2017 European Payment Systems Competitive Strategy Innovation and Leadership Award

Transcription

1 2017 European Payment Systems Competitive Strategy Innovation and Leadership Award 2017 EUROPEAN PAYMENT SYSTEMS COMPETITIVE STRATEGY INNOVATION AND LEADERSHIP AWARD

2 Contents Background and Company Performance Industry Challenges... 3 Strategy Innovation and Customer Impact... 4 Conclusion... 7 Significance of Competitive Strategy Innovation and Leadership... 8 Understanding Competitive Strategy Innovation and Leadership... 8 Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices...10 The Intersection between 360-Degree Research and Best Practices Awards...11 Research Methodology...11 About Frost & Sullivan...11 Frost & Sullivan We Accelerate Growth

3 Background and Company Performance Industry Challenges As online payments and e-commerce become ubiquitous across the globe, the security, flexibility, and reliability of payment services become paramount to facilitate transactions. Frost & Sullivan research projects that by 2025, 75% of financial transactions will flow through cloud-based platforms (i.e., cloud computing). 1 As private clouds, collaboration approaches, and multi-channel messaging gain greater acceptance, demand for cloud computing will only grow and spur development in infrastructure as a service (IaaS) offerings. Increasingly, business agility, time to market speed, and uptime will become unavoidable imperatives for processors working for e-commerce operations and financial institutions. Consumers expect merchants and financial institutions to provide more convenient and frictionless options, attendant to the rise of mobile apps, ubiquitous Internet penetration, and cashless technologies. Providers seeking to service the new markets of payment systems and processing must break down silos and expand their reach to meet the demands required for real-time electronic payment solutions. 2 E-commerce options, while increasingly popular, require significant attention to develop an ecosystem of payment acceptors at the endpoints, remain apprised of security developments, and connect an international network of transaction and compliance mechanisms. Data management will automate and disintermediate legacy systems, but providers must strategize effectively now to take advantage of emerging technologies such as blockchain, machine learning, fraud analytics, and artificial intelligence. Smart contracting and process automation are enabling preset protocols to decrease the time required for transactions based on concrete regulations which significantly reduce the time required for processing. 3 Frost & Sullivan research projects serious disruptions creating growth opportunities in the payment systems and processing space. The payment infrastructure from consumer transactions to large enterprise applications and central banks will experience automation like never before and must adapt to the rapid imperatives of global transactions. The Internet of Things and blockchain-based applications will grow precipitously in the next two to three years as more applications and industries adopt. Security will remain an ever-present concern as the number of endpoints involved open up potential vulnerabilities to the system and risk for fraud or malfeasance. 4 1 Future of Financial Services: Growth in FinTech is Shaping the Future of Invisible Finance & Virtual Banking (Frost & Sullivan, November 2016). 2 Digital Disruption in the Global Financial Services Sector: Innovations Around AI, ML, and Robo-advisory Will Drive Disruptions Over the Next 5 Years (Frost & Sullivan, November 2016). 3 Future of Financial Services: Growth in FinTech is Shaping the Future of Invisible Finance & Virtual Banking (Frost & Sullivan, September 2016); and Convergence of Artificial Intelligence (AI) and the Finance Industry: Robotrading, Robo-advisors, Consumer Smart Wallets, Insurance, and Fraud Analytics Set the stage for Massive Disruption (Frost & Sullivan, April 2016). 4 FinTech in Europe, 2016: Advanced Technologies to Become Mainstream in the Next 5 Years, as Adoption Increases across the Region (Frost & Sullivan, January 2017). Frost & Sullivan We Accelerate Growth

4 Technological innovations for the point of sale, online transfer applications, and mobile wallets extend the reach of the banking sector and enable new webs of commerce, inclusion, and competition among merchant service providers. The result of which is downward pressure on transaction fees. A fee per transaction remains the dominant business model, and competition among payment processors and solutions providers grows fierce. Technological innovations represent merely one field of competition among processors other competitive variables include flexibility, ecosystem integration, international reach, security, and client service quality. Providers must adapt and incorporate these multiple factors to lead this highly competitive and complex market successfully. Strategy Innovation and Customer Impact of ACI Worldwide With over 40 years experience in the payments sector and offices in 35 countries, ACI Worldwide (ACI) enables payment capabilities across payment types, channels, currencies, and networks. ACI offers a spectrum of electronic payment solutions geared toward consumer payments, transaction banking, merchant payments and digital commerce, and bill payment services. ACI connects a portfolio of local payment methods, acquirers and networks through a single integration for streamlining cross-border commerce. Since deciding to expand focus, which historically included banks and intermediaries, to encompassing digital commerce and electronic payments up and down the value chain, Frost & Sullivan believes ACI s record of adaptation demonstrates exemplary strategy and execution. Local Reach ACI offers a comprehensive set of products for the European market, with more connectors and gateways accepting more payment types across the world, from e- commerce payment gateways to payment engines with embedded fraud detection. ACI finalized consolidation of its data housing and performance with the opening of its Limerick, Ireland data center in October The cutting-edge facility ensures reliability, security, and compliance with European data privacy laws, in addition to expanding the capabilities, such as hosted private cloud services. This center builds on top of ACI s existing infrastructure and local office locations in Belgium, France, Germany, Greece, Ireland, Italy, Netherlands, Romania, Russia, Spain, Sweden, and the United Kingdom, among others. Local offices operate with sufficient autonomy to make decisions fast and speed up implementation and deployment processes, as well as give feedback to countrymen on-site to effectively allocate resources. ACI connects customers through the breadth and depth of its international reach for locally preferred payment methods, with more than 350 card acquirers and alternative payment methods and approximately 12,000 connections available. Frost & Sullivan We Accelerate Growth

5 Integrating Strategic Acquisitions Create Unique Value Beginning in 2012, ACI realized that it lacked e-commerce capabilities to cope with expected demand and developed a significant acquisition strategy that it implemented over the ensuing years: 2012: The acquisition of Distra Pty Ltd (Distra) included technology for its serviceoriented-architecture-based platform infrastructure that augmented ACI with greater flexibility and time to market. With the integrated platform, customers, such as financial institutions, processors, and retailers, can meet rising market trends with agility and develop new features in multichannel engagement and payment service hubs. Also in 2012, the acquisition of S1 extended the company's global reach for merchant payments processing as well as strengthened its corporate banking capabilities. 2014: The acquisition of UK-based Retail Decisions (ReD) bolstered ACI s fraud protection measures as more crime moved online and e-commerce security grew. ReD s solutions not only help prevent and reduce fraud loss, but supplement fraud management teams to become more efficient. ACI profited from the rise in card-not-present transaction fraud as (Europay-MasterCard-Visa) EMV chip card adoption increased. 2015: The acquisition of Germany s PAY.ON significantly expanded ACI s applicability to alternative payment methods and card acquirers and accelerating cross-border commerce across multiple channels. Frost & Sullivan We Accelerate Growth

6 The combination of ACI with the PAY.ON payment gateway and the ReD Shield real-time fraud prevention software comprise the UP ecommerce Payments solution, offering omnichannel solutions for online merchants and global customers. Acquisitions helped consolidate market share, upgrade feature functions, and extend distribution for the UP ecommerce Payments solution. With these acquisitions ACI has invested in growth and retained the employees and infrastructure of the acquired companies. Providing Exceptional Value ACI focuses on building a competitive moat around its expansive portfolio with a longterm value offering. Across its segment, with specific offerings (for e-commerce, processors, commercial and retail banks), ACI strives to maintain its reputation for always-on availability and enabling the features and functions that customers require for new revenue generating operations. The white label UP ecommerce Payments solution includes embedded fraud and risk management, as well as a record of boosting conversion rates. Moreover, ACI requires less capital investment for scaling up; whereas competitors would require purchasing new hardware, ACI can scale up the software with faster and easier implementation to cope with greater volume. The reliability and flexibility of ACI s software and software as a service offerings reduce a customer s configuration schedule and time to market; typically, e-commerce implementations are up and running in 3 months rather than 7 to 12 months with other providers. Furthermore, ACI s automated dispute management system resolves issues faster and with fewer errors than a client s legacy paper-based system. Dedication to Value ACI demonstrates astute concern for ensuring that its solutions maintain trust, addressing customer concerns for the ongoing security and performance of systems. The company invests approximately 17% of its annual budget into research and development, keeping abreast of the latest technology developments. For example, ACI is modeling, and already running a proof-of-concept, for a project enabling central banks and clearing houses to operate on a blockchain. Through its technical expertise, ACI already runs some of the fastest transactions through its UP Immediate Payments solution deployed in Singapore, the UK, and Australia, among other regions. Moreover, ACI s presence in Europe validates a commitment to rigorous fraud protection with machine learning and artificial intelligence capabilities available to clients. ACI works closely with its customers to coordinate customized versions of its real-time integrated fraud prevention, in addition to fraud detection analytics, adaptive machine learning, sanctions filter, and anti-money laundering measures. Fraud attempts denied by ACI s solutions save customers money, save time by reducing manual reviews required, and bring chargeback rates down precipitously. Further, the protections afforded by ACI s solutions are a drop in the bucket compared the hundreds of millions of dollars and Euros in fines potentially levied against organizations shirking due diligence to prevent money laundering. Frost & Sullivan We Accelerate Growth

7 Differentiating through Customer Experience With a keen awareness of the competitive environment, ACI systematized efforts to make customer experience a point of differentiation, particularly when technology does not provide a reassuring touch. ACI is currently designing a signature method of customer interaction, built around core principles of building trust in the relationship. Across interactions with ACI, from pre-sales to sales, to implementation, to product management, or back end, the comprehensive customer experience will ensure satisfaction with ACI s business model. Moreover, concentrated efforts already underway to improve the customer experience in the back office operations (billing and invoicing) are already achieving tremendous feedback and yielding improved results. The global support team includes more than 300 individuals providing assistance through web, phone, and . Conclusion With competitive pressures on payment initiators and compliance burdens on financial institutions, ACI expedites processes and relationships in the payments ecosystem. ACI demonstrates a keen awareness of future developments and invests in organic and inorganic growth to capitalize on emerging trends. With a string of strategic acquisitions, investment in technology, and commitment to customer service, ACI efficiently executes plans to grow its strengths in the payment systems space. Differentiating itself from competitors, ACI facilitates painless transactions across borders and channels. In the fast moving world of cashless payments and online transactions, ACI provides proven solutions making commerce frictionless for clients up and down the value chain. With its strong overall performance and rigorous pursuit of differentiators, ACI Worldwide earns Frost & Sullivan s 2017 Europe Competitive Strategy Innovation and Leadership Award for the payment systems market. Frost & Sullivan We Accelerate Growth

8 Significance of Competitive Strategy Innovation and Leadership Any successful approach to achieving top-line growth must (1) take into account what competitors are, and are not, doing; (2) meet customer demand with a comprehensive, value-driven product or service portfolio; and (3) establish a brand that resonates deeply with customers and stands apart from other providers. Companies must succeed in these three areas brand, demand, and positioning to achieve best-practice levels in competitive strategy. Understanding Competitive Strategy Innovation and Leadership As discussed above, driving demand, brand strength, and competitive differentiation all play a critical role in delivering unique value to customers. This three-fold focus, however, must ideally be complemented by an equally rigorous focus on Strategy Innovation and Customer Impact. Frost & Sullivan We Accelerate Growth

9 Key Benchmarking Criteria For the Competitive Strategy Innovation and Leadership Award, Frost & Sullivan analysts independently evaluated two key factors Strategy Innovation and Customer Impact according to the criteria identified below. Strategy Innovation Criterion 1: Strategy Effectiveness Criterion 2: Strategy Execution Criterion 3: Competitive Differentiation Criterion 4: Executive Team Alignment Criterion 5: Stakeholder Integration Customer Impact Criterion 1: Price/Performance Value Criterion 2: Customer Purchase Experience Criterion 3: Customer Ownership Experience Criterion 4: Customer Service Experience Criterion 5: Brand Equity Frost & Sullivan We Accelerate Growth

10 Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices Frost & Sullivan analysts follow a 10-step process to evaluate Award candidates and assess their fit with select best practice criteria. The reputation and integrity of the Awards are based on close adherence to this process. STEP OBJECTIVE KEY ACTIVITIES OUTPUT 1 Monitor, target, and screen Identify Award recipient candidates from around the globe Conduct in-depth industry research Identify emerging sectors Scan multiple geographies Pipeline of candidates who potentially meet all bestpractice criteria 2 Perform 360-degree research Perform comprehensive, 360-degree research on all candidates in the pipeline Interview thought leaders and industry practitioners Assess candidates fit with best-practice criteria Rank all candidates Matrix positioning all candidates performance relative to one another 3 Invite thought leadership in best practices Perform in-depth examination of all candidates Confirm best-practice criteria Examine eligibility of all candidates Identify any information gaps Detailed profiles of all ranked candidates 4 Initiate research director review Conduct an unbiased evaluation of all candidate profiles Brainstorm ranking options Invite multiple perspectives on candidates performance Update candidate profiles Final prioritization of all eligible candidates and companion best-practice positioning paper 5 Assemble panel of industry experts Present findings to an expert panel of industry thought leaders Share findings Strengthen cases for candidate eligibility Prioritize candidates Refined list of prioritized Award candidates 6 Conduct global industry review Build consensus on Award candidates eligibility Hold global team meeting to review all candidates Pressure-test fit with criteria Confirm inclusion of all eligible candidates Final list of eligible Award candidates, representing success stories worldwide 7 Perform quality check Develop official Award consideration materials Perform final performance benchmarking activities Write nominations Perform quality review High-quality, accurate, and creative presentation of nominees successes 8 Reconnect with panel of industry experts Finalize the selection of the best-practice Award recipient Review analysis with panel Build consensus Select recipient Decision on which company performs best against all best-practice criteria 9 Communicate recognition Inform Award recipient of Award recognition Present Award to the CEO Inspire the organization for continued success Celebrate the recipient s performance Announcement of Award and plan for how recipient can use the Award to enhance the brand 10 Take strategic action Upon licensing, company may share Award news with stakeholders and customers Coordinate media outreach Design a marketing plan Assess Award s role in future strategic planning Widespread awareness of recipient s Award status among investors, media personnel, and employees Frost & Sullivan We Accelerate Growth

11 The Intersection between 360-Degree Research and Best Practices Awards Research Methodology Frost & Sullivan s 360-degree research methodology represents the analytical rigor of our research process. It offers a 360-degree-view of industry challenges, trends, and issues by integrating all 7 of Frost & Sullivan's research methodologies. Too often, companies make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. The integration of these research disciplines into the 360-degree research methodology provides an evaluation platform for benchmarking industry 360-DEGREE RESEARCH: SEEING ORDER IN THE CHAOS participants and for identifying those performing at best-in-class levels. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages more than 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 45 offices on six continents. To join our Growth Partnership, please visit Frost & Sullivan We Accelerate Growth