The document discusses strategies for banks to pursue growth in a post-SEPA world. It outlines the economic challenges banks face from high fixed costs, legacy technology, and increasing competition. Two strategies presented are outsourcing transactions to lower costs and splitting into distribution and transaction banks. The document provides two case studies, one of a European bank implementing SEPA direct debits and another of a pan-European payments outsourcing deal. It concludes by asking if there are any other examples of deals not being seen in the market.

1. Strategies for Growth in a
Post SEPA World
Brendan Reilly
Head of Northern Europe
Country Product Management

2. 1 The Environment
2 Deutsche Bank’s Approach
3 Case Studies
4 Questions
Brendan Reilly · 3 July 2008 · page 2

3. "If you are planning for one year, grow rice. If
you are planning for 20 years grow trees. "
- Chinese Proverb
Brendan Reilly · 3 July 2008 · page 3

4. Economic challenges – Transaction Banking
Expenses Revenues
• High fixed costs • Commoditised products
• Legacy technology • Increasing competition
• Labour intensive operations • Pricing compression
• Operational risk • SEPA – changing landscape
• Inflexible product • Seeking value-add products
Brendan Reilly · 3 July 2008 · page 4

5. Banks have a few real options
Market trends put pressure on strategic positioning
High
Outsourcing Cost Reduction
Cost
level
Sharing Insourcing
Low
Low Transaction Volumes High
Brendan Reilly · 3 July 2008 · page 5

6. …resulting in New Business Models
Split between Distribution and Transaction Banks
Distribution
Customer Sales/Service
Bank
Transaction
Bank Customer Sales/Service Product Mgmt Processing Clearing
Client interaction and relationship can be intact
without ownership of full value chain
Brendan Reilly · 3 July 2008 · page 6

7. Market Trends
• Equens wins contract to provide outsourced payments transaction
services to OP Bank Group
• Barclays forms strategic partnership with Deutsche Bank
• HBoS selects Fortis as its prime Euro Partner Bank
• ING and Atos Origin launch a joint offering of end-to-end services
• What isn’t being seen ?
Brendan Reilly · 3 July 2008 · page 7

8. Wholesale Solutions
Partner Banking, White-label & In-Sourcing Business
Business Initiative established in 2004
Established customer base, business relationship with close to 25 international banks
Considerable track record with Implementing White-label and Partner Banking Solutions
Global reach with offices in Frankfurt, London, Singapore and New York
A Product Suite designed to meet requirements of clients from different segments:
White Labelled Infrastructure
Partner Banking
Channels (db-di) Solutions
Brendan Reilly · 3 July 2008 · page 8

9. db-Infrastructure Solutions
Leveraging DB’s significant Investments in Cash Management /
Payments Technology
GMA PRISMA MTNA SEPA CINQ
Funds Cheque
Investigations
Transfer Processing
Customer Messaging Messaging Customer
Processing
5 year vision & investment program
Systems designed & built to include 3rd party partners
White-labelled electronic banking solutions
Scalable operations across the globe
Business Continuity Plans & Systems
Market leading customer service model
Future-proofing payments environment
Brendan Reilly · 3 July 2008 · page 9

10. Case Study #1: European Bank - SEPA Direct Debits
High volume
11 Software Vendors & 1 Bank
Integration Layer being built
Talks already started with another bank for same solution
Natural extension in to SEPA Credit Transfer Processing
Brendan Reilly · 3 July 2008 · page 10

11. SEPA Direct Debit – European Bank
Access Channels
Country Specific EB Access (SAML) Creditors Direct Access
SSO via SAML
db direct Internet db direct Connect
Attended Unattended
Pain008,
Paymul
Conversion &
PRISMA Routing SEPA DD
SEPA
Engine Integration Pre-Authorization
Initiated Recurrent DD Customer DD Files Layer Sanctions Checking
Local back Non-funds Authorization
Pre-Authorization Check
Advance MT103
end Cashflow/Liquidity
Local back
System
end Notifications
Pre-Authorization Check Local back
System
Response end
Local Business Activity Monitor
System
Back-end
Deutsche Bank’s Systems
SEPA Engine of Client
Authorization Check Authorization
(Client’s instance) Booking MT103
Sanctions Checking
Authorization Check Non-funds Authorization
Response
Funds Authorization
Cashflow/Liquidity
Optional:
Fees and Billing Business Activity Monitor
Customer Notifications
Status Fee Deutsche
Bankack
Transaction Download
Central Bank Reporting
Daily Operational Reports
EBA
STEP 2
Brendan Reilly · 3 July 2008 · page 11

12. Case Study #2 : Pan-European Payments Outsourcing
Multi € million contract over 5 years
High volume of high value transactions
Client is challenged by a legacy of ageing technology & employees
Technology & Operational play – leveraging India & other low cost locations
Transformational deal
Brendan Reilly · 3 July 2008 · page 12

13. European Bank - Payment Outsourcing
Static Data Sources Transaction Sources
Bilateral Internet File-based SEPA Internal Insourced
Client Data Bank Data SWIFT
Agreements Banking system Instruments Applications Clients
Integration Layer
Bank Repository File Transfer
Dedicated SWIFT
(CAAA) (db-direct connect /
line (GMA)
SWIFTNet FileAct)
Middleware
Transactions (PRISMA)
Static Data
High Value & SEPA Payment Processing Platforms
(MTNA & SEPA Engine)
Brendan Reilly · 3 July 2008 · page 13

14. Questions
Brendan Reilly · 3 July 2008 · page 14