Business Case for Next Generation Payments in Transit

Transcription

1 Business Case for Next Generation Payments in Transit Smart Card Alliance 2016 Payments Summit Wednesday, April 6, 2016 Michael Wilson Managing Director, Transportation Copyright 2016 Accenture All rights reserved. 0

2 Fare Collection Costs On Average 15% of Fare Revenue Based on interview of 30 transit agency executives in North America 50% have deployed or in the process of deploying a new fare solution Nearly 30% see a change on the 3-5 year horizon New smart fare systems are viewed as both an opportunity and challenge Concern about the rising cost of maintenance remains Keeping current with customers and technologies is important Promoting open architecture to keep technology flexible, secure and compliant Enabling multi-vendor supply to keep device costs down Embracing payment industry standards to make it easier for customers to pay Active consideration is being given to in-sourcing versus outsourcing 42 percent saw outsourcing as enabling outside expertise access and better use of internal resources More than 25% saw a cost reduction advantage Copyright 2016 Accenture All rights reserved. 1

3 Changing the Economics of the Fare Collections Devices & Operations Customer Service, Cards & Distribution Back Office & Collection Total Cost of Ownership over a 10 to 15 year period 60% 15% 25% Solution Essentials Device Interoperability Networked Payment Choices Self-Service Digital Account Based Commercial Software Open Architecture Outcomes over the life 40% to 50% Less Competitive device supply Consumer s infrastructure Remote monitoring & maintenance 45% to 60% Less Reduction of Cash Payment options Customer self-service Digital distribution 50% to 65% Less Extends the life of back office solution to 30 years Self sufficiency Copyright 2016 Accenture All rights reserved. 2

4 The Business Case Focuses on 3 Categories 1. Capital Cost Avoidance 2. Increasing Revenue and Ridership 3. Reducing Fare Management Related Costs Copyright 2016 Accenture All rights reserved. 3

5 Legacy Fare Systems Face Mounting Capital Costs Field Equipment Increasing failure rates No supply of replacement parts Unappealing look Central Systems Unsupported software versions Loss of custom code knowledge base Inability to support customer and fare product innovation Increasing PCI and security risks Fare Media Hacking, fraud and liability risks mounting Insufficient tools to reduce cash collection Copyright 2016 Accenture All rights reserved. 4

6 Potential to Increase Revenue by Up to 5% Value Model Increase Revenue Value Tree New Product Revenue New Rider Revenue Fare Leakage Advertising Revenue Rationale Ability to more dynamic targeted fare products and improve payment convenience Ability to target loyalty programs, improve customer experience Improved controls and reduced cash in the system New channels for digital marketing, partnership opportunities Copyright 2016 Accenture All rights reserved. 5

7 Potential to Reduce Fare Payment Costs by up to 50% Value Model Value Tree Rationale Reduce Cost Maintenance Cost Equipment Quantity Customer Service Cost of Cash Collection Media Distribution Cost of Fare Changes Asset Optimization New technology replacing obsolete equipment Reduced cash in the system, new reload channels reducing demand for in-person services Reduced customer service calls on bank cards and mobile phones Reduced cash in the system Riders use their own cards, reducing card issuance Ability to quickly deploy fare rules centrally without impacting edge equipment Offboard fare payment at retail locations and thru mobile wallets reduces bus dwell time Copyright 2016 Accenture All rights reserved. 6

8 Secure Network Architecting the Next Generation Fare Payment Solution Providing the convenience of choice to customers and transit agencies Fare Media Choices Customer Choice Hardware and Software- Different Vendors Hardware and Software- Same Vendor Agency Choice Enterprise Integration Architecture Plug & Play Flexible Integration Accenture Fare Management Solution Agency Ready Configuration COTS Software Cross-Industry Innovation Data Center Modern, Scalable, Reliable Infrastructure Copyright 2016 Accenture All rights reserved. 7

9 The Next Generation Payment System Value Proposition $ Purchasing a flexible, open customer and financial management solution Build system on commercial off the shelf (COTS) products Use open standards and best practices from the financial services industry Reduce total cost of ownership Preserve investment in back-office system Back-office system that can evolve as needs evolve in the future Enable multi-vendor device integration versus expensive proprietary devices Reduce cost linked to cash and media management Allow customers to use what they have to pay Minimize the need to issue high volumes of cards Promote retail standard alternatives over in station/on-board cash collection Expand customer loyalty Establish a regional customer account that can integrate loyalty, offers and rewards Put in a more flexible fare rules engine to enable targeted customer segmentation Copyright 2016 Accenture All rights reserved. 8