Overcoming Infrastructure Challenges Voca Link Martin Kearsley

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    Outline of the history of payments Cash was simple, the first true real-time payment mechanism However payments have become more complex Different types of payments, from card payments to high value payments All driven by customer needs and demand – which is good But.. Limited by the technology available: - e.g. Cheques – used the technology of the day – printing and the branch network to create an effective debit based instrument that was potentially more secure than cash. But… what would have been created with today’s technology? Hold that thought….

    Today, each payment type sits on a separate platform, which reflected “state of art” when it was built. Different payment types are subject to different regulation and require different change management IT resources are under ever increasing pressure to maintain all different payment platforms Leaving less resource to use on undertaking activities and developments we want them to, and that would help better serve our customers. Including introducing new payment types.

    Each payment platform, requires layers of operational staff to support the process, and handle related customer queries and exception management Building silos across the bank, of staff managing these issues

    An added layer of complexity is in the growing use of customer channels, to access the growing number of payment types We have trained the customer to use multiple channels (this about how we encouraged them to use ATMs, not the branch They now expect and demand us to keep pace with their future requirements. Indeed they will invent their own if left alone – think of Internet CNP

    By allowing the same infrastructure to simplify and enhance legacy payment systems by migrating them to the real-time service (and by encouraging customers to move to real-time through true self-service) the banking industry will see a step change in customer contact costs, in payment capture and reconciliation costs and in error and exception handling. If we thought ATMs had saved branch teller costs, if we thought telephone banking had revolutionised customer service overheads, and if we thought Internet Banking had saved customer contact expenses – we have seen nothing yet. This is the biggest revolution in Payments of our generation

    In short: - Domestic interbank architecture can be radically simplified - Centralised, shared service model delivers optimum industry efficiency - VocaLink enables and brokers bilateral arrangements providing choice - Commercial independence accelerates the rate of innovation - Commercial independence proliferates range of choices for all stakeholders - Costs can come down - Efficiency can improve - Product innovation can increase

    - From a customer point of view…

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    Overcoming Infrastructure Challenges Voca Link Martin Kearsley - Presentation Transcript

    1. Overcoming Infrastructure Challenges Preparing for the future Martin Kearsley Director of Strategy
    2. About VocaLink At the forefront of innovation 19:00 Leaving restaurant, top-up mobile (by ATM mobile phone top-up ) 14:00 Check balance and pay bills online (by OneVu ) 17:30 Leave work. Withdraw cash for night out (by ATM ) 15:25 Gas bill and life insurance paid (by Direct Debit ) 10:00 Salary paid in (by Direct Credit ) 12:30 Check your statement on your mobile (by MONILINK ) 20:30 Remember nephew’s birthday – transfer £50 via Faster Payments 18:00 Funds transferred to savings account (by Standing Order )
    3. Environment of innovation and change Over time we have built a plethora of different payment types all more complex to meet our customers’ needs Cash was the original real-time payment
    4. Multiple platforms drives complexity Each payment type, lives on a separate platform Placing valuable IT resources under intolerable pressure Less resource available to drive new business
    5. Complexity multipliers Platform diversity brings inefficiency Operational silos grow as complexity increases Agility and flexibility are increasingly elusive
    6. Proliferating channels Mobile Internet banking ATM POS Telephone banking We have trained our customers to use multiple channels These channels bring their own complexities Increasingly mobile customers continue to expect more
    7. Real-Time: fit with current payment types Customer Customer Channel Cash Credit transfer Direct debit High value Retail cards E-Information Bank Single settlement (per currency) ATM infrastructure Automated payments infrastructure High value infrastructure PoS infrastructure ATM inter-bank infrastructure Automated payments inter-bank infrastructure High value inter-bank infrastructure PoS inter-bank infrastructure Inter-bank Settlement agent PoS Single bank infrastructure Single inter-bank infrastructure Instrument settlement settlement settlement settlement Convergence Convergence
    8. Multiple propositions one payments backbone Customer Channel Cash Credit transfer Direct debit High value Retail cards E-Information Bank Inter-bank Settlement agent PoS Single settlement (per currency) Central Real- Time Platform Customer Instrument Bank switch reflects central platform switch design Single bank infrastructure Single inter-bank infrastructure Convergence Convergence
    9. Re-engineering the economics of payments Central Infrastructure Real-Time payments Convergence
      • Simplifies inter-bank
      • architecture
      • Shared service model
      • Value-added services
      • Multilateral netting
      • Self-service
      • True STP
      • No reconciliation
      • Zero exceptions
      • Irrevocability
      • Support all customer channels
      • Shared platform
      • Rationalise connectivity
      • Combine settlement
      • Reduce costs
    10. Any channel but same experience: Internet, mobile, ATM , “cards” plus new channels Valid anywhere Highly secure: bank centric Any value Widely accepted Integrated with day-to-day transactions Final for all parties No reconciliation required The future payment experience The same…only different Instantaneous Enhanced experience
    11. A final thought “ We are continually faced with a series of great opportunities brilliantly disguised as insoluble problems.” John W. Gardner
    12.  
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