Building the Foundations for Next Generation Consumer Payments

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2 <Insert Picture Here> Building the Foundations for Next Generation Consumer Payments Steve Whiting Head of Business Development EMEA Alaric System Joaquin de Valenzuela Muley Senior Director Oracle Financial Services Global Business Unit

3 Foundations for next generation payments Time to Market for new products and Services Regulatory requirements Too high operating cost Complexity in development operational cost Mobile payments accelerate change Difficult to scale down Int operations Improve Operational Efficiencies Enhance Risk & Fraud Mitigation Increase Margins Acquire Customers Efficiently Break down payments silos Lower IT costs Optimize vault and physical cash management Prevent unauthorized account access via sophisticated multifactor authentication Reduce exposure with integrated AML, behavioral scoring and fraud detection capabilities Identify physical fraud at any self serve device Proactively manage idle cash across ATMs, branches and cash points (bank and customer) Determine individual customer acquisition pricing for attracting new and retaining existing customers Lower costs to serve Expand number of products per customer while attracting non-customers to open accounts Effectively mine customer data to improve cross-sell and up-sell capabilities and launch targeted campaigns 3

4 Building blocks ATM POS Mobile Internet Call Center Branch Register Vault Management Device Management Switch Device status Application Management Application Configuration Switching & Routing Authentication Services Real-time Management Rules Off the Shelf Card Scheme Support Support all major ATM & POS brands Device Cash Inventory Management Integration for Marketing Campaigns Device Security Ease of Host & Network Interfaces Message Mapper Configurable Processing Performance Benchmark: 10,800+ TPS Active/Active: 10,000 TPS Security and PCI Certified Smartcards, Chips, PIN and EMV Support 100% Java and standards based Analytics & Reporting Transact Processed Authorizations Referrals Top ATM Volumes Security & Authentication Reconciliation & Settlement Identity Administration Authentication Trust Mgmt Access Control Audit and Compliance Manageability Service Level Configuration. Extended Settlement Reconciliation Disputes Fees & Commissions Configurable Business Rules Financial Crimes Cash Management & Control Real-time, Near, Batch Fraud Detection Behavioral Analytics AML/KYC. Event Correlation Case Management Customer Acquisition Real-time Offers Self Learning Cash Planning & Forecasting Transportation Schedule & Mgmt. Device Location Optimization End to end Cash Planning and Mgmt. (ATM, Stores, Branches and Vault Cash Control) Top volumes by institution Cash utilization by region & ATM Safety Stock projections Prior period comparative analysis Fraud cases pending Data Management Master Data Mgmt. Event Management Device Alerts & Actions Payment Transactions Cash Planning & Mgmt Technology & Infrastructure High Availability Data Storage Process Management Analytics Disaster Recovery Authentication Servers Transaction Monitoring 4

5 The Oracle blueprint for next generation payments Consumer Payments Services Hub Set of compatible Oracle and partner applications, built on the Oracle stack, that function as a true payments services hub Manages and optimizes physical cash at ATMs, branches and other cash points Advanced fraud and risk mitigation capabilities to detect and interdict suspicious transactions Targeted marketing capabilities and customer acquisition functionality Sophisticated analytics, reports, alerts and online dashboards Host Associations Business Intelligence (OBIEE) Physical Cash Management (Demantra/SNO) Payments Switch Management Stand-In/Issuer Authorization Switching & Routing XML Check Images Authentication Services (Alaric Authentic) Monitoring & Replication (OEM/ GoldenGate) Real Time Decisioning (RTD) Device Monitoring Security (Dynasty) CIF/CRM Recon. & Settlement Fraud Detection (Alaric Fractals) Access Management (OAAM) Financial Crimes Detection (Mantas/CEP) 5

6 The Alaric Payments Suite Well established Payments Company Started in 1997 with many long term high profile customers in Europe and globally Deep domain expertise in payments authorization, switching, multi-channel device driving and real-time intelligent fraud detection Offices in UK, USA, Australia and Malaysia Key Clients Include: Innovative payments products for the banking and retail industries Alaric Authentic: ATM, POS, Internet, Mobile payment authorization and switching Alaric Fractals: integrated real-time intelligent fraud detection & prevention Alaric Message Mapper: SOA and SaaS payment channel integration 6

7 Alaric/Oracle engineered together Disruptive Price Performance Simulation for 100,000,000 cardholders (6,000 BIN) Purchase Type Transaction (Point of Sale 0100 Payment Authorization request (ISO ) Certified Alaric Authentic with latest Oracle Tech(11g R2, RAC, Partitioning, ASM, Solaris 10 SPARC, M- Series, T-Series, Storage including Flash Arrays) Maximum throughput of 10,864 transactions per second with Average Response Time of 206 ms Golden Gate Active-Active Processing Database A LAN/WA N Internet TCP/IP Bidirectional Database Golden Gate ATM/POS Clients Include: B Under Active-Active card processing with GoldenGate throughput of 9,348 transactions per second with 268 ms of response time and 0.9 to 1.8 seconds to complete capture to delivery in an 800 mile remote site cycle) 938 Million Transactions per Day at the lowest market price (*) Benchmark completed May

8 Point of Contact Fraud trends The Many Dimensions of Fraud Fraud extends across channels, lines of business, and customer life-cycle stages Account Hijacking Credit/Debit Card Fraud Identity Fraud Check Fraud Pharming/Phishing Card Skimming Key Logging Stolen Card Unauthorized Transactions ID Theft/Fabrication to Commit Fraud Physical / Electronic Check Kiting Forgery Counterfeiting Insurance Claims Fraud Credit Abuse/ Bust-Out Fraud Application / New Account Fraud Securties Fraud Soft/Hard Frauds Padding Claims Staging Losses Pharming/Phishing Card Skimming Key Logging Content Fibbing in Acct. Applications Content Falsification Rogue Trader Biased / Unfounded Advice 8

9 Real time fraud prevention Real-time Complex Event Processing Oracle Mantas AML Oracle Mantas KYC/CDD Fractals Oracle Mantas Alert Correlation Engine Real-Time Alert Correlation Real-Time Event Detection Oracle Mantas Behavior Detection Engine Real-Time Presentation to Analyst Oracle Mantas Case Management & Reporting Collection Mgmt Systems Regulatory Reporting Operational Risk Solutions Fraud Point Solutions Payments Systems Source Systems Adaptive Access Manager Oracle Mantas KYC OBIEE Liability Risk & Mgmt Systems A Centralized Financial Crime & Compliance Platform 9

10 Experiencing disruptive next generation payments Disruptive change disruptive innovation disruptive social evolution enabled by disruptive technology In the 2010s business, technology and consumer demand all come together 1980 s - 1st generation payments products COBOL, proprietary platforms 1990 s - Last generation payments products C++, Java, vendor dependent 2000 s - Current generation payments products SOA, configurable Proven Stable Mature Reliable Powerful Multi-channel Payments experience Flexible Adaptive Ultra fast Ultra scalable Multi functional Forward looking Business solutions 10

11 Case study Cal Israel A Visa and MasterCard EU member (cross-border) ~1500 employees Over 1.37m debit and credit cards Serves over 55,000 merchants locally and globally Recent growth engines: retail and business financing activities cross border e-commerce gateway & acquiring services 11 11

12 Cal s payments switch problem Legacy technology Patched over years hard to manage, maintain & enhance Part of one big core system - availability issues Compliance & regulation projects require heavy resources 15 year old legacy system Business growth is limited by performance and capacity Limited support for complex business rules 12 12

13 Cal s fraud detection problem limited coverage Issuing side only a black box implementation high vendor dependency a 5+ years old untrained neural model => high FPR no credibility forced a near-real-time implementation 10 year old System limited support for complex business rules complementary tools are required 13

14 Cal s solution Authentic Flexible interfaces and messages integration End-User configurable business logic Ability to independently develop new complex business logic Fractals Issuer & Acquirer in one system Proven advanced predictive model with dynamic calibration Advanced business rules capability 14

15 Why did Cal select Oracle and Alaric? A pure software products vendor focused on payments Impressive industry knowledge and experience Global customer base Modern & open technology and software architecture Powerful out of the box functionality, easy to enhance Product roadmap & support dependency on vendor is limited Compliant with payment brands mandatory requirements PA DSS certified, real time fraud detection Scalability, Performance, Redundancy, Availability An Oracle strong partner 15

16 Why did Cal select Oracle and Alaric? Strong partners for innovation Complete functional offering Strategic roadmap assuring long term business support Reduced TCO Proven record for delivery Reliable, professional, pleasure-to-work-with team of excellent people 16

17 Some lessons learned The demand for next generation payments started in the US and is now a global trend - it is linked to social and generational changes Get the technology and solutions foundations right to adapt with change then focus on using it - try not to always just react to change Next generation payments will take a multitude of forms - implement some, watch for others, be ready Core principles and values remain the same: Deliver to the business yet be entrepreneurial Be consistent yet adapt with change Be solid yet flexible Be risk averse yet do something! Be cost effective yet profitable and competitive 17

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