Q4 2016 ISSUE 110 In This Issue Evolving Payments Landscape: pg 1 Ⅰ Quick Deposit Mobile: pg 4 Ⅰ Cybersecurity: pg 5 Ⅰ DOL Overtime Changes Delayed: pg 7

AdvisorTreasuryManagement

NAVIGATING THE EVOLVING PAYMENTS LANDSCAPEWhat are the implications for your business?

Businesses and consumers are increasingly in need of “real-time” or immediate payment options to transfer funds from one account to another conveniently and instantaneously. This is a standard expectation of the modern global economy, and its participants demand faster electronic payment mechanisms and dynamic tracking and reporting. To support new real-time payment (RTP) options and accommodate evolving technologies, global-standard payment infrastructures are the focus of critical development. The payments industry is at the crossroads of globalization, innovation, regulation, and business and consumer expectations.

To meet the challenges, a new payments frontier highlighted by fintech (financial technology) pioneers,as well as established financial institutions, is emerging, giving rise to two distinct factions– industry collaborators and disruptors. These dynamics are prompting rapid acceleration in payment speed and supporting infrastructure, with dozens of faster payment systemseither in operation or in development globally.

Incremental Advancements with Same Day ACH Among many industry collaborators is NACHA®, the association that manages and governs the ACH electronic payments network. In May 2015, NACHA adopted the Same Day ACH Rule to provide the capability for expediting Automated Clearing House (ACH) payments. Supported by the Federal Reserve, the rule – once fully implemented in March of 2018–will enable same-day processing of nearly all payments conducted via the ACH Network. Currently, most ACH payments are settled on the next business day, though ACH credit transactions have been eligible for same-day processing since September of 2016 to support business uses such as hourly payroll, person-to-person (P2P) payments and same-day bill pay.

Same Day ACH meets demands to move funds faster, and the infrastructure is expected to be a springboard to facilitate future payments innovation for low-value commodity payments. However, NACHA alone cannot satisfy every payment need and is under pressure to maintain global competitiveness against new and emerging real-time payment alternatives.

Continued

The Fed’s Task Force Approach The Federal Reserve also is encouraging modernization of financial systems to facilitate RTP by establishing the 331-member Faster Payments Task Force in 20151. The task force’s objective is to support efforts to improve the speed, security and efficiency of payments, with a specific focus on identifying effective approaches for implementing faster payment capabilities in the United States. The Faster Payments Task Force is working to assess solution proposals from industry providers to make better choices available for U.S. consumers and businesses for sending and receiving convenient, cost-effective and timely payments.

The Clearing House’s New to Us Approach The Clearing House (TCH) is leading one of the major efforts for building a clearing and settlement system to support RTP consistent with the Federal Reserve’s mandate. The New York–headquartered industry consortium advocates regulatory, legislative, and legal public policy issues on behalf of the largest commercial banks in the United States and abroad, and is considered a formidable force in advancing RTP.

Notably, TCH’s real-time payments initiative is a totally new solution for the U.S. market, but is based on the International Organization for Standardization’s (ISO) 20022 XML format, the standardized electronic data messaging infrastructure utilized within the European Union and a growing number of countries. ISO 20022 provides the underpinning for a common data language for financial institutions. The format allows consumers and businesses to send and receive instant payments directly from their accounts at financial institutions with rich payment data – a key solution differentiator. It also includes non-payment messages that financial institutions can use to build innovative digital commerce solutions. ISO 20022’s data capability, for example, facilitates payments via mobile phone by matching the phone number to a bank account. ISO 20022 is expected to emerge as the dominant real-time payment format in the U.S. with the support of the Federal Reserve.

Another RTP utility regarded as a contender in the U.S. market is ZelleSM, currently operational and supported by notable U.S. banks. These payments are delivered using the ACH infrastructure and are delivered near real-time. The early focus of these developments is on P2P payments. The potential drawback to this model is a lack of enhancement to support B2B remittance information.

Environmental Forces and the Disruptors A flurry of fintech innovators are driving process improvements across the financial industry and helping usher real-time payments to market globally. Originally perceived to be a threat to traditional financial institutions, fintech innovators are helping to improve payments transparency through advanced technology as well as improve the delivery of services offered by traditional banks. The two are not mutually exclusive by any measure; the collaboration among banks and fintech innovators has created new benefits for businesses and consumers such as near-field communication payment options like Android Pay,TM 2 Apple PayTM 2 and digital wallets. Consumers will continue to benefit as innovators and traditional institutions find deeper ways to partner.

The Rise of Blockchain Technology Blockchain technology has been best known for providing the infrastructure for Bitcoin and is now giving rise to major technological advancements not limited to the financial sector.

Digital cryptocurrencies like Bitcoin are based on blockchain technology, or distributed ledgers, where every transaction completed on the network is recorded chronologically in a digital file. The data in the digital files are bundled into blocks, creating a chain of blocks. Once a block is completed, it cannot be altered. Each new block references and identifies the preceding block, creating a time stamp of each transaction that prevents alteration and establishing a public, permanent ledger through an unbroken chain.

Treasury Management Advisor Ⅰ 2

Continued

For more about Same Day ACH: Visit www.nacha.org/same-day-ach. Or, contact your Treasury Management officer or relationship manager to learn about Regions Same Day ACH.

For more about ISO 20022: Visit https://www.iso20022.org

For more about The Clearing House and real-time payments: Visit https://www.theclearinghouse.org/payments/real-time-payments

For more about the Federal Reserve’s vision for U.S. payments: Visit https://www.fedpayments improvement.org

Storage of information on a publicly distributed ledger network also makes counterfeiting nearly impossible, because there is no central ownership or control, and blockchains are heavily encrypted with public and private keys. This technology can thus provide for improved transparency and speed of execution across a broad range of transaction types.

Financial services organizations are joining forces to explore practical applications for blockchain’s distributed ledger technology and are working to accelerate development and adoption of standard security protocols. Proactive efforts to adopt distributed ledgers are already revolutionizing information storage and how transactions occur within the payments value chain. New payment services like Visa B2B Connect rely on distributed ledger technology to offer

near real-time funds transfer for bank-to-bank payments. Blockchain technology is also being evaluated for financial products like cross-border payments, derivatives and syndicated lending.

All Innovation Considered Real-time payments are on track to completely change the way business is transacted globally. Once readily available, RTP will provide added convenience and security for consumers and improved funds availability for businesses. Accompanying innovations and new infrastructures will enable traditional financial institutions to provide more responsive services. While integration and scalability with existing processes and systems remain a challenge, banks and regulators are focused on revolutionizing the U.S. payment systems.

Treasury Management Advisor Ⅰ 3

NACHA is a registered trademark of the National Automated Clearing House Association. Venmo is a registered trademark of PayPal, Inc. Zelle is a trademark of Early Warning Services, LLC. clearXchange is a registered trademark of CLEARXCHANGE, LLC. Visa B2B Connect is a registered trademark of Visa. MasterCard Send is a registered trademark of MasterCard International Incorporated. CheckFree is a registered trademark of Fiserv, Inc. Ripple is a registered trademark of Ripple, Inc. 1Federal Reserve System, “Strategies for Improving the U.S. Payment System,” https://fedpaymentsimprovement.org/wp-content/uploads/strategies-improving-us-payment-system.pdf; January 26, 2015. Android Pay. 2Android Pay is a trademark of Google, Inc.; Apple Pay. Apple, the Apple logo, and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. Apple Pay is a trademark of Apple, Inc.

Toward Real-Time Payments in the U.S. and Improved Payment Infrastructure

Payment Entity Structure Applications Implications

NACHA®

Industry utility; primary focus on low-dollar, commodity payments

The Clearing HouseLarge financialinstitution-owned utility open to all banks

ZelleSM

Large financialinstitution-owned utility available for subscription membership

Card AssociationsVisa B2B Connect® &MasterCard Send®

• $25,000 maximum• Same Day ACH Credits currently available• Same Day ACH Debits available 9/15/17• Faster ACH credit funds availability requirements introduced for RDFIs 3/16/18

• Initially $25,000 maximum, credit only with option of debit request• Operates on new payment type ISO 20022 format• True real-time payments with real-time settlement, robust data capabilities

• Initially $25,000 maximum• Real-time payments with end-of-day settlement• Leverages ACH platforms

• Initially $25,000 maximum• Push payments using the debit infrastructure to push credits to recipient’s checking account or credit card• Near real-time• May leverage blockchain• May leverage ISO 20022 format

• Emergency payments

• Risk of loss mitigation

• High value

• Deeper ERP integration

• Greater intraday finality of payment

• B2B payment focus

• P2P payments

• C2B bill payment platforms (CheckFree,® iPay,® etc.)

• P2P payments

• Cross-border payments

• Remittances

• B2C – Insurance payments, etc.

• Faster funds availability and payments • Likely to remain the low value, commodity payment vehicle

• Competitive advantage due to the liquidity efficiency of a netting system and the intraday finality of real-time gross settlement and Image Exchange capabilities

• Faster to implement

• Response to platforms like PayPal’s Venmo® payment app

• Already global• Existing infrastructure with settlement leveraging current card processes• FX processes in use• Competitive with fintech such as Ripple® distributed financial technology

INTRODUCING REGIONS QUICK DEPOSIT MOBILE Now make check deposits on the gofrom your mobile device or tablet.

Regions Treasury Management Products and Services is pleased to offer Regions Quick Deposit® Mobile. Quick Deposit Mobile is available as a stand-alone mobile deposit solution using your phone or tablet as a scanner to submit and approve check deposits. It can also be used in conjunction with the existing Regions Quick Deposit desktop solution.

Benefits of Regions Quick Deposit Mobile:

Treasury Management Advisor Ⅰ 4

Increased Convenience Make check deposits anywhere, anytime using your compatible mobile device.

Enhanced Control Easily verify check totals and make error corrections before the deposit goes to the bank.

Improved Deposit Availability As with Regions Quick Deposit desktop, Quick Deposit Mobile offers an extended ledger deposit deadline of 8PM CT, compared to standard in-branch deposits. With mobile capability, you also retain the ability to scan multiple checks at once.

Centralized Management Employees can scan checks from their own mobile devices, which is ideal if your business has multiple locations or employees who travel and collect customer payments and may not have time to deliver checks to a centralized office for deposit.

Regions offers your business a variety of solutions to scan and deposit checks remotely. To learn more about Regions Quick Deposit Mobile and determine the option that best fits your business needs, contact your Treasury Management officer or relationship manager.

•

•

•

•

Regions Quick Deposit Mobile requires compatible equipment and is available to eligible customers, subject to Treasury Management terms, conditions, and fees. Your carrier’s message and data rates may apply to use of Regions Quick Deposit Mobile.

Note:

CYBERSECURITY FOR THE SMALL BUSINESS With the number of cyberattacks targeted at small businesses always on the rise, here’s how owners can protect their companies and employees without breaking the budget.Running your own business has long been—and still remains—an endeavor that holds the potential for financial success and a sense of personal accomplishment. And while the technological advancements of the digital age have in many ways made entrepreneurship a more realistic pursuit, they have also introduced a new set of concerns and potential threats that don’t always get the time, attention and resources necessary.

“I don’t think anyone intentionally says ‘I don’t care about cybersecurity,’” says Matthew Speare, Enterprise Chief Information Officer for Regions in Birmingham, Alabama. “They just don’t realize how highly vulnerable they can be to things like fraud, cyber scams and the loss of intellectual property.”

Speare isn’t exaggerating the level of vulnerability. Fraudulent email scams, often called “spear-phishing campaigns,” that target business employees increased 55% in 2015, according to recent research from cybersecurity software and consulting firm Symantec. Furthermore, 43% of attacks against companies in 2015 were targeted at those in the small business sector—companies with fewer than 250 employees—up from 34% in 2014 and 30% in 2013.

The Threats Are Real Despite the very real threats, many small business owners remain in the dark about, or at least justifiably distracted by, a laundry list of other high-priority concerns when it comes to protecting themselves, says Thomas Reddington, Director of the Cybersecurity Master’s Program at New York University’s School of Engineering. “Cybersecurity is not on their minds,” Reddington says. “They don’t know about it and they haven’t considered the potential long-term impact.”

The issue of cost is top of mind for small businesses in particular, but Speare and Reddington agree that there are plenty of precautions a business can take that won’t break the bank.

“There is something to be said for having a level of skepticism,” Speare says, after providing a real-life example of a company that lost “a couple million dollars” after hackers posing as the CEO contacted the company’s CFO, requesting that he wire money to purchase a company in China. “Often it is more about awareness than anything else,” he says.

Treasury Management Advisor Ⅰ 5

Continued

Treasury Management Advisor Ⅰ 6

Have A Plan While it’s a key component of an effective cybersecurity strategy, just being aware of existing cyber threats and potential scams isn’t a comprehensive plan and certainly can’t guarantee protection.

“Security isn’t one thing,” explains Reddington. “It’s a series of technologies and policies.” In order to implement the most effective cybersecurity strategy possible, Reddington says owners should first be able to answer the following questions:

• What do I want to protect?

• What are my overarching security policies and goals?

• Who has access to my network?

• What is the value of my company’s and employees’ intellectual property?

• What is the nature of the service agreement I have with my Internet provider?

When owners start with these questions, they can then begin to implement a cybersecurity strategy that makes the most sense for their companies.

To do so properly, however, Reddington points out that the more savvy small business owner—one who understands the seriousness of being victimized by cybercriminals—will hire a trusted expert to aid in the planning and construction of a secure, safe network. This, of course, brings back the issue of cost, which Reddington suggests approaching with a different mindset, looking at it as an investment as opposed to an expense. “I hear that security is expensive all the time, but they never consider the cost a breach may bring,” he says. “It’s frustrating.”

Be Aware Whether an owner is in a position to spend on cybersecurity or not, Speare says that practices like frequently changing passwords—every 90 days is a good rule of thumb—and using established and reliable brands when it comes to applications and software are practical and cost-effective steps to take when trying to mitigate a potentially devastating hack.

“Our first advice to small business owners is to bring up the level of awareness,” says Speare. “Use namebrand file-sharing software and leverage all security services offered.” And among the most important tools for protecting your business is the use of “dual control” for monetary transactions. This simple step can prevent significant losses.

Finally, Speare encourages his clients to ask questions. “We encourage all small business owners to ask the tough questions and make sure their businesses are safe for today and in the future.”

4 Cybersecurity Steps to Take for the Small Business

Having a cybersecurity strategy in place is the first step in preventing an attack.

1. Educate employees on potential cyber threats and scams, raising the level of awareness across the board.

2. Equip all computers associated with the company with anti-virus and anti-malware software, and enroll in automatic updates to always have the latest versions.

3. Require dual authorization – a system where two employees must approve and sign off on a particular transaction before it can be executed – when it comes to payroll and other financial transaction services.

4. Question anything and everything that seems unusual, such as email requests for money transfers or unsolicited business inquiries from overseas.

Immediately report anything you feel is suspicious, including emails that appear to be from your financial institution, application pop-ups, unexpected error messages or any unfamiliar login screens.

If you are a Regions client and suspect fraud or have received a suspicious communication, call Regions Client Services immediately at 1-800-787-3905.

Reporting Fraud

Treasury Management Advisor Ⅰ 7©2016 Regions Bank

DEPARTMENT OF LABOR OVERTIME CHANGES DELAYEDIn May 2016, the Department of Labor announced final overtime rule changes affecting Fair Labor Standards Act compliance. The changes, originally scheduled to be effective December 1, 2016, are currently on hold due to a nationwide injunction imposed November 22, 2016, in a United States District Court for the Eastern District of Texas. The injunction prevents execution of the regulations, pending further court proceedings. As a result, the December 1, 2016 implementation date is no longer in effect. At this time, a new date for implementation has not yet been determined or suggested.

What Changes May Occur To The Rule? Further court proceedings may cause new changes to the rule in the future, but how this will affect the current rule is uncertain. Paycor, which provides payroll and HR services, is recommending that businesses still plan for the current rule, but with a delayed implementation timeline.

If your business has made changes to employees’ pay structure, job duties, or company policies to accommodate the rule, Paycor recommends that those changes be kept in place, as the Texas ruling may only delay the updates. Reverting these updates may cause compliance challenges, and the new date for implementation could be delayed a few months or a few years.

Stay Up To Date And Learn More Visit the Department of Labor website at DOL.gov for the latest information on the rule and its delay. Also view updates and a recorded webinar hosted by Paycor at Paycor.com/DOL that explores DOL overtime rule changes, as well as what steps businesses should now take as a result of the suspension.

Join Us for an Exclusive Webinar January 19:Hiring Compliance

Paycor1 is providing an opportunity for Regions customers to hear speakers Lester Rosen and Dawn Standerwick, of Employment Screening Resources, address what to watch out for when conducting criminal background checks, including how to ensure EEOC compliance. They will provide information about the rapidly spreading “Ban the Box” movement, triggered by civil rights concerns. They will share key vulnerabilities they see in compliance with the Affordable Care Act, HIPAA, the Family and Medical Leave Act, COBRA and Section 125. Participants will also learn how to create an automated reminder system that sends alerts about key compliance dates.

When:Thursday, January 19, 20171:00 p.m. – 2:00 p.m. CT

Learn more and register:Visit http://go.paycor.com/2017-01-regions-StrategiesandTrendsforBackgroundChecks.html

1Paycor Payroll and HR Services are provided by Paycor. Regions customers will receive preferential pricing when your payroll is funded through a Regions Business Checking Account. While these services are made available to Regions Bank customers, Regions Bank does not provide the product or service and makes no representations or warranties regarding your use of Paycor Services

Treasury Management Advisor Ⅰ 8

Regions Treasury Management Advisor is published by Regions Bank and is provided to you as a Regions client.

All Regions products and services are subject to applicable customer agreements, terms, conditions, disclosures, and application requirements. Credit products and all loans and lines are subject to credit approval. Only deposit products are FDIC Insured.

This information is general in nature and is provided for educational purposes only. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation. Information provided and statements made by individuals who are not employees of Regions are the views, opinions, or positions of the individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Regions. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

©2016 Regions Bank

Investment, Insurance and Annuity Products

Not FDIC-Insured | Not Bank Guaranteed | May Lose Value | Not DepositsNot Insured by Any Government Agency | Not a Condition of Any Banking Activity

REGIONS TREASURY MANAGEMENT ADVISOR

Additional Information:For more information on Regions business and commercial industry insights, please visit regions.com/businessinsights or regions.com/commercialinsights

We Welcome Your Feedback.Feel free to share with us your thoughts or ideas on how we can improve the Treasury Management Advisor newsletter to better fit your needs by emailing TMAdvisor@regions.com

Follow us on Twitter @RegionsNewsRegions and the Regions logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.