Real-Time Payments: Why Should Corporates Care?

Transcription

1 Real-Time Payments: Why Should Corporates Care? Dennis Humble Director, Treasury Services Humana Irfan Ahmad Vice President, Product Development and Strategy The Clearing House Kerstin Rubinstein Vice President, Senior Product Manager Fifth Third Bank

2 Your Panelists Dennis Humble, Director, Treasury Services, Humana Irfan Ahmed, VP, Product Development and Strategy, The Clearing House Kerstin Rubinstein, Senior Product Manager, Fifth Third Bank

3 Who Is Humana? We are committed to helping our millions of medical and specialty members achieve their best health Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care with the power to improve health and well-being and lower costs We support physicians and other health care professionals as they work to deliver the right care in the right place for their patients Our range of clinical capabilities, resources and tools such as in-home care, behavioral health, pharmacy services, data analytics and wellness solutions combine to produce a simplified experience that makes health care easier to navigate and more effective

4 Who Is The Clearing House? We are a banking association and payments company that is owned by the largest commercial banks and dates back to 1853 We own and operate the core payments system infrastructure in the United States and currently are working to modernize that infrastructure by building a new, ubiquitous, real-time payment system We clear and settle nearly $2 trillion in U.S. dollar payments each day, representing half of all commercial ACH and wire volume

5 Who Is Fifth Third Bank? We are a diversified financial services company headquartered in Cincinnati, Ohio We have $142 billion in assets and operate 1,191 full-service Banking Centers, and 2,495 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina We operate four main businesses: Commercial Banking, Branch Banking, Consumer Lending and Wealth & Asset Management

6 Will Faster Payments Be All They re Cracked Up To Be?

7 Why Does Humana Care About Real-Time Payments? Humana issues millions of claims payments annually Real-time payments were never seriously under consideration until 2016 Payments have been the last piece of the puzzle to change with the delivery of faster information

8 Our Assessment of Impact Category Payment Type Per Payment Value Range RTP Impact 24x7x365 Impact B2B Suppliers Low to High LOW Low Impact B2C B2P (HUM to Providers) P2B (Providers to HUM) C2B Member premium refunds Claims payments Claims recovery payments Member premium payments Low VERY HIGH Medium Impact Low to High HIGH Low Impact Low to High VERY HIGH Medium Impact Low HIGH Low Impact

9 Our Curiosity Was Peaked

10 Delving Into RTP What steps should I take to prepare for this new payment trend?

11 Delving Into RTP Why should we change our business model to accommodate faster payment processing when the speed of payment processing is not an issue for our company?

12 Delving Into RTP Even with the efficiencies gained through remittance data and payment settlement, how do I formulate an ROI case for making a capital investment in this new payment stream?

13 Delving Into RTP How do I convince my management team that RTP is worth an investment as a competing initiative to what is being considered a nonsales/revenue growth driver?

14 Delving Into RTP What are the organizational risks associated with sending/receiving RTP transactions?

15 RTP: Why Should Corporates Care? B2B - Suppliers are typically on specific payment terms that don t create value for RTP B2C - Major opportunity to convert a fully paper-based process today to electronic B2P - The opportunity to deliver faster payments (with remittance data) to smaller providers would add value for both Humana and providers P2B - Adoption by providers of RTP would speed the collections process and wipe out claims recovery receivables that much faster C2B - RTP would keep step with advancing technology in mobile information delivery, allowing members to pay their premiums quickly and conveniently and at any time

16 Now It s Your Turn to Chime In

17 Here s How to Reach Us Dennis Humble Director, Treasury Services Humana dhumble@humana.com Irfan Ahmad Vice President, Product Development and Strategy The Clearing House irfan.ahmad@theclearinghouse.org Kerstin Rubinstein Vice President, Senior Product Manager Fifth Third Bank kerstind.rubinstein@53.com

18 APPENDIX

19 Your Panelists Dennis Humble Director, Treasury Services Humana Manages the treasury function for the consolidated holding company which consists of regulated (State Departments of Insurance) and non-regulated business Responsibilities include cash flow forecasting using the direct and indirect method, used for public street projections and for investment and liquidity decision making; bank and third-party relationship management; managing a fee-based budget in excess of $35 million annually; working closely with the Statutory Reporting group, Tax, Accounting and Legal to optimize subsidiary cash dividends and capitalization requirements; and managing and maintaining the company s treasury workstation environment

20 Your Panelists Irfan Ahmad Vice President, Product Development and Strategy The Clearing House Deeply engaged in the development of several new digital payments initiatives, including real-time payments where he is responsible for the product development work stream Works with internal and external technology experts and bank executives to define, develop, and launch the new U.S. payments infrastructure Expertise in payments, product development, strategic planning

21 Your Panelists Kerstin Rubinstein VP, Senior Product Manager, Payments and Commerce Solutions Fifth Third Bank Responsible for the development and execution of strategies related to electronic payments Has more than 20 years of banking experience, with more than 10 years in Cash Management services Has served on the NACHA Compliance and Operations Committee ( ), CHIPS Business Committee (2015 current), led Fifth Third s ACH and Wire Operations ( ), led Fifth Third s Check Services Operations ( ) and served as the Director of Enterprise Operational Risk Management ( ). Integral contributor to the development of Fifth Third s Real Time Payments strategy

22 The Clearing House: Hub for Interbank Exchanges 1853 Founded by New York banks to improve efficiency and remove risk from daily exchanges TODAY Owns and operates core U.S. payments system infrastructure, clearing and settling approximately $2 trillion each day, representing half of all commercial ACH, wire and check image exchange volume RIGHT NOW Working to modernize the U.S. payments infrastructure by building a new, ubiquitous, real-time payment system 2017 The Clearing House Payments Co. 22

23 But what is RTP? RTP is a brand new payment infrastructure that has been uniquely designed to support the way that businesses and consumers interact today You can almost think of RTP as a mobile phone and U.S. financial institutions or third-party companies as the developers of new and innovative apps that run on that mobile phone In the same way, RTP provides the tools (network, platform and rules) upon which an FI s payment services can be created and transformed Traditional U.S. infrastructure systems are ACH, wire, check image exchange, card networks, ATM networks APP FI Services 2017 The Clearing House Payments Co. 23

24 TCH RTP is real-time in every way RTP 24/7 Continuous Input/Output Clearing 24/7 Continuous Settlement Immediate Confirmation = Simplified Reconciliation Real-time posting and visibility 2017 The Clearing House Payments Co. 24

25 RTP Distinctive Features Credit Push Only Payment Status Payment Certainty Immediate Availability of Funds Customers send payments directly from their existing accounts complete transparency, no pending payments Immediate notification of successful transfer to end users, providing certainty for both senders and receivers Receivers have certainty that payments will not be reversed or revoked Receivers have funds available in real-time 24/7/365 Complete AR/AP Messaging Fulfillment Messaging Data Extensibility Global Ready Ability to link multiple messages associated with the same transactions through a common reference Ability to provide confirmation by the receiver that they have received funds, combined with fulfillment information Allows banks to develop Value added services based on extensible data ISO is a global standard that supports the needs of multi-national customers and will enable cross-border payments in the near future 2017 The Clearing House Payments Co. 25

26 Comparison of RTP to Existing Payment Systems Feature Real-Time Payments ACH Wire Debit/Credit Cards Request for Payment Supported Not supported Not supported Not supported Cross-Border Interoperability Contextual Data Functionality planned Yes, but limited in reach Yes, but can be slow Yes 140 characters in payment message + extensive remittance advice 9999 addenda records of 94 characters each 9000 characters Very limited Authorization Real-time Varies but never real-time Real-time Real-time Clearing Real-time and continuous Multiple times daily Settlement Real-time and continuous Three times daily Real-time (during operating hours) Real-time (during operating hours) Real-time or near realtime (pin debit); once daily (signature) Once daily Settlement Finality Real-time Depends on reason for return, can be up to 60 days Real-time Depends on reason for return, can be up to 60 days Posting Real-time Same day as a settlement Reconciliation Real-time After settlement cycle Real time; may be delayed in some cases Complex, sometimes manual process Real-time or near real-time Automated, but with time delay for settlement 2017 The Clearing House Payments Co. 26

27 What Are Financial Institutions Doing To Enable Customers? Technolial Building Infrastructure Product Support Solutions Expanding data archive services to support extensible RTP receivables capabilities Enabling immediate availability and settlement of funds transfers 24/7/365 via Zelle and The Clearing House Integrating with ERP platforms to streamline payment flows and reconciliation processes Improving payment flow transparency via real time payment acknowledgements and confirmations 27

28 What Are Financial Institutions Doing To Enable Customers? Technological Infrastructure Support Advancing payment systems to support merge of corporation based customer alias profiles (mobile/ ) with legacy payable files Real time information reporting to enable corporations to post RTP payments to their systems in near real time Advancing bank grade real time fraud prevention tools in alignment with US governed payments systems (i.e. SWIFT, Fed) 28

29 What Are Financial Institutions Doing To Enable Customers? Client Education Targeted solution based discovery sessions with customers to validate product solutions and assist with organizational education Trade association participation and customer focused round tables White paper and article publications 29