PAYMENTS FUTURE CAST - NCR · 2019-05-17 · Payments Future Cast… Session Agenda 2 Open...

INNOVATION CONFERENCE 2017

PAYMENTS FUTURE CAST

Andrew ShortSenior Solutions Manager, ISG

Please use theInnovation ConferenceEvent App to check-in to this session S726

NCR Innovation Conference 2017: Confidential


Understand the Customer Problems

That Got us to This Point

Review the Market Dynamics

Payments Future Cast…Session Agenda

2

Open payments, open APIs, distributed ledger, secure payments, mobile payments, P2P along with faster payments

Thought Provoking Ideas to Help You

Think About & Organize Your

Investments for the Challenges Ahead

THE PROCESS OF MAKING & RECEIVING A PAYMENT HAS FAILED TO KEEP PACE WITH

CUSTOMER EXPECTATIONS IN A 24X7X365 GLOBAL

ECONOMY.

NCR Innovation Conference 2017: Confidential 3

Intelligent & Ubiquitous

Immediate & lower

cost

Convenient & secure

PAYMENTS NEED TO BE MORE:

So Zoltar….What is Happening in Payments?

Exchange

Availability

Settlement

Cost

4

Zoltar…

Mobile

Online

ATM

Branch

CardACH WireCheck

Physical

Next Day

or Longer

Low Cost

Batch/Next

Day

Physical

Swipe/Type

End of

Day

Med Cost

Net

Settlement

Electronic

(Batch)

1-3 Days

Low Cost

Batch/ 1-3

days

1-5 Days (Domestic/

International)

High Cost

Immediate (RTGS)

Electronic w/

Assistance

deposit

w/d

Key: Positive attribute Neutral attribute Negative attribute

BANK ACCOUNTS

How Did We End Up Here?

Channels

that Service

them

Cash

Physical

Immediate (Same location)

Med Cost

Immediate

Settlement

New Devices (Wearables, etc) ACH

Batch/ 1-3

days

New Modalities (Augmented/Virtual Reality)

Blockchain

5

So Zoltar…

Card

Wire

Check

Electronic

Deposit

Physical/

Low Cost

Batch/

Next Day

Physical Swipe/Type

Med CostLow Cost

Same Day

Electronic w/

Assistance

Immediate

High Cost

Immediate (RTGS)

Electronic

Batch

NEW/ ALT

Account

Schemes

• Rich Apps

& Data

• Easy Setup (mobile/

email)

• Immediate

Settlement

• Lower Cost

Per Trx

Key: Trending Attributes Areas of Improvements: See Logo’s

Phone#/Email/

QR

What is Changing in the Market?

Next Day

or LongerImmediate 0-3 DaysImmediate

New

Channels

End of

Day

Net

Settlement

Near

Real-time

Settlement

(30 Min)

Phys/Elec Tap/Insert/Type/

Picture/Pressetc…

NFC, HCE/SE &

Tokenisation

Social Networks

Exchange

Availability

Settlement

Cost

What does the Future Hold for Banks and Payments?

Let’s Build a Layered View…

NCR Innovation Conference 2017: Confidential6

Distributed

LedgersTier 1

Tier 2Tier 3Tier 4

(~25 Banks)(~531 Banks)(~13,835 CFIs)

*Assumes DDA and Credit (issuer) accounts

6 Banks

Blockchain

Defining Categories to Inform our Future Cast

Immediate & low cost

Convenient & secure

Tra

nsp

are

ncy

&

acco

un

tab

ility

Intelligent & ubiquitous

WireCheck ACH NEW/ALTCard

THE INFRASTRUCTURE LAYER


Immediate & low cost

Infrastructure-“Messaging”


A single, common “language” for global financial communications

200 initiatives in 90 countries across payments, securities, trades services & foreign exchange

CardACH Wire NEW

The Good

Richer Data; Structured Fields

Better Customer Experience (longer names,

why + amounts enabling better collaboration)

More Information for Fraud Processes

The Reality

Different Implementations (of the standard)

Changing Needs (differ by country, region,

pymt type)

Legacy Message Types Continue

A lot of Message Transformation in our Future!Legacy Legacy ProprietaryLegacy

Infrastructure-“Faster Payments”


Card RailsBank Owned Rails New/ALT Rails

Give customers immediate

availability with minimal

changes to payments

infrastructure

Immediate availability on new

rails with true immediacy of

settlement between accounts

(PUSH)

Immediate availability

w/ almost real-time

settlement between

accounts (PUSH)

Immediate availability

w/ real-time settlement

between Paypal

accounts (PUSH)

Use Cases:

Live: P2P; Disbursements (EWS)

Pilots: B2B & C2B Focus (TCH)

Use Cases:

Live: P2P, A2A, B/G2C;

Agent Cashout; CC Bill Pay

Use Cases:

Live: P2P, A2A,

C2B; B2B, etc…

ALT Rails

A lot of Faster Payment Alternatives in our Future!

Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)

ISO20022 Will Become the Most Common Form of Rich Payment Message

Banks Specialization in Connections to Payments Infrastructure

First Casualties of Faster Payments and Generational Shifts (discontinuation of the check; consolidation of ACH/Wire business cases onto new FP rails)

Prepared for Richer Formats of Payment Messages (Fraud and Cross Scheme

Interactions)

Consolidation of Bank Owned Assets to Compete With Alternative Providers

Myriad of New Faster Payment Cases for B2B and B2P Payments

Implement Tools to Deal With a Wide Variety of Legacy & New Message Formats

Invest in Legacy Rails as They are Made as Fast as Possible

Decide and Invest in FP Rails Make Most Sense for Your Customers

Future Cast- Infrastructure Layer


What new infrastructure is your bank planning to connect to over the next 2-3 years?

11

POLL OPEN

1 P2P/Promise to Pay (EWS) 0%

2 B2B/C2B New Rails (TCH) 0%

3 Both a & b 0%

4 Investing in Current Rails only (e.g. same day ACH) 0%

5 Other…(leverage Visa/MC API’s; Blockchain for Cross Border Payments)

0%

THE ACCOUNTS LAYER


Intelligent & ubiquitous

Financial Accounts & Payment

Transactions

Key Trends Driving Change @ Accounts Layer


Tier 1Tier 2Tier 3Tier 4*Assumes DDA and Credit (issuer) accounts

1. Big Data/Analytics Will Make Account Tier Smarter Helping to Protect as

well as Anticipate Customer Needs

2. API’s Will Accelerate the Disruption of End-to-End Processing by Banks

Creating Competition and Ubiquity in Payments

Social/Retail Accounts &

Transactions

Highly

Regulated

Not as

Regulated

Battle for account relevance is just

beginning!


Widespread Use of AI (Proactive Advice/Alerts)

Fundamental Changes to Banks Data Models (Behavioural Driven)

New Platform Based Business Models Driven out of Open Banking Initiatives

AI Tools Mainstream (Reactive- Q&A, Financial Planning, etc.)

Cross Industry Partnerships/Mergers/ Acquisitions

Move Towards Standardization of Best API Ideas

Consortiums of Industry Related Players Building to Common Standards

Data Wars/Partnerships

Move to Collect, Store and Make Data Accessible Across All Channels

App Partners Talking to Large Account Providers Driving API Ideas

Very Little Standardization


Future Cast- Accounts Layer

What account related investments are you planning to bring to market in the next:

a) 1 year?

b) 3 years?

c) 5 years?e.g.

1 year: Big Data

3 years: Data Related Partnerships

5 years: APIs

Poll: Investment Horizon for Data; APIs; Partnerships

15

THE APPLICATIONS LAYER


Convenient & secure

APP/Service “Extravaganza”


Tier 1Tier 2Tier 3Tier 4

Card RailsBank Owned Rails ALT Rails

HCE/Secure Elements; Tokenization;

Services Just the Beginning

Just Scratching the Surface on Convenience (one click payments, cross institution, cross payments, etc…)


Consumer is the Payment

Delegation of Payments to IoT Devices

US Players Consolidate to Compete with Emerging Global Payments

Authentication Becomes Transparent

New Bus. Payment Apps (built out of consumer market successes)

Biometrics Improve Convenience (less intrusive)

Emerging Market Payments Disrupt First World Markets (e.g. AliPay)

Biometrics Provide Another Level of Authentication Improving Security

First Gen Cross Payment/ Cross FI Consumer Apps

Move to NFC (Convenience in Physical

Channels)

Social Network Integration Drives Consumer Adoption of Mobile Payments

Secure Payments via Tokenization of Financial Data (card, account, etc…)

Enterprise Fraud Services


Future Cast- Application & Services

What role do you see your bank playing in the years ahead?

19

POLL OPEN

1 Cross Payment and Cross Institution Applications? 0%

2 Contributing services for consumption by your partners/application vendors? 0%

3 Outsourcing payments arena and focusing on other areas in banking? 0%

4 Other: _________ 0%

BLOCKCHAIN


Transparency & accountability

Future Cast- Blockchain


Distributed

Ledgers

Public BlockchainTraditional Payments Models

Transparency,

Free from

Manipulation

No Oversight

Immediate,

Lower Cost

Built on

Privacy

Transparency,

Removal of

Centralized Data

Limited

Oversight

Immediate,

Lower Cost

What happened @ Equifax Will Drive

Opportunities

Cross Border Payments Offer Up

and Immediate Opportunity


Legitimate Digital Currencies Make it to the Mainstream Market

Payments Infrastructure Relies on Block Chain for Reputation and Identity

Consolidation of Cryptocurrencies

Private Blockchain Move to Production for Cross Border Payments

Blockchain for Reputation Moves to Large Scale Pilots

Blockchain for Identity Moves to Large Scale Pilots

Lots of Digital Currencies Struggling for Legitimacy

POC/Pilots Focus on:

Cross Border

Trade Fin; AML/KYC

Data Breaches (Equifax) Now Drive Increased Interest in Identity Use Cases

Future Cast- Blockchain


Where is your bank experimenting with blockchain business cases?

23

POLL OPEN

1 Cross Border Payments? 0%

2 Reputation (AML/KYC)? 0%

3 Identity? 0%

4 Other: _______ 0%

PLANNING FOR THE FUTURE



Digital Currency Integration

Ready to Participate in Private Blockchain Infrastructure

Specialization in Banking:

Payment Infrastructure Players

Platform Business Provider

Front-end Aggregator of Banking Services

Faster Payments for Businesses (B2*)

Big Data Analytics Driving Customer Insights & New Services

Consuming and Releasing APIs to Compete in an Open Banking Market

Extended Authentication Processes to Include a Variety of Biometrics

Message Transformation Tools w/ Ability to Create and Consume ISO20022

Faster Payments for Consumers (P2*)

Orchestration of Payments Data and Experiences

Incorporating NFC and Tokens Into Your Banking Applications

Enterprise Fraud Capabilities

What’s Important For Planning?


Poll: Specialization & Your Bank?

26

Full-service model, own-

labeled products &

services

Web of cross-subsidies

with profitable products

propping up unprofitable

ones

Fending off competitors at

every point in value chain

with a more integrated full

service model

Remain Full Service

Vertically integrated but thin to

capture network effects and

capitalize on competitive

advantages

Offer small number of own-labeled

products where strategically

important e.g. current accounts (for

data, cheap deposits), payments

(data), secured lending (competitive

advantage)

Open Platform for third-party

products/services, as in aggregator

model, but delivered faster, less

friction

Platform Business

Distributor of financial

products and services

Don’t manufacture financial

products/services but

instead source from

ecosystem of partners

Aggregator

Provider of financial products

and & services to other

FIs/FinTechs

Eliminate need for others to

engage in heavily regulated

activities, take on compliance

burden, or – for new entrant –

having to apply for license at all

Infrastructure Provider

Do you see your bank specializing over the long-term, if so where?

a) b) c) d)

Discussion

27

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28NCR Innovation Conference 2017: Confidential

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INNOVATION CONFERENCE 2017

THANK YOUAndrew ShortSenior Solutions Manager, ISG

Please use theInnovation ConferenceEvent App to check-in to this sessionNCR Innovation Conference 2017: Confidential

PAYMENTS FUTURE CAST - NCR · 2019-05-17 · Payments Future Cast… Session Agenda 2 Open...

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Transcript of PAYMENTS FUTURE CAST - NCR · 2019-05-17 · Payments Future Cast… Session Agenda 2 Open...