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Staying Competitive in the Payments Industry

Laura Clary, AAP

Tuesday, September 16, 2014 10:15 – 11:15 am

WesPay Payments Symposium 2014

© 2014 Fiserv, Inc. or its affiliates. 2

In this session, we’ll discuss…

• Industry Trends and Payment Systems Convergence

• Given the large investment most FIs have made in their core

payment processing systems and the cost to convert to newer

technology, how do we:

• stay competitive in the marketplace;

• offer our clients state-of-the art systems that are not only efficient but

reduce the bank’s operating cost;

• generate revenue while investing less.


Payment System

Convergence into a

New Commerce

Marketplace


General Market Observations - Drivers

Payments Evolving into Exchange of Information & Money in Real-Time

• The entire landscape is drastically evolving across all payment types & use

cases into a relational ecosystem where technologies, consumers, and

cultures are converging through the experience of conducting commerce.

• Migration of payment volume and revenue to non-bank applications & networks

as a result of customer preferences and technological change

• Fast is not Fast Enough.

The Movement of Money and Data Must be Done in Real-Time

• Competitive conditions are driving financial institutions to find flexible cost-

effective ways to ensure operational quality & scalability

• Speed & responsiveness in delivering new capabilities & innovation in order

to grow and defend the payments franchise at the Bank

• Resurgence of interest in DDA based payments.

© 2014 Fiserv, Inc. or its affiliates. 5 5

Key Trends Changing the Payments Landscape

Rise of the Digital Relationship and

100% Electronic Payments

Emergence of Non-Traditional Competitors

and New Value Chains

Demand for Faster Payments


Connected Devices Becoming a Primary Point of

Relationship Engagement - Retail & Corporate


Digital Accelerates Delivery Speed Expectations

Books Physical goods What?

Who?

Instantly Instantly

How

Long?

Music, Apps,

Movies

Same Day

Digital Consumers are trained to expect instant gratification

and immediate delivery


Digital Devices Enable & Encourage 2-Way Relationships


Powerful New Competitors Leveraging Payments to

Build Relationships and Engagement

https://retaillink.wal-mart.com/ProductSubmission/images/WM_Logo.jpg


Example: New Payment Competitor Leveraging P2P

to Deepen Customer Engagement


Payment Services Have Not Kept Pace

• Days, not minutes

• Cut-off times, weekends and

holidays

• Instant delivery options are

very limited

• Electronification of endpoints

• 1-way interactions

$$


Financial Institutions Have Captured Less Than 20%

of Digital Payment Transactions

Estimated Bill Payments By Type – 2012 billions

Estimated Bill Presentment By Type – 2012 billions

Biller 3.5

Bill Pay 3

Checks 3.8

Offline 5.5

Biller direct 2.6

FI ebill 0.3

Paper 14.1

Source: USPS Survey and internal estimates.


Fragmented Payment Relationships, Creating a

Strategic Opportunity for Financial Institutions

Consumers Have MANY Financial

Relationships at risk of

disintermediation

Financial Institutions need to

remain the primary relationship

with consumers and their money

Charities

Merchants Billers

Groups

People

Service Providers

Charities

Merchants Billers

Groups

People

Service Providers

Consumer


Integrated Payments Require a New Kind of Network

Network Services

Accounts

Charities

Merchants

Billers Groups

Collect & Contribute eBill

eInvoice

Transfer & Deposit

Billpay

eRequest

Send & Request Money

Digital Payment Network (Connect, Collect,

Pay, Inform)

People

Small Businesses


• Fully integrated payment management across all payment types & channels

• 100% electronic capable Digital Payment Network, native real-time & open

architecture

Intelligent Payment Management &

Fiserv Digital Network

ACH Check Card Wire Other

Networks

Intelligent Payment

Management

Real-Time

Payment & Information

Integrated Digital Payment

Experience


Real-Time is a Core Element of the Fiserv Network

Enhance Money Movement for FIs, Consumers, Businesses

• 100% electronic capable network—for all types of bills and payments

• Creating a ‘network effect’ for

participating FIs, Billers,

and Consumers

• Enabling 2-way exchange of

money and information

• Leveraging an open network approach

• Providing Faster Payments options to all participants


GenY, GenX Expect Faster Transactions

24%

19%

10%

9%

More timely posting oftransactions

Gen Y

Gen X

Boomer

Senior

Represents 59 percent of households

How can your financial institution improve its online banking

experience?

Source: Fiserv Household Survey, 2012


Mobile Will Accelerate Demand for Faster Payments

• Mobile Bankers are

48% more likely to want

real-time P2P than non

mobile users

• Mobile Bankers are 68% more likely to want same

day BillPay


Expedited Payment Connectivity

Fiserv Digital Network with Instant Payments

Real-Time Applications

with Large Communities

Debit Networks

PEP+ Direct to Core Other DDA Networks

Faster Payments Requires Broad Connectivity, and

Connected Applications

Pay Person

Transfer Collect / Get Paid

Billpay Mobile Deposit

Payments Processing

Modernization


Payment Hubs enable banks to capture the growth

opportunities of rising payment volumes and address

regulatory challenges by providing enterprise-wide

visibility into payments operations across all channels

and business lines

• Can wrap around existing payment engines and orchestrate payments from

sources to clearing channels or can be end-to-end orchestration and processing

platforms which replace all legacy siloed processing engines

• In both methods, hubs enable banks to capture all payment data in a single

location. This allows banks to perform rigorous checks as well as value-added

analysis and data mining


Increase Efficiency and Derive Insight from

Centralized Payments

Payment Hub Enterprise Payments Monitoring and Management

Rules and

Workflow

Foreign

Exchange

Exceptions

and Repair

Alerts and

Messaging

Formatting Dupe Check Posting Routing Check Clearing

Networks

ACH Networks

Wire Networks

Card Networks

Interbank

Networks

Straight-through Processing

DDA AML/Sanctions MIS

DDA AML/Sanctions MIS

Bank Systems

Data Repository Liquidity mgt. Notifications

Analytics Cross-selling

Value-added Services

Payment Hub Schematic

Payment

Services

Corporate

Clients

Branch

Online

ATM

Mobile

Source: CEB TowerGroup Research 2013

1

Business Agility

• Centralize business rules

• Quickly add new payment

methods, channels and

products

• Reduce time and cost for

integrating new

acquisitions

Customer Service

• Single customer view

• Consistent customer

experience across all

payment channels

• Create potential to

expose payment data

to corporates

Operational Efficiency

• Centralize payments

logic

• Reduce operational

complexity

• Increase STP rates for

all payment types

Compliance

• Single data repository and

audit trails

• Improve controls. resilience,

and recovery

• Ability to integrate all

channels into Fraud, AML,

and sanctions tools

2 3 4

Clearing

Channels


Payment Processing Challenges &

Solution Approaches

• Simplify complex payment

ecosystems, reduce redundancies,

create & leverage common services

• Fast, Faster, Fastest + Agility are

the operating mandates

• Visibility & Management of payment

through entire processing pipeline.

• Fraud, Risk & Compliance are

critical at every step

• Customer Enablement

• API Economy and Architecture are

business enablers

• Leverage data intelligence over data

reporting

• Assemble capabilities & build

composite applications

• Distribute processing to any

available node based on profiles

and policies, workload balancing

• Deliver Alerts and Messaging as an

enabler, exceptions handling

• Fraud, Risk, Compliance

Integration

• Customer self-service minimize

delays, risk

• Services, and more services

• Build on reporting initiatives and

leverage intelligence in processes

Challenge Approach


Architectural Principles

• Prioritize the delivery of business value using a service-centric

approach based on the strategic capability model mapping

process. Insure a business architecture that supports and is

consistent with the technical architecture.

• Deliver products in an incremental and iterative fashion; using

assets from the Capability Model

• Model technical deliveries in an Enterprise Service-Oriented

Architecture that prioritizes loose-coupling and standard service

interfaces over individual application implementations.

• Incorporate Cloud Computing concepts into the applications to

support the required delivery models via the inclusion of multi-

tenant support

• Standardize a Payment Enterprise Data Architecture which

optimizes data access, integration, storage, replication and

management of business entities and data.


Architectural Principles

• Embrace an architecture that includes automated business rules,

workflow orchestration, and clear process boundaries.

• Include monitoring, reporting, and role-based information delivery

via an easy-to-use Portal that supports browser, mobile,

“phablets” and potentially many other devices.

• Implementing a consistent modern UI architecture that

incorporates responsive design.

• Build application components and a centralized

Role & Permission’s approach so that security within systems and

across dependent services can be universally controlled and

defined.


Workflow Orchestration & Rules Engine

On Arrival Payment Services

Risk Detection & Prevention

Intelligent Payment Routing

Exceptions & Reconciliation

Application & Data Integration Layer

Reporting & Analytics

Detail and Enterprise Monitoring

Profile Mgmt and Onboarding

Client Self Service

Actionable Alerts Customer Care

Branch

Online

Mobile

ATM

Corporate

ACH

Check

Card

Wire

Interbank

Processors International

Bank Systems DDA

Sanctions

Customer Info Files

Regulatory Compliance

Image Archives

Big Data

Core Payment

Services Warehousing

Settlement

Clearing

Posting

Collection

Dashboards Administration

Acquisition

&

Origination

Clearing

Channels /

Networks

Payment Capability Inventory

Simple View


• Fully integrated payment management across all payment types & channels

• 100% electronic capable Digital Payment Network, native real-time & open

architecture

Integrated Payment Strategy:

Keys to Success

ACH Check Card Wire Other

Networks

Intelligent Payment

Management

Real-Time

Payment & Information

Integrated Digital Payment

Experience


4.0 On

Arrival

Ingest Payments to

Database

4.1

Translate Payment

Data

4.3

3.0 Workflow / Orchestration

Validate Ingestion

4.2

Acq

uis

itio

n &

Ori

gin

ati

on

8.0 Exceptions & Reconciliation

Exceptions

Assignments

8.1

Manage

Disputes

8.2

1.0 Visibility & Management

Monitoring

1.1

Actionable Alerts

1.2

Analytics

1.4

Reporting

1.5

Balancing

1.3

End-Client

Visibility

1.6

7.0

Intelligent

Payment

Routing

Intelligent

Routing

Process 7.1

Liquidity Mgt

7.4

5.0 Other Payment

Services

Perform Enrichment

5.2

6.0 Risk &

Compliance

Detect

Duplicates

6.1

Perform Data

Validation

5.1

Scheduling

5.3

Capture Data

5.4

Market Transformation Drives Development

Customer

Facing

Network

and Data

Integration

Bank

Facing

Monitoring,

Reporting &

OnBoarding

Market

Transformation

Fiserv Payment Capability Inventory


Bank Facing

• Fraud and Risk Monitoring Analysis

• Exceptions Workflow

• Exception and Dispute Management

• SCO Branch, Teller

• Customer Care

• PNV

• Front-End ACH Origination

• ARP/SMS

• Business Client Services

• PopMoney

• Snap2Pay

• MyCheckFree

• Online Banking

• Online Bill Pay

• Mobiliti

• SpotPay

• SCO Merchant, Mobile, Prepaid Debit

• Comprehensive Payables

Monitoring, Reporting &

OnBoarding

• Reporting and Analytics

• PaymentView

• Report Archive Management

• Monitoring, Messaging, and

Alerts

• Onboarding, Entitlements, and

User Profiles

Network and

Data Integration

• Fiserv Real-Time Network

• Data Integration

• Payment Channel Optimization

• Workflow Orchestration

• Landing Zone Coordination

• Automated Rules Engines

Customer Facing

The Emerging Payments Landscape


In Summary


The Problems with Today’s Payment Infrastructure

1. New Market Pressures

Vendors who do not traditionally work in the

payment market are successfully moving in

because they are where the people are

2. Relationship Transformation

These new vendors immerse themselves in

the life of the customer to understand who

they are, which creates a disadvantage to

the Banks and FI’s.

3. New Payment Activities Emerge

Competitors lead when they can translate

data that is pertinent to the customer into

intercommunications which enhance the

customers payment experience.

4. Fast is Not Fast Enough

Rapid change is inherent in this new

marketplace


The Solution Framework

1. FIs need to take aggressive

ownership of this new payment

world.

2. FIs must extend the payment

experience to include an enriched

relationship with your customers.

We need to become more robust in

establishing who they are, by

referencing data which better

describes their role in the new

commerce frontier.

3. Blending payment data from

different sources into a single view

becomes a requirement which

provides simple and concise

information to make sound, and

credible decisions

4. Steps must be taken to deliver

solutions in meaningful increments of

value, at a faster pace.


New

Products

The Solution Framework Drives Common Attributes Within

New Products

1. All products must deliver specific

functionality that address non bank

competition

2. The products must have the

following common value proposition

components

1. Revenue Generation

2. Cost Reduction

3. Enhanced Customer Experience

4. Integration Flexibility

5. Risk Mitigation and/or Prevention

3. Smart, simple, and comprehensive

use of blended data to enhance to

customer experience

4. Execute Continuous Improvement

and Continuous Delivery (CICD)

techniques within our new

development process

(Agile/DEVOPS)


Please stop by Booth 11

or

Contact Laura Clary

[email protected]


Thank You

laura clary, aap - prodevmedia.com€¦ · and new value chains ... • fully integrated payment...

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