- Firms with complicated organizational structure and systems already in place
- Organizations dealing with complex governance in several regulatory frameworks
- Firms with investment in the SAP eco-system
- Firms operating global compliance operations across many nations
Real-World Evaluation Checklist
- What are the regulatory requirements that need to be met, and where?
- What level of complexity exists in your current risk management processes?
- Do you require real-time analysis, or is periodic reporting adequate?
- How many entities/ subsidiaries do you have that need to be managed by the same system?
- What integrations do you require, especially in relation to existing payment rails?
- At what speed does the ERP need to grow as the volume of transactions increases?
Final Verdict: Oracle vs SAP for FinTech Risk Management
Choose Oracle If
- Cloud innovation is favored over proven enterprise practice
- Automation driven by artificial intelligence is required within finance processes
- Financial transparency in real time is key to running your business
- Scalability is a requirement going forward
Choose SAP If
- The need for mature and comprehensive enterprise governance is essential.
- Managing complexity in compliance management is key to your operations.
- Your organization is already working within the SAP landscape.
- Risk and Audit are more important than iteration.
Conclusion
Indeed, both Oracle and SAP boast some truly impressive ERP functionality for FinTech businesses, with no bad choice of the two as such. Oracle tends to be particularly strong at cloud-based finance automation and AI-enabled insight, while SAP usually wins with its enterprise-grade governance and comprehensive risk and compliance tools. The deciding factor here is going to be your specific regulatory landscape and where your business is headed.
For those still trying to decide which platform is best suited for their FinTech operations, LogiChannel’s technographic data may help you see which ERP solutions are in use by similar financial services firms.