MODERNISING YOUR CARD PROCESSING: OVERCOMING THE CHALLENGES

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1 MODERNISING YOUR CARD PROCESSING: OVERCOMING THE CHALLENGES Stefano Cipollone, Europe Presales Leader Andy Brown, Marketing Director, Payments

2 Challenges and opportunities of a complex world Modern Card Processing High Availability Migration Modernizing the ATM/POS experience Real Time Payments Cloud Open Banking 2 NCR Workshop Salone dei Pagementi

3 But where next? Cards Checks ACH Real-time Payments Cross Border 3 NCR Workshop Salone dei Pagementi

4 NCR s CxBanking Platform for Financial Institutions NCR CxBanking Strategic Framework Consumers Mass, Mass Affluent, High Net Worth, Small & Medium Business, Non-Customers Businesses Channel Transformation Digital Banking Branch Transformation Self-service Reinvention Omni-Channel Platform Customer Experience Transaction Orchestration Data & Analytics Digital Enablement Payments & Transaction Processing Channel Management Fraud & Security Know me Help me Advise me Real-time Frictionless Open API Simplify Digitize Intelligence Enterprise systems & services Core, Commerce, POS, Marketing, Analytics, Compliance, Fraud External systems & services Software Services Hardware 4 NCR Workshop Salone dei Pagementi

5 Modernizing card processing Card mix credit, debit, pre-pay Card schemes Bancomat, Visa, Mastercard, Amex, Diners, Union Pay etc Responsiveness in authorisation How to reduce decline rates But protect from risk Tokenisation Apple Pay, Samsung Pay, wearables Alternative payment schemes important for acquirers 5 NCR Workshop Salone dei Pagementi

6 Many more payment schemes around ecommerce Payment Usage 2016 (% of total spend) Credit Card ewallet Bank Transfer Pre-Paid Cash on Delivery Debit Card Charge/Deferred Debit Card PrePay E-Invoices 0% 10% 20% 30% 40% 50% 60% 70% Source: Worldpay Global Payments Report 6 NCR Workshop Salone dei Pagementi Italy UK Netherlands

7 Swiss Private Bank Context One of the largest Issuer (Visa, Mastercard, Diners) in Switzerland and other countries 1.4m cardholders Service and operational excellence Early adopter of Authentic Solution Single platform across all countries Apple Pay, Samsung Pay Rich authorization processing How long a customer Spend behaviour Velocity checks Integration to fraud detection engine Responsive to business demands 7 NCR Workshop Salone dei Pagementi

8 Real-time Payments + Open Banking Impact Cards 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 8 Please state your level of agreement with statement The combination of immediate payments and open bank APIs will see the importance of payment cards reduce over time 73% NCR Workshop Salone dei Pagementi 83% 76% 78% 74% 66% Retail banks Americas Asia Europe Global 68% Merchants 68% Over time, banks and merchants expect to see card volumes put under pressure by the combination of immediate payments and open banking Source: 2018 Ovum Global Payments Insight Survey (report available here)

9 GATEWAY GATEWAY Real-time Payments Sending Bank Online Banking Corporate Account Services Fraud Services Central Infrastructure Core Banking System Core Banking (s) System Core Banking (s) System (s) Receiving Bank OFAC Services Fraud Services Core Banking System Customer Alerting Gateway Functional Characteristics: Message Protocol Mapping Workflow control Monitoring & Alerting Authorization & Transaction Monitoring Respond to new requirements (Request to Pay) Gateway Non-functional Characteristics: High performance High availability Fail-over / alternate processing options Security & Data Integrity 9 NCR Workshop Salone dei Pagementi

10 High availability on commodity hardware In modern technical topology, resilience and extensibility are achieved through 3 key elements Application clustering Database clustering Replication Example availability: 8bn transactions per year with just 20 having a problem Customer does not measure availability as % - counts problem transactions 10 NCR Workshop Salone dei Pagementi

11 Cloud environments Changes in How Technology Is Being Developed and Deployed 11 NCR Workshop Salone dei Pagementi

12 Cloud Technologies, Challenges, Benefits Containerization Docker and Kubernetes Database Cassandra, PostgreSQL, NuoDB HSMs Cloud providers no payment functions Cloud enable HSM non performant Hosted potential performance issue Hosted & collocated only route for now Working with Barclaycard and others Key benefits: Reductions in Capital spend Elasticity Deployment cycles (DevOps CICD) 12 NCR Workshop Salone dei Pagementi

13 Migrating to a new system Paul Pester quits TSB after latest computer meltdown September Paul Pester has quit as chief executive of TSB four months after a botched systems upgrade as the bank continues to struggle with IT failures. Up to 1.9 million people were locked out of their online or mobile banking accounts after the IT upgrade in April. Yesterday the bank was forced to apologise again after some customers suffered further digital disruption over the weekend. 13 NCR Workshop Salone dei Pagementi

14 Migration Routes CORE BANKING CARD MGMT. etc Legacy Switch System 14 NCR Workshop Salone dei Pagementi

15 Migration Routes Steps Rollback Source for settlement & reconciliation Incorporating new business functions Risk vs time Fast example: Piraeus Bank: 16 months contract to finish CORE BANKING CARD MGMT. Legacy Switch System etc 15 NCR Workshop Salone dei Pagementi

16 Open Banking Another channel to your customer Another silo of data processing? Adding to branch, cards, digital banking Move to Omni-channel transaction processing Middle Office Single transaction execution layer Single point to integrate with internal (core banking etc) and external systems Ability to execute cross channel capability start in digital complete in branch Knowledge across channels APIs for bank touchpoints and external Bank Touchpoints Internal APIs Middle Office Layer Host Abstraction APIs Systems of Record Partner Touchpoints External APIs 16 NCR Workshop Salone dei Pagementi

17 Omni channel more important with open banking. Source: IDC research 175 FIs globally (Q2 2018) 17 NCR Workshop Salone dei Pagementi

18 18 NCR Workshop Salone dei Pagementi Hub for all payment transactions ATM, POS, internet banking, mobile payments, real-time payments

19 Modernizing the ATM and POS ISO based protocols for ATM and POS Two layers to standard: Information elements Syntax of the message Protocols: nexo Acquirer Protocol (merchant to acquirer) nexo-ifx ATM protocol (others) These standards have now been included in the acceptance platform used by Carrefour, a global leader and the reference in food retail. Meanwhile, nexo standards also enable Natixis Payments to more easily and swiftly design new innovative services, as an in-flight mobile device/tablet payment service for airlines. Natixis press release 3 October NCR Workshop Salone dei Pagementi

20 Nextgen ATM: industry and Deployers Asking for Change The ATM network has grown increasingly complex. and it s our job to create meaningful change that makes ATM technology easier to own and operate, and more supportive of the digitalfirst consumer. Frank Gauld The mission is to define the next generation ATM architecture, to simplify standardize and rationalize. THE ATM MUST EVOLVE CONSUMER BEHAVIOURS ARE CHANGING 20 NCR Workshop Salone dei Pagementi

21 AUTHENTIC TECHNOLOGY

22 Intelligent Transaction Handling Configurable interfaces for online and batch messages The message mapper incorporates Web Service Importer Message Mapper Web Service Importer Actions Standard Application Interfaces Action List Processing Configurable Intelligent Transactional Business Logic Framework Orchestration Layer Message Mapper Web Service Importer Your Business Logic Authentic Product Business Logic Your internal and external interfaces Used for APIs, ISO etc. Open Transactions Framework, including payments handling Core Product Payment Transaction Switching, Intelligent Transaction Handling, Cryptography, Integrity, Scalability, Resilience, High Performance, PCI, EMV, Alerting and Monitoring Core product foundation for intelligent transaction orchestration 22 NCR Workshop Salone dei Pagementi

23 Message Mapping External / internal translation GUI to define message conversion - Transformation rules - Parsing and formatting rules - Validation rules Fixed length, variable length, bit mapped, XML/web service Web service importer Java code for complicated transformation INTERFACE 1 AUTHENTIC FIELDS INTERFACE 2 Define Interface Fields Define Messages Define Validation Rules Define Mapping Rules Internal Field Internal Field Internal Field Define Mapping Rules Define Interface Fields Define Messages Define Validation Rules 23 NCR Workshop Salone dei Pagementi

24 Action List Processing Orchestrating the transaction processing 24 NCR Workshop Salone dei Pagementi End-to-end transaction workflow management Combines workflow with routing Actions grouped into lists Lists assigned to scenarios Actions re-usable across lists Lists re-usable across channels Alaric provide hundreds of actions Customer add own Java applet Unique element of product

25 CONCLUSION

26 Challenges and opportunities of a complex world Modern Card Processing High Availability Migration Modernizing the ATM/POS experience 26 NCR Workshop Salone dei Pagementi Real Time Payments Cloud Open Banking Where next?

27 THANK YOU Contact us: Visit us on stand M06