DFM takes its payment transactions up a gear

Zanders drives the search for a new outsourcing partner

DFM takes its payment transactions up a gear

DFM is a finance and insurance company that specializes in the automotive industry. The company provides financial services for this sector, up to and including payment transactions.

The introduction of SEPA meant that a change in payment transaction servies provider was necessary. But what kind of party would be suitable to a nonstandard company in the new, strongly standardization-oriented environment? Assisted by Zanders, DFM went in search of a new outsourcing partner.

For over 40 years, DFM has provided corporate finance and insurance services for all parties in the automotive industry. DFM advises these companies in operational and financial management and offers online services to streamline their day-to-day activities, such as payment transactions. “For a capital-intensive industry such as this one, proper management of liquidity is a must,” explains Henk Brandsma, manager of operations at DFM.

 “We now know where we stand and what we can do as a service provider in the new world of payment transactions.”

“In the chain from car manufacturers to end users, we handle millions of transactions a year, and we’re just one company. In addition to cars, these transactions also concern matters like insurances and lease contracts. Proper integration between checking accounts and payment transactions with other credit products is therefore very important. The car market is also very seasonal. A sales peak occurs in January, whereas hardly any cars are sold in December.”

Exchanging market knowledge and self-knowledge

DFM started handling payment transactions for its customers in 1989. At the time, the Amersfoort-based company entered into a partnership for the purpose with a bank that provided the technical infrastructure as a white-label service. The partnership went very well until 2006, when it became clear that the introduction of the Single Euro Payments Area (SEPA) would entail very different guidelines for payment transactions.

Dealer Financierings Maatschappij

DFM was incorporated in 1967 as a specialist in corporate finance, insurances and related services for the automotive industry. The company has approximately 250 to 300 clients and focuses mainly on car importers, dealers, leasing companies, and vehicle fleet managers.

Although the company is part of Volkswagen Pon Financial Services, it also provides services for makes of car outside the Volkswagen group. DFM provides solutions for the financing and insurance of a broad range of business assets. Examples in this regard include real estate, plant and equipment, fluctuating stock, lease, rental, and used car financing, and checking accounts. A central part of DFM’s provision of services is support with respect to payment transactions, an area in which DFM is a top 10 service provider in the Netherlands.

Further information can be found at www.dfm.nl.

In the words of Harry van den Ham, manager of project and process management, “Although SEPA provides opportunities, its introduction also meant that we had to invest in our systems and processes. It was a good time to consider our strategic options, certainly when it became clear that our partner at the time wished to implement far-reaching standardization, whereas DFM opted for more custom work.

Our business models were increasingly diverging; we realized that if we did nothing we would lose our grip on our cash flows.” It was obvious that DFM had to look for a new outsourcing partner. To properly identify and list the strategic options, the company asked Zanders for help at the beginning of 2007.

According to Brandsma, DFM was looking for a partner with comprehensive knowledge of current and future developments in European payment transactions. Brandsma adds: “With its extensive network in the banking sector,Zanders helped us in the search for new providers.” Zanders’ consultants Bas Rebel and David Kelin headed to DFM.

As Rebel explains, “I always like working with non-standard companies dealing with this kind of challenge, and when I saw the professionalism, justifiable pride, and adaptability at DFM, I knew right away that this would be a nice project.”

Better insight, new course

Zanders and DFM decided to divide the search into a number of steps. The first step was to determine exactly what kind of payment transaction services DFM aimed to provide to its clients. Once this had been done, the entire scale and nature of the European changes were identified.

Two strategic options emerged from this process. Following a request for information, a range of candidates outlined their capabilities and, on that basis, DFM decided on the definitive strategy to be pursued. This strategy meant not only that the relationship with the outsourcing partner would be different.

It also meant that DFM itself had to conclude new agreements with, for example, processors of PIN payments. The search was narrowed and three providers received a request for proposal. The provider ultimately chosen had a long-term strategy in which DFM could continue to provide services relating to payment transactions under its own label. The company was also chosen because it produced clear evidence of commitment and proven technology.

“The communication with us was also good, transparent, and pleasantly informal right from the start. It suits us very well; it’s easier to communicate in an informal atmosphere, which makes it possible to devise solutions more quickly,” Van den Ham explains. “We actually made up our minds very quickly about which provider was the most suitable. Doing so was possible mainly because we had properly considered our wishes and requirements and formulated them in precise terms in the preparation phase.”

DFM has been working with the new, future-proof checking account infrastructure since November 2009. The infrastructure is integrated in e-Kompas, the online front office application in which all DFM’s other financial products are included. All components make use of a single security tool and the entire conversion was completed while business went on as usual.

The company concluded new agreements with suppliers concerning point-of-sale terminals, cash payments, and security transport. The company also placed certain duties under its own management again to improve the provision of services. For example, DFM now has access to a number of bank systems that make it possible for the company to process customer data and transactions itself as well as to provide primary support.

According to Brandsma, “Of course there were limited technical hiccups during roll-out as well. That’s inevitable. But the objectives we formulated with Zanders were achieved. A client satisfaction survey has also been carried out since and the results were very positive. That is the ultimate measure of our success.”