Prairie Payments Initiative (PPI) -Announcement

CREDIT UNION RESPONSE TO PAYMENTS REALITIES

1. Have a modernized ISO standards infrastructure

in place.

3. Have future-focusedpayments that deliver

excellent member experience.

2. Demonstrate compelling thought

leadership in payments.

Following PayCo’s demise, the seven largest prairie credit unions established a Payments Working Group (representatives from AB Central, CUPS, SaskCentral, CUCM and Celero) to create a payments strategy (the Prairie Payments Initiative - PPI) that would ensure Prairie credit unions:

DEFINING OPTIONS FOR PAYMENTS INFRASTRUCTUREVery thorough analysis brought forward three options. The committee chose option 3 – buy Payments As A Service (PaaS) through IBM.

Option #1 New Build

Option #2 Own & Operate

(Build + Buy)

Option #3 Buy Payments-as-a-

Service (PaaS)

Re-build existing systems and build new functionality

for a modernized environment

----------Develop greater payments and technology expertise

within the Centrals----------

Continually improve, develop and integrate

payments services

Purchase “payments hub” software for new

functionality----------

Re-build existing systems to comply with modernization and integrate with new hub

----------Manage vendors and continually improve /

integrate new payments services into hub

Outsource payments processing to a third-party

technology provider----------

Manage vendors and ensure integration of new payments

services as available

IBM’s STRENGTHS IBM OFFERS MANY BENEFITS including:

Significant presence and expertise in Canada –currently providing services to all major banks.

Worldwide experience operating modernized payments infrastructure (ISO20022).

In-depth knowledge of Payments Modernization and close relationship with Payments Canada (recently awarded contract to host LYNX).

Potential to provide greater scale efficiencies through collective volumes of all clients (non-prairie credit unions, banks).

Ability for credit unions to connect directly (if desired).

BENEFITS OF PAAS TO CUsPAAS OFFERS MANY BENEFITS including:

Gives prairie credit unions a modernized, cognitive payments platform.

Offers a strong foundation upon which to build an excellent member experience.

Provides the optimal path to enable credit unions to be competitive in payments through access to modern/efficient infrastructure.

Strategic Recommendation for PaaS (Feb 2019)

Structured RFI Process (March 2019)

BusinessCase, Part I(April 2019)

Commercial Negotiations & Pricing

Business Case, Part II

May 2019: Provided update to prairie credit unions through system-wide memo

Final Go Decision –December 2019

A stage-gated approach ensured progress and aligned objectives.

PROGRESSING THE PPI

CURRENT STATUS - APPROVED

Board approvals and a signed contract with IBM complete – late December 2019.In preparation for the implementation phase, the prairie central CEOs will administer the IBM contract in a three-way joint venture structure called the Prairie Payments Joint Venture (for now).Leads: • Michael Devlin, Chief Payments and Technology Officer, Alberta Central

and Wilson Griffiths, Senior Vice President, Member Solutions, Credit Union Central Manitoba.

• As co-leads they will be further extending their existing roles until a more formalized operating structure for the new payments initiative is determined and the newly structured management board is in place.

Implementation and transition to take approximately 24 months.

.

IMPLEMENTATION + TRANSITION

SERVICES TO BE OUTSOURCED TO IBM

Payments processing outsourced to IBM under PaaS will include:

• AFT• Bill Payments • Interac Payments • Wires• Cheques• Centralized Fraud• Real Time Rail

PROPOSED IMPLEMENTATION STAGESThe transition and implementation is expected to take approximately 24 months.

Stabilization + ReviewEnsure the proper expertise is represented in the governance structure and shift to increase credit unions influence and participation.

Prep for ImplementationEstablish a governance structure to efficiently kick-off the PaaS Implementation Phase.

Dec 2019

Implementation & TransitionExecute and manage the transition to PaaS while maintaining strong relationships with end users. Immediate Action:Create the transition team (PaaS Implementation Program Management Office) which will support the implementation phase. To do this, the prairie central CEOs will administer the IBM contract in a three-way joint venture (JV) structure.

Jan 2020 to Jan 2022

Jan 2022 +

beyond

JV PROPOSED APPROACH | CUPS + CUCM PAYMENTS

Prairie Payments Joint Venture Lead by Michael Devlin, Chief

Payments and Technology Officer, Alberta Central and and Wilson Griffiths, Senior

Vice President, Member Solutions, CUCM

PaaS Implementation

CUCM Payments

CUPS

11

• Transition current state operations and resources into JV.

• Maintain current operations while methodically transitioning to new model.

• Develop future-forward capabilities in a phased approach.

In order to effectively manage the transition and ultimate optimization of payments, CUPS and CUCM are exploring how best to align existing capabilities into the JV.

12

JV GOVERNANCE + OWNERSHIP

PAAS MANAGEMENT BOARD:

1 2 3 4 5 6 7

IndependentsProvincial Centrals Representatives

(TBD)

COMMITTEES & CONTRACT ADMINISTRATION:

IPCC Councils

SOW Committees

Operations Committees

3-Way Prairie Central JV (Contract

Administration)

AB

SK

MB

Selected CU Executives

(one from each province)

COMMUNICATIONS + INFORMATION

PPI secure portal: prairiepaymentsinitiative.ca The site has a variety of tools: FAQs, PowerPoints, videos, infographics and more.

Email your questions: ppi@albertacentral.com

Your manager/supervisor

Ongoing communications will continue throughout the transition. A variety of sources are available to keep employees updated:

A PPI steering committee member from your central: Alberta Central: Michael Devlin/Ian BurnsCredit Union Central Manitoba: Wilson Griffiths/Garth MannessSaskCentral: Duane Blahun/Keith Nixon