1. Changing Landscape in Payments
Adrian Ng
ACI Worldwide
30 May 2007

2. Agenda
Introduction
•
• Industry Trends
• What Happens Next
• ATM Fraud
• Summary

3. ACI’s Mission
“To be the best global provider of
consumer electronic payment software
and solutions.”

4. ACI Customers
800+ Customers
•
83 countries
•
Supported by a
•
Worldwide Network of
ACI Offices, Distributors
and Partners

5. ACI Customers
36 of the Top 100 U.S. Banks
•
• 27 of the Top 100 U.S. Retailers
• 17 of the Top Banks in India
• 8 of the Top 10 Banks in Canada
• 5 of the Top 10 Banks in the UK and Mexico
• 4 of the Top 5 Banks in South Africa
• 3 of the Top 5 Banks in Australia & Indonesia

6. Industry Trends

7. Ongoing Growth for Electronic Payments
Regional Growth Rate for Electronic Payments
(Retail Payments + Retail Transfers + Large Value)
7.0
Eastern Europe
6.0 Asia Pacific
Middle East/Africa
5.0 South America
Index 2004 = 1.0
Nafta
4.0
Western Europe
3.0
2.0
1.0
0.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

8. The Trend Will Continue in Vietnam…
“Vietnam’s central bank has called on the country’s banks to
•
increase card payment volumes to reduce the population’s
dependence on cash, but interoperability remains an issue.
Three separate card payment networks exist in Vietnam, the
•
alliance of Vietcombank with 17 joint-stock banks, BankNetVN (the
national funds transfer system) and the four banks in the VNBC
network. Cash payments currently represent 22.8 per cent of
Vietnam’s total payments, with just 2 million ATM cards and 1,900
ATMs in use for a total population of 82 million.
Where possible, the banks are encouraged to promote card
•
payments and electronic payment services to customers…”

9. Ongoing Growth for ATM Deployments
Number of ATMs Worldwide 1967- 2005 (millions)
1.75
Early signs of
Early signs of
1.50 slowdown
slowdown
1.25
1.00
High growth in the
High growth in the
0.75 1990s in
1990s in
all regions
all regions
0.50 Early growth in the
Early growth in the
First ATM installed
First ATM installed USA and then
USA and then
in the UK in 1967
in the UK in 1967 Japan
Japan
0.25
0.00
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Source: RBR Research

10. A/P Is Now The World’s Largest ATM Region
Share of ATMs Worldwide, 2005
Central
Asia-Pacific has displaced
Middle •
and
Eastern East and
North America as the largest
Africa
Europe
region for ATMs.
2%
5% Asia-
Pacific
Latin
WE’s share of world
•
31%
America
11%
installations has declined.
CEE’s share has risen from
•
2% in 2001 to 5% in 2005.
Western
Europe
The shares of Latin America
•
22%
and the Middle East and
Africa have risen slightly.
North
America
29%
Source: RBR Research

11. Growth Rates Vary Significantly
Installed Base of ATMs by Region, 2005 and 2009 (thousands)
600
↑4-5% pa
2005 2009
500 ↑1-2% pa
400 ↑2-4% pa
300
↑4-5% pa
200
↑10-15% pa
100 ↑8-12% pa
0
Asia-Pacific North Western Latin Eastern Middle East
America Europe America Europe & Africa
Source: RBR Research

12. What Happens Next…?
Success Means:
•
– Additional Complexity
– Higher Costs
– Increased Fraud
– Customer Service Challenges
– More Competition
– Pressure on Profits

13. Problems with existing payment
systems

14. 1. Banks operate too many payment systems on
too many platforms within their payment silos.
Settle Switch ACH RTGS Risk Card
Platform Platform Platform Platform Platform Platform

15. 2. Each payment system has separate
connections to core systems, channels, and
payment networks.
Payment Systems
ACH Debit Card
•Printing •Printing
Check •Risk & Fraud Mgmt. •Risk & Fraud Mgmt.
Wire
•Security •Security
•Pricing
•Printing
•Monitoring & Rptg. •Monitoring & Rptg.
•Risk & Fraud Mgmt.
•Risk & Fraud Mgmt.
•Security
•Security
•Monitoring & Rptg.
•Monitoring & Rptg.
Core Systems
Teller
DDA
Channels
Call Center
Web Site
G/L
IVR
Mobile Reconciliation
Source: How to Get to the Promised Land: Alternative Pathways to Enterprise Payments
Financial Insights Aaron McPherson July 2005

16. 3. Each payment type needs access to similar
services … but today these services are deployed
in separate silos.
ATM POS Branch Internet
Authentication X X X X
Switching/Routing X X X X
Delivery Channel
X X X X
Management
Marketing X X X
Data Aggregation X X X X
CRM X X X X
Monitoring X X X X
Presentation/
X X X
Personalisation
Authorisation X X X X
Risk Management X X X X
Source: The Tower Group

17. Where are payment systems going?

18. Banks are deploying enterprise payments hubs to
simplify and rationalize their payments architectures.
Wire
Debit Card
Payment
Payments
Systems Database
ACH
Check
Payments Hub
Pricing
Teller Risk & Fraud Mgmt.
Core Systems
DDA
Security
Channels
Call Center Unique Functions
Web Site
G/L
IVR
Reconciliation
Mobile
Source: How to Get to the Promised Land: Alternative Pathways to Enterprise Payments
Financial Insights Aaron McPherson July 2005

19. ACI’s Vision ---
providing an enterprise payments hub
Wire
Debit Card
Payment
Payments
Systems
Database
ACH
Check
Teller
Channels
Core Systems
DDA
Call Center
Web Site
G/L
IVR
Mobile
Reconciliation
Source: How to Get to the Promised Land: Alternative Pathways to Enterprise Payments
Financial Insights Aaron McPherson July 2005

20. Case study - CIBC
BASE24
BASE24-es
CIBC Hosts
Phone Banking IFX
Card
Processor
Branch
Network
Internet
Banking PRM – Debit Payments
PRM – AML Manager

21. ATM Fraud

22. The Crooks are Everywhere!
fraud
ss border ATM
for cro
rested in Russia 00,000 from US
Four ar aling around $5
icion of ste
ur men on susp ress reports.
have arrested fo , according to p
n police cam
Russia s border ATM s
ounts in a cros
bank acc
Australian police r
ecover first
complete ATM skim
New ming device
Zeala
ATM nd Ban
ks iss
fraud ue
warn
ing
y ATM
k s h it b
ore Ban al scam
Singap e
m & st
ski

23. Card Fraud in A/P Higher Than World Average
World Average
US
Canada
UK
Taiwan
South Korea
Philippines
Malaysia
Japan
Indonesia
Australia Source: The Asian Banker Research, 18 March 2004
0 5 10 15 20 25 30 35
Losses Due to Fraud Out of Total Card Transactions (%) in 2002
Losses Due to Fraud Out of Total Card Transactions (%) in 2002

24. Card Skimming – The Set-up…

25. Card Skimming – The Set-up…

26. Card Skimming – Final Touches…

27. Card Skimming – Execution

28. Card Skimming - Receiver in Car

29. PC, Database, Encoder, Etc…

30. DIY Cards…

31. ATM Fraud – What can banks do?
Operational
•
–Education for customers
–Security cameras
–EMV
Fraud detection solution
•
–ACI Proactive Risk Manager

32. SUMMARY

33. Summary
Establish a Vision
•
• Build the Right Infrastructure
• Buy Established Packages To Leverage
Global Cards & ATM Developments
• Don’t Forget About Security
• Execute Effectively
• Work With Good Partners

34. EVERY S E C O N D. EVERY DAY