INNOVATION CONFERENCE 2017
PAYMENTS FUTURE CAST
Andrew ShortSenior Solutions Manager, ISG
Please use theInnovation ConferenceEvent App to check-in to this session S726
NCR Innovation Conference 2017: Confidential
NCR Innovation Conference 2017: Confidential
Understand the Customer Problems
That Got us to This Point
Review the Market Dynamics
Payments Future Cast…Session Agenda
2
Open payments, open APIs, distributed ledger, secure payments, mobile payments, P2P along with faster payments
Thought Provoking Ideas to Help You
Think About & Organize Your
Investments for the Challenges Ahead
THE PROCESS OF MAKING & RECEIVING A PAYMENT HAS FAILED TO KEEP PACE WITH
CUSTOMER EXPECTATIONS IN A 24X7X365 GLOBAL
ECONOMY.
NCR Innovation Conference 2017: Confidential 3
Intelligent & Ubiquitous
Immediate & lower
cost
Convenient & secure
PAYMENTS NEED TO BE MORE:
So Zoltar….What is Happening in Payments?
Exchange
Availability
Settlement
Cost
4
Zoltar…
Mobile
Online
ATM
Branch
CardACH WireCheck
Physical
Next Day
or Longer
Low Cost
Batch/Next
Day
Physical
Swipe/Type
End of
Day
Med Cost
Net
Settlement
Electronic
(Batch)
1-3 Days
Low Cost
Batch/ 1-3
days
1-5 Days (Domestic/
International)
High Cost
Immediate (RTGS)
Electronic w/
Assistance
deposit
w/d
Key: Positive attribute Neutral attribute Negative attribute
BANK ACCOUNTS
How Did We End Up Here?
Channels
that Service
them
Cash
Physical
Immediate (Same location)
Med Cost
Immediate
Settlement
New Devices (Wearables, etc) ACH
Batch/ 1-3
days
New Modalities (Augmented/Virtual Reality)
Blockchain
5
So Zoltar…
Card
Wire
Check
Electronic
Deposit
Physical/
Low Cost
Batch/
Next Day
Physical Swipe/Type
Med CostLow Cost
Same Day
Electronic w/
Assistance
Immediate
High Cost
Immediate (RTGS)
Electronic
Batch
NEW/ ALT
Account
Schemes
• Rich Apps
& Data
• Easy Setup (mobile/
email)
• Immediate
Settlement
• Lower Cost
Per Trx
Key: Trending Attributes Areas of Improvements: See Logo’s
Phone#/Email/
QR
What is Changing in the Market?
Next Day
or LongerImmediate 0-3 DaysImmediate
New
Channels
End of
Day
Net
Settlement
Near
Real-time
Settlement
(30 Min)
Phys/Elec Tap/Insert/Type/
Picture/Pressetc…
NFC, HCE/SE &
Tokenisation
Social Networks
Exchange
Availability
Settlement
Cost
What does the Future Hold for Banks and Payments?
Let’s Build a Layered View…
NCR Innovation Conference 2017: Confidential6
Distributed
LedgersTier 1
Tier 2Tier 3Tier 4
(~25 Banks)(~531 Banks)(~13,835 CFIs)
*Assumes DDA and Credit (issuer) accounts
6 Banks
Blockchain
Defining Categories to Inform our Future Cast
Immediate & low cost
Convenient & secure
Tra
nsp
are
ncy
&
acco
un
tab
ility
Intelligent & ubiquitous
WireCheck ACH NEW/ALTCard
THE INFRASTRUCTURE LAYER
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Immediate & low cost
Infrastructure-“Messaging”
NCR Innovation Conference 2017: Confidential8
A single, common “language” for global financial communications
200 initiatives in 90 countries across payments, securities, trades services & foreign exchange
CardACH Wire NEW
The Good
Richer Data; Structured Fields
Better Customer Experience (longer names,
why + amounts enabling better collaboration)
More Information for Fraud Processes
The Reality
Different Implementations (of the standard)
Changing Needs (differ by country, region,
pymt type)
Legacy Message Types Continue
A lot of Message Transformation in our Future!Legacy Legacy ProprietaryLegacy
Infrastructure-“Faster Payments”
NCR Innovation Conference 2017: Confidential9
Card RailsBank Owned Rails New/ALT Rails
Give customers immediate
availability with minimal
changes to payments
infrastructure
Immediate availability on new
rails with true immediacy of
settlement between accounts
(PUSH)
Immediate availability
w/ almost real-time
settlement between
accounts (PUSH)
Immediate availability
w/ real-time settlement
between Paypal
accounts (PUSH)
Use Cases:
Live: P2P; Disbursements (EWS)
Pilots: B2B & C2B Focus (TCH)
Use Cases:
Live: P2P, A2A, B/G2C;
Agent Cashout; CC Bill Pay
Use Cases:
Live: P2P, A2A,
C2B; B2B, etc…
ALT Rails
A lot of Faster Payment Alternatives in our Future!
Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)
ISO20022 Will Become the Most Common Form of Rich Payment Message
Banks Specialization in Connections to Payments Infrastructure
First Casualties of Faster Payments and Generational Shifts (discontinuation of the check; consolidation of ACH/Wire business cases onto new FP rails)
Prepared for Richer Formats of Payment Messages (Fraud and Cross Scheme
Interactions)
Consolidation of Bank Owned Assets to Compete With Alternative Providers
Myriad of New Faster Payment Cases for B2B and B2P Payments
Implement Tools to Deal With a Wide Variety of Legacy & New Message Formats
Invest in Legacy Rails as They are Made as Fast as Possible
Decide and Invest in FP Rails Make Most Sense for Your Customers
Future Cast- Infrastructure Layer
NCR Innovation Conference 2017: Confidential
What new infrastructure is your bank planning to connect to over the next 2-3 years?
11
POLL OPEN
1 P2P/Promise to Pay (EWS) 0%
2 B2B/C2B New Rails (TCH) 0%
3 Both a & b 0%
4 Investing in Current Rails only (e.g. same day ACH) 0%
5 Other…(leverage Visa/MC API’s; Blockchain for Cross Border Payments)
0%
THE ACCOUNTS LAYER
NCR Innovation Conference 2017: Confidential 12
Intelligent & ubiquitous
Financial Accounts & Payment
Transactions
Key Trends Driving Change @ Accounts Layer
NCR Innovation Conference 2017: Confidential13
Tier 1Tier 2Tier 3Tier 4*Assumes DDA and Credit (issuer) accounts
1. Big Data/Analytics Will Make Account Tier Smarter Helping to Protect as
well as Anticipate Customer Needs
2. API’s Will Accelerate the Disruption of End-to-End Processing by Banks
Creating Competition and Ubiquity in Payments
Social/Retail Accounts &
Transactions
Highly
Regulated
Not as
Regulated
Battle for account relevance is just
beginning!
Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)
Widespread Use of AI (Proactive Advice/Alerts)
Fundamental Changes to Banks Data Models (Behavioural Driven)
New Platform Based Business Models Driven out of Open Banking Initiatives
AI Tools Mainstream (Reactive- Q&A, Financial Planning, etc.)
Cross Industry Partnerships/Mergers/ Acquisitions
Move Towards Standardization of Best API Ideas
Consortiums of Industry Related Players Building to Common Standards
Data Wars/Partnerships
Move to Collect, Store and Make Data Accessible Across All Channels
App Partners Talking to Large Account Providers Driving API Ideas
Very Little Standardization
NCR Innovation Conference 2017: Confidential
Future Cast- Accounts Layer
What account related investments are you planning to bring to market in the next:
a) 1 year?
b) 3 years?
c) 5 years?e.g.
1 year: Big Data
3 years: Data Related Partnerships
5 years: APIs
Poll: Investment Horizon for Data; APIs; Partnerships
15
THE APPLICATIONS LAYER
NCR Innovation Conference 2017: Confidential 16
Convenient & secure
APP/Service “Extravaganza”
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Tier 1Tier 2Tier 3Tier 4
Card RailsBank Owned Rails ALT Rails
HCE/Secure Elements; Tokenization;
Services Just the Beginning
Just Scratching the Surface on Convenience (one click payments, cross institution, cross payments, etc…)
Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)
Consumer is the Payment
Delegation of Payments to IoT Devices
US Players Consolidate to Compete with Emerging Global Payments
Authentication Becomes Transparent
New Bus. Payment Apps (built out of consumer market successes)
Biometrics Improve Convenience (less intrusive)
Emerging Market Payments Disrupt First World Markets (e.g. AliPay)
Biometrics Provide Another Level of Authentication Improving Security
First Gen Cross Payment/ Cross FI Consumer Apps
Move to NFC (Convenience in Physical
Channels)
Social Network Integration Drives Consumer Adoption of Mobile Payments
Secure Payments via Tokenization of Financial Data (card, account, etc…)
Enterprise Fraud Services
NCR Innovation Conference 2017: Confidential
Future Cast- Application & Services
What role do you see your bank playing in the years ahead?
19
POLL OPEN
1 Cross Payment and Cross Institution Applications? 0%
2 Contributing services for consumption by your partners/application vendors? 0%
3 Outsourcing payments arena and focusing on other areas in banking? 0%
4 Other: _________ 0%
BLOCKCHAIN
NCR Innovation Conference 2017: Confidential 20
Transparency & accountability
Future Cast- Blockchain
NCR Innovation Conference 2017: Confidential21
Distributed
Ledgers
Public BlockchainTraditional Payments Models
Transparency,
Free from
Manipulation
No Oversight
Immediate,
Lower Cost
Built on
Privacy
Transparency,
Removal of
Centralized Data
Limited
Oversight
Immediate,
Lower Cost
What happened @ Equifax Will Drive
Opportunities
Cross Border Payments Offer Up
and Immediate Opportunity
Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)
Legitimate Digital Currencies Make it to the Mainstream Market
Payments Infrastructure Relies on Block Chain for Reputation and Identity
Consolidation of Cryptocurrencies
Private Blockchain Move to Production for Cross Border Payments
Blockchain for Reputation Moves to Large Scale Pilots
Blockchain for Identity Moves to Large Scale Pilots
Lots of Digital Currencies Struggling for Legitimacy
POC/Pilots Focus on:
Cross Border
Trade Fin; AML/KYC
Data Breaches (Equifax) Now Drive Increased Interest in Identity Use Cases
Future Cast- Blockchain
NCR Innovation Conference 2017: Confidential
Where is your bank experimenting with blockchain business cases?
23
POLL OPEN
1 Cross Border Payments? 0%
2 Reputation (AML/KYC)? 0%
3 Identity? 0%
4 Other: _______ 0%
PLANNING FOR THE FUTURE
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Long-term (7-10yrs)Medium-term (4-6yrs)Short-term (1-3yrs)
Digital Currency Integration
Ready to Participate in Private Blockchain Infrastructure
Specialization in Banking:
Payment Infrastructure Players
Platform Business Provider
Front-end Aggregator of Banking Services
Faster Payments for Businesses (B2*)
Big Data Analytics Driving Customer Insights & New Services
Consuming and Releasing APIs to Compete in an Open Banking Market
Extended Authentication Processes to Include a Variety of Biometrics
Message Transformation Tools w/ Ability to Create and Consume ISO20022
Faster Payments for Consumers (P2*)
Orchestration of Payments Data and Experiences
Incorporating NFC and Tokens Into Your Banking Applications
Enterprise Fraud Capabilities
What’s Important For Planning?
NCR Innovation Conference 2017: Confidential
Poll: Specialization & Your Bank?
26
Full-service model, own-
labeled products &
services
Web of cross-subsidies
with profitable products
propping up unprofitable
ones
Fending off competitors at
every point in value chain
with a more integrated full
service model
Remain Full Service
Vertically integrated but thin to
capture network effects and
capitalize on competitive
advantages
Offer small number of own-labeled
products where strategically
important e.g. current accounts (for
data, cheap deposits), payments
(data), secured lending (competitive
advantage)
Open Platform for third-party
products/services, as in aggregator
model, but delivered faster, less
friction
Platform Business
Distributor of financial
products and services
Don’t manufacture financial
products/services but
instead source from
ecosystem of partners
Aggregator
Provider of financial products
and & services to other
FIs/FinTechs
Eliminate need for others to
engage in heavily regulated
activities, take on compliance
burden, or – for new entrant –
having to apply for license at all
Infrastructure Provider
Do you see your bank specializing over the long-term, if so where?
a) b) c) d)
You can earn 10 points toward the
Innovation Game right now!
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Check in code is S726
28NCR Innovation Conference 2017: Confidential
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INNOVATION CONFERENCE 2017
THANK YOUAndrew ShortSenior Solutions Manager, ISG
Please use theInnovation ConferenceEvent App to check-in to this sessionNCR Innovation Conference 2017: Confidential