Pamela Joseph. Vice Chairman, U.S. Bancorp Chairman, President & CEO, NOVA Information Systems, Inc.

Transcription

1 Pamela Joseph Vice Chairman, U.S. Bancorp Chairman, President & CEO, NOVA Information Systems, Inc. 1

2 Forward-looking Statement This presentation contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These statements often include the words may, could, would, should, believes, expects, anticipates, estimates, intends, plans, targets, potentially, probably, projects, outlook or similar expressions. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future prospects of the Company. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including the following, in addition to those contained in the Company's reports on file with the SEC: (i) general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for credit losses, or a reduced demand for credit or feebased products and services; (ii) changes in the domestic interest rate environment could reduce net interest income and could increase credit losses; (iii) inflation, changes in securities market conditions and monetary fluctuations could adversely affect the value or credit quality of the Company's assets, or the availability and terms of funding necessary to meet the Company's liquidity needs; (iv) changes in the extensive laws, regulations and policies governing financial services companies could alter the Company's business environment or affect operations; (v) the potential need to adapt to industry changes in information technology systems, on which the Company is highly dependent, could present operational issues or require significant capital spending; (vi) competitive pressures could intensify and affect the Company's profitability, including as a result of continued industry consolidation, the increased availability of financial services from non-banks, technological developments, or bank regulatory reform; (vii) changes in consumer spending and savings habits could adversely affect the Company s results of operations; (viii) changes in the financial performance and condition of the Company s borrowers could negatively affect repayment of such borrowers loans; (ix) acquisitions may not produce revenue enhancements or cost savings at levels or within time frames originally anticipated, or may result in unforeseen integration difficulties; (x) capital investments in the Company's businesses may not produce expected growth in earnings anticipated at the time of the expenditure; and (xi) acts or threats of terrorism, and/or political and military actions taken by the U.S. or other governments in response to acts or threats of terrorism or otherwise could adversely affect general economic or industry conditions. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events. 2

3 Domestic Strategy Domestic growth strategy will focus on: Customer base penetration for both USB and financial institution clients Continued extension of product capabilities Leveraging USB s broad payments capabilities to provide enterprise payments solutions Acquisitions will focus primarily on obtaining payments capabilities, the purchase of existing portfolios from financial institutions, or other processing opportunities. 3

4 International Strategy International growth strategy will focus on forming alliances, primarily with financial institutions. Integrated electronic processing solutions at the enterprise level provide: 4 Access to leading edge, regulatory compliant technology at a fraction of the cost Product advantage in local markets Superior fraud and risk management capabilities High quality customer service Organic growth will be driven by growth in the number of alliances and increased transition from paper to electronic transactions. Acquisitions will focus primarily on obtaining payments capabilities, the purchase of existing portfolios from financial institutions or other processing opportunities.

5 Lines of Business Global Merchant Acquiring Transaction Services Retail Payment Solutions Emerging Payments 5

6 6 Global Merchant Acquiring

7 Global Merchant Acquiring Overview The Global Merchant Acquiring business is a leading provider of Card Payment Services across North America and Europe. The company provides integrated payment processing services to more than 800,000 merchants and financial institutions in 10 countries. Our payment products are supported by the most reliable network in the industry and include credit and debit processing, check conversion, gift cards, and dynamic currency conversion. Business Dimensions 2004 Market Share (1) Current Strategic Focus Vice Chair Pamela Joseph Manager Stuart Harvey Total Employees 2, FDC (Concord/Chase/ Paymentech) 2. Bank of America/NPC 3. NOVA 4. Fifth Third 5. Global Payments Volume millions Merchants thousands $767,105 1,233 $247, $122, $109, $ 87, Market Expansion Customer Retention U.S. Bank Cross-sell Increased Product Penetration 2005 Revenue Mix 2004 Revenue By Customer Segment Equipment 7% DIA (incl. rebates and residuals) Micro Business 31% Small Business Fees 23% 71% National Accounts 10% 53% Middle Market 6% 7 (1) Source = 2005 Nilson Report (2) YTD 2005 performance

8 Strategic Initiatives Be recognized as the partner of choice in European market, similar to U.S. Leverage bank partnerships on all levels for crosssell opportunities Achieve bank/card scheme independence in Europe Capitalize on select acquisition/alliance opportunities in core markets 8

9 9 Transaction Services

10 Transaction Services Overview Transaction Services provides ATM, debit, and prepaid card processing solutions to financial institutions, businesses, and sales partners throughout the U.S. The division employs its own sales, RM, and client support organizations, as well as product-specific operational support. This division also provides sales and support for FIs with Elan credit card and merchant services, as well as product and vendor management for USB ATM Banking, and coordination of our bank-wide FI Services sales, product positioning, and segment support. Business Dimensions Market Share (1) Current Strategic Focus Vice Chair Pamela Joseph Manager - Jan Estep Total Employees Concord/FDC U.S. Bancorp efunds Lynk (RBS) Metavante Market ATMs 93,200 31,388 29,327 25,000 20, ,370 % Share 41.2% 13.9% 12.9% 11.0% 9.1% Leverage volume efficiencies Expand beyond click processing Package adjacent products and leverage broader relationships 2005 Revenue Mix 2004 Revenue by Customer Debit Card Processing 17% Other C-Store+ Other 20% 37% 46% Casino 7% FIs ATM Processing ISO <1% 72% Transaction Services 10 (1) Share in 3 rd party ATMs processed within the U.S. - Source:09/04 ATM & Debit News (includes Elan + Genpass ATMs at 3/05)

11 Strategic Initiatives Continued expansion beyond click processing Development of prepaid expertise for many card types/industry segments Expand casino cash access services beyond ATM Move into international capabilities in debit and prepaid card 11

12 12 Retail Payment Solutions

13 Retail Payment Solutions Overview Retail Payment Solutions (RPS) provides credit, debit and pre-paid card products to consumers and small businesses through both the U.S. Bank franchise and partner-based channels including agent FI s, affinity partners, and co-brand partners. Business Dimensions Vice Chair Pam Joseph Manager Pat Wesner Total Employees 1, U.S. Market Share Purchases Balances American Express 12.9% 9.0% JPM Chase 12.8% 19.1% Citigroup 10.0% 16.4% Bank of America 8.1% 8.6% MBNA 6.6% 11.6% Cap One 4.1% 7.5% Discover 4.0% 6.5% U.S. Bancorp 2.9% 1.5% Wells Fargo 2.7% 1.9% Current Strategic Focus Increase customer penetration - Existing USB portfolio - Agent FI Portfolio Continue to improve partner acquisitions - Agent FI s - Co-brands - Affinity 2005 Forecasted Revenue Mix 2005 Earnings By Business Line Loan Fees 8% Other Fees 13% Spread 40% USB Debit 25% USB Credit 38% Interchange Fees 39% Elan 10% Co-brand 27% Affinity 0% 13 Nilson Report

14 Strategic Initiatives Develop break-through partner-based account acquisition strategies Increase U.S. Bank branch credit card product sales Develop near-prime credit management capability Exploit incremental debit & pre-paid volume opportunities 14

15 15 Emerging Payments

16 Emerging Payments Emerging Technologies Definitions RFID -- Radio Frequency Based Alternatives such as RFID tokens, contactless smart cards M-Payments A POS payment made through a mobile device such as a cellular telephone, a smart phone or a PDA. Europay/MasterCard/Visa (EMV) Smart Card Chip cards using a PIN as the method of customer verification. EMV is the industry standard for chip and PIN. Biometrics The verification of an individual s identity by matching a record of some physiological trait U.S. Europe Asia-Pacific RFID Rollout Rollout Rollout M-Payments Development Pilot Pilot EMV Smart Cards Concept Rollout Pilot Biometrics Development Concept Concept 16

17 Emerging Payments Europe US Asia RFID Customer Usage Early Adoption Mainstream Biometrics Biometrics EMV M-Payments M-Payments M-Payments Biometrics EMV RFID EMV RFID 17 Concept Development Pilot Rollout Merchant Acceptance

18 Emerging Payments RFID Currently support contactless on NOVA host for Visa, MC, and Amex Live with several customers M-Payments Currently support purchase of pre-paid mobile phone minutes at ATM in US Support multiple providers in Europe on acquiring side mostly unique solutions for a merchant or supplier EMV Currently support in Europe (processed first Irish EMV Laser transaction) Plan to move into Canada over next ~18 months (required by 2010) Biometrics Currently building NOVA network enrollment and authentication capability with established biometric provider operational 4Q 2005 Joint HHS RFI response with established biometric provider for nationwide healthcare identification/authentication infrastructure Joint calls to healthcare and government with established biometric provider 18