Welcome to Accuity’s ‘Corporate Payments
Modernisation – Opportunities & Challenges
Ahead’ webinar
Buyung Bachtiar
Senior Vice President, Head of Transaction Banking Solutions
Sumitomo Mitsui Banking Corporation
Indonesia
Ryan Lee
Business Solution Manager, Payments and FC KYC
Accuity
5 November 2015
2:30 PM SGT
1
Corporate Payments Modernisation
Webinar (Part I)
Trends, Challenges and Opportunities for Banks
Ryan Lee
Business Solution Manager, Payments and FC KYC
Accuity
2
Agenda
I.
Trends in Corporate Payments
II. What are the Potential Risks?
III. How are Leading Banks Addressing These Issues?
IV. Wholesale Payment Modernisation from a Bankers’
Perspective
V. Client Case Study
VI. Question and Answer
3
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
I. Trends in Corporate Payments
Global Transaction Banking Revenue Potential
US$330B
In 2014 Total Transaction Banking
US$ 1.1 trillion
Wholesale
In 2024
Total Transaction Banking
US$ 2 trillion
Retail
Source: BCG Global Payments October 2015
5
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Global Transaction Banking Revenue Potential
US$?
US$330B
In 2014 Total Transaction Banking
US$ 1.1 trillion
Wholesale
In 2024
Total Transaction Banking
US$ 2 trillion
Retail
Source: BCG Global Payments October 2015
6
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Global Transaction Banking (Wholesale)
Revenue Potential
US$330B
2014
2024
Wholesale Transaction Banking Revenue
Account and Payment Revenue
Other Revenue
Source: BCG Global Payments October 2015
7
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Global Transaction Banking (Wholesale)
Revenue Potential
US$330B
US$243B
2014
2024
Wholesale Transaction Banking Revenue
Account and Payment Revenue
Other Revenue
Source: BCG Global Payments October 2015
8
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Global Transaction Banking (Wholesale)
Revenue Potential
US$330B
US$480B
US$243B
2014
2024
Wholesale Transaction Banking Revenue
Account and Payment Revenue
Other Revenue
Source: BCG Global Payments October 2015
9
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Global Transaction Banking Revenue Potential
Wholesale (Business and government initiated) payments are
projected to post a stronger annual revenue growth, at
compounded annual growth rate (CAGR) of 7% compared with
6% for retail payments.
Attractiveness of the business has heightened the competition
among banks, while Gaps in Bank Services and the rise of
multibank platforms have opened the door to nonbank
competitors.
Source: BCG Global Payments October 2015
10
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Poll 1: How important is the wholesale
payment business for your bank?
(Please click on only 1)
Not Important
Gaining Importance
Moderately Important
Very Important
11
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Challenges Faced by Corporates in Domestic
B2B Payment?
12
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Challenges Faced by Corporates in X-Border
B2B Payment?
13
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Challenges Faced by Corporates in
X-Border B2B Payment?
Reasons for Delay
Complexity of the
Payment Procedures
Incorrect information
on invoice
Inefficiencies of the
banking system
B2B Domestic
28.5%
20%
19.6%
B2B X-Border
39.4%
23%
29.2%
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Challenges Faced by Corporates in
X-Border B2B Payment?
Reasons for Delay
Complexity of the
Payment Procedures
Incorrect information
on invoice
Inefficiencies of the
banking system
B2B Domestic
28.5%
20%
19.6%
B2B X-Border
39.4%
23%
29.2%
Primary Payment Challenges Banks could aim to address：
1 Simplify existing payment process
2 Advocate innovation in the existing banking system
3 Directly assist Corporate Clients bank master data needs or
recommend reliable payment reference data partners
15
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Corporate Payment Structure
CENTRALISED
MANUAL
AUTOMATED
DECENTRALISED
o
16
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Corporates are Consolidating
Number of Bank Accounts
23%
77%
7%
93%
> 1000 bank
accounts
< 1000 bank
accounts
2014
2015
Source: Sungard 2015 Payment Study
17
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Corporates are Consolidating
Number of Bank Accounts
23%
77%
7%
93%
> 1000 bank
accounts
< 1000 bank
accounts
2014
2015
Source: Sungard 2015 Payment Study
18
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Corporates are Diversifying
their Cash Management Banking
Relationships
25%
2014
28%
10 or more cash
management
banks
2015
Source: Sungard 2015 Payment Study
19
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
3 Key Drivers for Payment Centralisation
33%
27%
20%
$
Gain Control to
Prevent Fraud
Reduce
Unnecessary Cost
Achieve True
Cash Visibility
Source: Sungard 2015 Payment Study
20
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
What are Corporate Treasurers Expecting
from their Banks?
Extend their Global Payment Reach to more
geographical locations where they have a footprint
Provide multiple channels of integration with Corporate
Clients for faster, quick integration with their corporate
payment process
Ensure a simpler and more efficient Payment STP
process from Corporate to Bank
Improved customer experience & convenience
Better bank fees
21
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Poll 2 : What are Corporate Treasurers
Expecting from Banks? (Tick all that
applies)
Extend Global Payment Reach
Provide Multiple Channels Integration
Ensure Simpler & Efficient Process
Improve Customer Experience
Provide Better Fees
22
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
II. What are the Potential Risks?
Risk of Payment Margin Erosion
Source: BCG Global Payment Database 2010
24
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Risk of Payment Margin Erosion
Source: BCG Global Payment Database 2010
25
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Risk Being Engulfed by an Evolving Ecosystem
made up Traditional and New Fintech Players
Redesign your payment offering now or new competitor will.
26
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Possibility of Disintermediation
Emergence of 3rd Party Payment Platforms and new form of
correspondent relationships are developing
e.g. Bank of America, Standard Chartered Bank and Japan Post Bank
signed an agreement with Earthport
Blockchain technology is potentially going to disrupt the model of
traditional correspondent banking and correspondent payments
Ripple is partnering with many banks globally.
E.g. Fidor from Germany will use Ripple in a number of ways, including
inter- and intrabank payments between other financial institutions and its
own branches.
The Ripple integration will also allow the bank to offer its customers faster
and less expensive money transfer options. Fidor Bank, Cross River
Bank and CBW Bank have signed up to use Ripple for real-time
settlement of cross-border money transfers
Bank of England discussion paper released in February 2015 envisioned
cryptocurrencies as a new way of undertaking interbank settlement and
enabling transactions directly between participants without a financial
intermediary.
27
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Risk Being Irrelevant to Corporate Clients
28
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
III. How are Leading Banks Addressing
These Issues?
Leading Banks are implementing / exploring
one or more of the following options
Extend their reach in Cross Border Payments
Provide greater range of Payment Offerings
Redesign their Payment User eXperience
Lower overall Cost of Processing
Boost their payment processing efficiency
30
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Leading Banks are implementing / exploring
one or more of the following options
Extend their reach in Cross Border Payments
Provide greater range of Payment Offerings
Redesign their Payment User eXperience
Lower overall Cost of Processing
Boost their payment processing efficiency
What is their approach?
31
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
3 Main Areas to Consider
TECHNOLOGY
BUSINESS
MODEL
REFERENCE
DATA
32
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Technology
Target Segment
Build / Buy
Domestic and Cross
Border Payments
Scaleable and
Future-proof
TECHNOLOGY
BUSINESS
MODEL
REFERENCE
DATA
33
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Business Model
Saxo Payments Launch
Platform for PSP
Build
Citibank offers Citicoin
TECHNOLOGY
Partner
BUSINESS
MODEL
REFERENCE
DATA
BAML + Earthport / Tieto
Japan Post Bank + Earthport
Citibank acquired PayQuik
Acquire
BBVA acquired Simple
Santander invest in RippleLabs
Invest
Many others have incubation
programs
34
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Reference Data
Customer Information File
Counterparty KYC File
Payment Master Data File
Others
TECHNOLOGY
BUSINESS
MODEL
REFERENCE
DATA
35
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Banks are looking to
customer self service channels
$4.25
$2.40
$0.20
Branch
Call Center
Online
Source: Bain Report on Customer Loyalty in Retail Banking 2012
36
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Trend : Banks are looking to
customer self service channels
$4.25
20x
$2.40
Lower cost of payment
processing to improve
margins
$0.20
Branch
Call Center
Online
Source: Bain Report on Customer Loyalty in Retail Banking 2012
37
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Optimised Wholesale Payment
Processing
38
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
IV. Wholesale Payment Modernisation
- Bankers’ Perspective
Corporate Payments Modernisation
Webinar (Part II)
Buyung Bachtiar
Senior Vice President, Head of Transaction Banking Solutions
Sumitomo Mitsui Banking Corporation, Indonesia
40
Agenda
1.
2.
3.
4.
5.
Corporate Payments Perspective
Client’s Expectation versus Bank’s Challenges
Enhance Front and Back Office
Idea to Embark
Future Look
41
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
1. Corporate Payments Perspective
Increase number of Import transactions significantly
Speedy and fast payment process by bank
Delay will cause penalty and reputational damage
Simple and moderate way to construct the payment
Prompt feedback of the payment ACK
Ability to engage payment with limited information
Cost concerns
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
2. Clients’ Expectation versus Bank’s Challenges
Corporates’ Expectations
Bank’s Issues
Prompt and fast process
Manual process and verification
Simple and moderate way in processing the
payment
Limited remittance information
Feedback on payment acknowledgement
Manual process of retrieving payment
acknowledgement
No delay in payment process
Compliance risk
Lower cost
High operational and overhead cost
-
Excellent payment process
Efficiency and Efficacy
Avoid Reputational Damage
-
Enhance Bank’s competitiveness
Streamlining Process
Reduce Operational Cost and Risk
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
3. Enhance Front and Back Office
Enhancement in
Bank’s System :
Complete data
within EB Channel
H2H / Interface
Solutions
Automated
SSI Process
Intelligent
Dictionary
Auto Payment
Acknowledgment
Two-Payment
Method
Automated
Specific Code
Enhance
KYC/AML Flow
Front-End System
Enhancement is
expected to be as
user-friendly as
possible without
additional steps done
by clients.
Back-End System
Enhancement
towards the end-toend process to avoid
manual intervention
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
4. Idea to Embark
Main reason of the delay process mainly triggered by :
Incomplete data / payment information
Screening process
FRONT END
Equip payment instruction with
complete information of:
BIC Code
IBAN for EUR
BACK OFFICE
Implement automate KYC/AML
screening process
Automated SSI Process
Automated Specific Code (ABA,
BSB, CNAPS)
Intelligent Dictionary
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
5. Future Look
AML Screening is going to be more strict and
complicated
Demand to have swift and quick process will be
higher
Competition among banks is getting tough due
to pursuing operating bank mandate
More type of currencies capabilities
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
V. Client Case Study
Payment STP Process
Mission
Critical
Origination
Receipt of Instructions
1. Beneficiary Bank Acct
2. Beneficiary Bank Name
3. Beneficiary Bank Code
4. Beneficiary Branch Name
5. Beneficiary Bank Address
Simply
payment
instructions
creation – UX
Routing
Decision
Routing Decision
1. Domestic vs
International payment
2. Currency
3. Value Date
Message
Formatting
Message Format
1. Domestic Format vs
Cross Border Format
2. Direct vs Correspondent
Payment
3. Serial / Cover Payment
Cost versus
Timeliness
Messaging
Formatting
and SSI
Repair
Facilitating
Fixing and
Putting Back
into Queue
Clearing &
Settlement
Apply payment rules
according to Clearing and
Settlement mechanisms
assigned to each routing
code.
Matching
Codes with
appropriate
Clearing &
Settlement
Mechanisms
48
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Case 1
Background – Case 1
Business Challenges:
Spending too much time
performing manual validation
of Payment instructions
Intend to grow the volume of
business without increasing
overhead
Duplication of bank branch
records
50
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Background – Case 1
Business Challenges:
Spending too much time
performing manual validation
of Payment instructions
Intend to grow the volume of
business without increasing
overhead
Duplication of bank branch
records
Solutions Benefits:
Reduced the amount of manual
validation by 70%
Integrate data file into Core Banking
Agency table to facilitate systems
level validation
Allow for single point of truth for
bank branch level data
51
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Case 2
Background – Case 2
Business Challenges:
Manually collected payment files
and individually entered into
systems
Thousands of man hours spent
each year loading data from
separate sources and performing
ad hoc fixes for failed
transactions
Costs from charge backs and
required overhead from rejected
payments totaled
53
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Background – Case 2
Business Challenges:
Manually collected payment files
and individually entered into
systems
Thousands of man hours spent
each year loading data from
separate sources and performing
ad hoc fixes for failed
transactions
Costs from charge backs and
required overhead from rejected
payments totaled
Solutions Benefits:
Access to most up-to-date global
payment information from a
single source on a daily basis
Improvement of bank’s overall
STP rate, dramatically in some
regions such as Asia
Significantly reduced time and
effort spent on payment data
maintenance by thousands of
man hours per year
Consolidated set of payments
data available to all locations
54
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
The payment services and operations group of a
bank is divided (generally) into three macro areas
Back End
Front End
Direct Feed
Transaction Platforms
Bank-Controlled
Front Ends
Cheque
Cash Management
Data Hub
Phone Banking
Retail Online Banking
ACH
Wire
ATM
Mobile
X-Border
Remote Check Capture
Branch
Investigations
Repairs
Exceptions
Fin Crime
Credit Risk
Card
55
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
VI. Question and Answer
Contacts
Buyung Bachtiar
Senior Vice President, Head of Transaction Banking Solutions
Sumitomo Mitsui Banking Corporation
Indonesia
E: [email protected]
Ryan Lee
Business Solution Manager, Payments and FC KYC
Accuity
E: [email protected]
Offices in Abu Dhabi, Boston, Chennai, Chicago, Frankfurt, Hong Kong, London,
Luxembourg, Moscow, Mumbai, New York, Paris, Pretoria, San Diego, Sao Paulo,
Shanghai, Singapore, Sydney and Zurich
© 2015 Accuity . All rights reserv ed. All other company and product names, trademarks and registered trademarks used here are the property of their respectiv e owners.
Thank you for attending the webinar.
5 November 2015
230pm, SGT