Q&A with SCHUMANN

Henning Rahlf, Member of Executive Board at SCHUMANN, rolls up his sleeves to describe the technical challenges and opportunities lying ahead for the trade credit insurance market.

Q: From an operational perspective, what has the impact of the COVID-19 crisis been for you as a tech company?

A: At the beginning of March, I came back from my last business trip, it was a great live event, the ExCred International conference in London. The next day we decided to switch to working from home for everyone. Technically it was actually pretty easy for us as a tech company; the home office infrastructure was ready, we just needed a couple of more licenses for virtual meetings - and that's it.

In the beginning, we had some concerns about whether virtual collaboration would be as effective as real life, but - after almost 9 months - the result is that it works perfectly. I think this is because we had a great team spirit - even before COVID.

Over the last couple of months, we've organised some remote town hall meetings and established a culture of virtual "water cooler" meetings just for regular informal communication within the teams. We've all worked hard to keep team spirits high during the crisis and were really delighted to be nominated as the "Best Equal Opportunity Tech Employer Europe 2020". We are really proud of it!

Q: Can you describe how SCHUMANN has converted current challenges into opportunities?

A: I think there are no winners in this crisis. COVID-19 is certainly changing many things, though – from our perspective – there are some positives. Due to the current restrictions on meeting each other face-to-face, we have new opportunities to digitalise both the way we interact with our partners, clients and suppliers, as well as how our systems communicate with those of our business partners. So, the question is: How we can create business success by connecting market players? Actually, this is a point where a provider of software solutions isn't in a bad strategic position. There is clearly a drive towards digitalisation coming from our clients as well as from the market, and, at SCHUMANN, we are well-prepared to respond to this demand. As a company, I would say that we have managed to convert current challenges into opportunities.

Q: What do you think the impact of the COVID-19 will be on the trade credit insurance industry?

A: Of course, some companies will face significant challenges, but I think that, on the whole, the industry will emerge well from the pandemic. In general, for our industry, it is a good thing when risk increases, though, some companies will adapt better than others. We will see new players entering the market with new products and new business models, and a trend to more transaction-based products either for selling or insuring risk. Also, we will see new intermediaries appear - and others disappear. Technology will be the key!

Q: How much has COVID-19 changed other aspects of your business life?

A: As mentioned above, at SCHUMANN, we decided quite quickly to move all staff to home-working. Although this was a change, it was actually not such a big deal for a tech company. The more fundamental change was the complete cessation of all kinds of business trips. For me, the impact was massive, as I'm used to meeting with prospects or partners on a face-to-face base. Of course, we had video calls before, but actually not for deeper discussions with our clients. However, over the first weeks of the shut-down, things settled in very quickly. Through technology, we can "travel" between continents within seconds, so, this year, we actually had a lot more virtual "business trips" in comparison to before the pandemic.
Another important change for SCHUMANN was our annual SCHUMANN Digital Credit Risk Management Conference. Since 2005, we've not only welcomed all our clients and partners in Göttingen once a year for two days of workshops, panels, presentations and, of course, a lot of networking, but we've always really enjoyed having dinner together in a relaxed atmosphere. This year everything was different! Fortunately, we realised very early on that an event with several hundred participants would not be possible on-site, and we decided to hold this conference as a virtual event. It was a great success. We had more than 600 participants from 42 countries virtually "visiting" Göttingen, and were able to present a lot of content, listen to the presentations of our clients or partners and follow discussions in four parallel channels.

Q: So, do you miss travelling, or do you think virtual meetings are an adequate replacement?

A: I don't miss travelling, but I do miss personal communication with our business partners. I believe we benefit from the fact that the market is very close to us and we've made many good, personal contacts in recent years. For now, we can bridge the current challenges with virtual meetings but, sooner or later, we will meet again in person. Possibly not as often as in the last few years . . . but we will meet again - especially for setting up new deals or partnerships. That said, I think that workshops and training events are more likely to be held virtually.

Q: What challenges do you think 2021 will bring?

A: In Germany in particular, we will not see the full consequences of the pandemic until 2021. There have been many government programmes that have provided support to companies. For example, the obligation to report insolvency was suspended. Although this was good, in the sense that it gave companies more security in the short-term, the downside was that it simply pushed some problems into the future. We will therefore see a sharp rise in insolvency figures in 2021. It also depends to some extent on how governments position themselves in the coming months.

Sectors will be impacted very differently by COVID-19, and this must be taken into account in the analysis of credit risks. Currently, balance sheets from 2019 are currently almost useless if you want to investigate the current situation of business partners to predict your own economic development, prompting SCHUMANN, at the beginning of the crisis, to develop a new tool (FINOYO) for the simulation of balance sheets. This means that if a customer takes out a large loan, for example, this information can be recorded, allowing various scenarios for the development of the company to be simulated. The automated evaluation of these scenarios makes balance sheets from 2019 usable again; enabling companies to predict whether suppliers can deliver reliably and customers can pay their invoices in 2020 and 2021. At the beginning of the crisis, we made this tool available to all SCHUMANN's customers free of charge.

Q: How will the market change in the near future?

A: Well, let me ask you one question? On a B2C basis, and as a private consumer, would you accept it if a company such as Amazon, Google or Apple asked you to send your registration data as a physical letter, or required you to wait 14 days for an answer to a request that you had made? I would not tolerate waiting for more than 5 minutes for a new account to be created! All your business partners are private consumers as well and, sooner or later, they won’t accept more frustration in their daily business life than they would in their private life.

The big tech players understand one thing very well. They provide their services exactly where, when and how consumers need and expect them – for example, via the smartphones consumers use 24/7 - and I think we have the same challenge for our business. We have to be there when new business opportunities appear and where transactions are started: in portals, the Point of Sale, or simply in the ERP systems of clients and partners. We see a strong need to provide connectivity capabilities for the credit insurance industry, and the same need is there for corporates which want to integrate insurance services within their credit risk supply chain. Now, is the perfect time to ensure that your company is in the best possible position.

Q: What is needed from a tech perspective to support this interaction?

A: It is obvious that there is more than one way that data can be interchanged and business processes coordinated, and, at SCHUMANN, we can see a trend for new ways of interacting. We believe that it isn’t that particularly relevant how your user interface is designed and what your back-end system looks like. Of course, Excel is not a valid data store for transactional data, but there are dedicated back-end systems for the management of industry-specific credit risks. Believe me, these back-end systems are a commodity; it's essential that you have one up-and-running, and crucial that it can be integrated into your IT-Landscape and with other companies.

SCHUMANN offers these platform solutions, with a focus on banks, insurance companies, financial service providers and corporates. UI-frameworks and apps have very short lifecycles, but what remains is data and business processes and the need for connections. As with interactions between human beings, your personal connections and the information you're able to share with your business partners are of the greatest importance.

Q: So what is your summary for 2020 and the outlook for 2021?

A: To summarise, there are some challenges in the market that we should face up to. New players are entering the market with new business models which require up-to-date technology, and which will challenge existing models of transferring credit risks. We will also see changes to the credit risk supply chain. It is crucial that you are prepared for this with up-to-date technology and an 'up and running' solution that fits your business and can be integrated cross-company. Also, the speed at which new products are being created is increasing, which could challenge your existing IT systems as they would need to be able to adapt very quickly.