SmartVista has been acclaimed by the Customs Payment System Green corridor

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1 7 ИНФОРМАЦИОННЫЙ БЮЛЛЕТЕНЬ БПЦ 2009 Within the contract BPC acted as a General Contractor and a systems integrator and took responsibility for all the stages of the processing center implementation, including its project management and implementation, and the supply for payment terminals, cards, communication, encryption, personalization and other necessary equipment. Thanks to the high professionalism of the BPC team, the implementation of the fully functional in-house processing center was realized in a record breaking period key projects SmartVista has been acclaimed by the Customs Payment System Green corridor The Customs Payment System, GreeN corridor a coordinator of the customs payment cards issuing in Russia has highly estimated the merits and efficiency of its fully fledged processing center, realized in 2009 on the base of Bpc s SmartVista solution. At present over 300 customs posts are equipped with pos terminals accepting GreeN corridor cards which are supported by SmartVista, while the number of terminals and participating banks quickly increases. within a 2.5 month term. Currently the cards of the Customs Payment System, GREEN CORRIDOR, are issued by tens of banks, with the processing center allowing for online authorization and control of customs dutys payments in an around-the-clock mode with online communication with the customs bodies. Currently the Customs Payment System, GREEN CORRIDOR, using high technology solutions and SmartVista based processing center ensures the timely payment of customs duties, the highest security of the information, payment transparency, and the opportunity to quickly adapt to TecHNoloGIes SmartVista MoneyTransfer: innovative approach to the realisation of an electronic funds transfer system by BPC and Coinstar e.l. Bpc and Coinstar Eurasia Limited (Coinstar Group) launched an innovative SmartVista MoneyTransfer the customs regulation changes, says Semen Zverev, CEO, Customs module for retail bank money transfer services. Payment System. The improvement of the customs payments through The solution is based on SmartVista the implementation of a modern processing system whose unique software complex on the base features allow a bank to launch of the Customs Payment System, money transfer services with the GREEN CORRIDOR, has allowed use of a payment card through the an increase in the efficiency of the bank s existing branch and selfservice network. The development custom duty payment processes and an expansion of the list of of money transfer business is one of services available with the use of the current priorities of the global the customs payment cards in full e-payments industry and the most accordance with the Russian Federal popular financial service with an Customs Service strategy. annual growth of 25 to 35%. (Continued on Page 2) (Continued on Page 4) Founded in 1913, Banco Atlantida SA is the largest bank in Honduras and one of the leaders in the retail financial services market. With a significant number of branches and POS terminals, the bank provides a broad range of products and services to numerous clients throughout Central Banco Atlantida in Latin America chooses SmartVista to strengthen its retail payment business Bpc announced the beginning of the project for implementation of a fully functional in-house retail payment processing center based on SmartVista Suite of software products at Banco Atlantida, Honduras. The project is designed to replace outsourced processing system for acquiring of ATM and pos transactions as well as processing and issuing of both debit and credit cards with the modern and proven SmartVista solution. The contract enabled Bpc to enter the opportune Americas market. America. In order to develop its retail business, focused on largescale retail projects, the bank opted for SmartVista as a reliable platform to support cross-country operations for its Honduras and Belize operations. The project aims to replace separate card centers with a centralized card management solution. The flexible SmartVista based I T- i n f r a s t r u c - ture will enable Banco Atlantida to launch innovative card products and services and to significantly reduce time-tomarket with the modern technological tools. In addition to payment processing, SmartVista offers a broad range of capabilities to effectively support and manage all sorts of card based banking products from a simple debit card to multiple credit cards integrated with retail account maintenance and lending environment. The end-to-end SmartVista solution brings comprehensive value added functionality such as fraud prevention and monitoring to enable timely detection and prevention of fraudulent activities as well as a number of self-service features which can be easily integrated with the existing payment solutions for hotels and restaurants. (Continued on Page 2) Romanian Banca Transilvania implements SmartVista Bpc has embarked on a project for SmartVista implementation to modernise the processing center of Banca Transilvania, one of the largest private banks in Romania, which holds a leading position in most of European banking ratings. The BPC solution, selected in the course of an international tender, will be used to replace the existing TP-Gold and TP-CMS solutions provided by IFS. (Continued on Page 2)

2 2 BPC INTERNATIONAL NEWSLETTER 2009, 7 key projects SmartVista has been acclaimed by the Customs Payment System Green corridor (Continued from Page 1) Romanian Banca Transilvania implements SmartVista (Continued from Page 1) The project for the creation of a modern customs payment infrastructure is a very important step for BPC s development. It is the first time that BPC has won a tender organized by a commercial organisation to serve Russian state needs. This win has been possible because of the company s reputation, experience of successful projects realized in the largest Russian financial institutions and partner relationships with the leading providers of hardware solutions for the financial industry which have been persistently built during many years. We highly appreciate the confidence placed in us by the Customs Payment System and will do everything to justify it by contributing to the efficiency of the customs payment technologies. On behalf of our company I would also like to thank our partners HP and Inpas for their highly professional assistance in the realization of the project, commented Vasily Grigoriev, CEO, BPC Banking Technologies. Banco Atlantida in Latin America chooses SmartVista to strengthen its retail payment business (Continued from Page 1) Among SmartVista superior advantages is the ability to deliver innovative products such as merchant distribution and single payment with flexible parameters and with fewer customizations. For nearly 100 years Banco Atlantida has distinguished itself through advanced banking services to fit our clients ever-changing needs. We see SmartVista implementation as a valuable means to make the most of the emerging e-payment opportunities. Not only will BPC software solution enable us to offer innovative card based products to clients across the Americas, but it also means we can continuously extend our product range to meet new trends and to offer an even wider choice of retail financial services, David R. Bueso, Vice Presidente, Banco Atlantida. The BPC Team is particularly delighted to have been chosen by Banco Atlantida to implement SmartVista to modernize the bank s Retail Payments solution. The broad functionality of SmartVista and its ability to support a large variety of Retail Payment products and services provides Banco Atlantida with proven flexibility and exceptional advantage to offer enhanced service to the bank s customers. We are keen for the bank to benefit from BPC s deep industry knowledge and wide experience, which help our clients achieve minimal time-to-market and maximum business value propositions. We believe that the project with Banco Atlantida will open new doors to the Americas e-payment market, Rajan S. Narayan, Managing Director BPC Latin America and Asia Pacific. SmartVista will allow the bank to expand the functionality of its processing centre, substantially raise the quality of the processing services, and ensure their availability in a 24x7 mode. Banca Transilvania is a dynamic universal bank providing the whole spectrum of retail and corporate banking services. As of 2H 2009 the bank has issued over 1.5M cards including EMV cards and supports an extended network of over 12,000 POS-terminals and 800 ATMs. Having faced the problem of the removal of support for the existing processing solution and some lack of functionality, the bank embarked on a migration project. To replace the existing system the bank chose a modern fully functional processing solution SmartVista. This is a coherent decision for a financial organisation striving to retain its leading position in the card market. Within the project, BPC will implement a fully functional processing solution based on the leading SmartVista products: high performance SmartVista Front-End system, SmartVista Back-Office for card and merchant management and SmartVista CardGen for magnetic stripe and EMV cards personalisation. After SmartVista integration into the existing IT infrastructure BPC will migrate the bank s card business to the new processing platform with a complete removal of TP-Gold and TP-CMS services. The implemented solution will provide quality support for the whole range of card products and services including credit card products and EMV cards, interaction with Internet banking, mobile banking and risk-management solutions as well as effective tools for terminal management. Banca Transilvania is constantly working on the development of its service quality to retain its leading positions in the retail financial market. That is why the bank contributes much into the development of its IT infrastructure. The existing TP-Gold and TP-CMS solutions cannot provide a reliable platform for the future business development anymore due to the removal of technical support and a lack of future functionality. Understanding this, the bank has launched a project for its processing centre modernisation with the use of the modern fully functional SmartVista solution, capable of fully covering all the requirements of our dynamically developing business, said Robert C. Rekkers, CEO, Banca Transilvania. SmartVista implementation in Banca Transilvania is BPC s first project in the European Union, whose successful realisation will allow our company to strengthen its positions in this conservative, yet at the same time attractive market from the point of view of card products and services development. SmartVista solutions offer all the necessary technological tools to support all the functional requirements and security standards of this highly demanding market and provide a perfect alternative to the solutions of the previous generations, typical in the EU. We are confident that the implementation of SmartVista will be only a start of a long lasting collaboration between BPC and Banca Transilvania in the area of cards and e-payments, underlined Nigel Cox, General Manager, BPC Europe.

3 BPC INTERNATIONAL NEWSLETTER 2009, 7 3 key projects Founded in 1992, VAB Bank is part of the Ukrainian financial group VAB Group, combining the assets of 9 companies. Through its extended branch network, stretching across the country, the bank offers a wide range of financial products and services to corporate clients and individuals. In order to modernize its ITinfrastructure, VAB Bank opted for SmartVista software products as a reliable platform to provide migration from the IFS backoffice system to the BPC solution and to realise integration with the Ukrainian Processing Center. Due to its functional flexibility, the SmartVista Suite will support a whole range of retail banking operations, available to the bank s clients in the branches and on self-service terminals. The cutting-edge SmartVista solution comes up with comprehensive Ukranian Vab Bank chooses SmartVista to modernize its it-infrastructure BPC Banking Technologies announced that it has signed a contract with VAB Bank, Ukraine, to implement a fully-functional processing center based on the SmartVista Suite of software products. This is yet another of BPC s large-scale projects in the Ukrainian market. functionality which includes EMV-issuing and acquiring, Fraud Prevention & Monitoring Module and SMS-notification. In addition to that, BPC s software products offer a broad range of capabilities to efficiently support multiple loyalty and affinity schemes. Today, in the heart of the crisis, VAB Bank is striving to achieve minimal time-to-market and maximum business value propositions and to provide its customers with an even wider choice of retail financial services. We are keen for the clients to benefit from our extended product range which is key to the bank s continued growth. Being a modular integrated solution, SmartVista can offer a variety of options depending on customers specific needs and technology preferences, which is why we chose BPC over many others. The flexible IT-infrastructure, based on SmartVista, will enable VAB Bank to launch innovative payment products and services and to further enhance customer loyalty, which we consider our main achievement, Tsvetan Petrinin, Deputy Chairman of the Board, VAB Bank. We welcome the opportunity to strengthen our positions in the Ukrainian market. Being one of the most interesting in the region, the project with VAB Bank aims to ensure full support for a wide range of retail financial services. SmartVista implementation will provide the bank with a range of add-on products, modules and options enabling it to take maximum advantage of the emerging e-payment opportunities. We at BPC pride ourselves on a very successful business model which addresses the needs of any particular organisation. SmartVista customers can always be sure that they can easily expand the solution by adding new functionality and increasing throughput capacity, Vasily Volynsky, director, BPC-Ukraine. TecHNoloGIes BPC announced the expansion of the range of SmartVista compatible HSM-equipment BPC announced the expansion of the range of SmartVista compatible HSM-equipment. Within SmartVista development project, BPC s specialists realised SmartVista integration with SafeNet ProtectServer Gold (PSG) HSM, which was provided by DS Technologies, a distributor of the SafeNet equipment. DS Technologies specialises in supply, technical support and consultancy in the sphere of cryptographicс equipment for the international payment systems, channel encryption, disk and file protection, digital authentication, and internal security. SafeNet is a global leader in information security. SafeNet provides complete security utilizing its encryption technologies to protect communications, intellectual property and digital identities, and offers a full spectrum of products including hardware, software, and chips. SafeNet technology is the de facto standard in remote access client software and the market leader in USB authentication tokens that eliminate user names and passwords; SSL acceleration devices providing fast and secure online transactions; software security, and licensing products preventing software piracy; highassurance security products; and SecureIP Technology licensed to Internet infrastructure manufacturers, service providers, and security vendors. The results of the benchmarking have proven a high level of availability and fault tolerance of the tested equipment and SmartVista ensuring efficient protection of data integrity and security. This allowed BPC to start integrating this module with issuance and management of virtual wallets on SmartVista mobile payment billing system which is deployed for the development of CNP (card-notpresent) payment infrastructure in a large Asia Pacific processing and settlement company. During the benchmarking, BPC analysed the declared functionality of ProtectServer Gold HSMs in the field of encryption keys management with the use of HMAC algorithm in accordance with 3DES and RSA standards. BPC s results proved that the PSG module meets modern industry requirements, including the following: Client-server authentication security requirements to the online interfaces Requirements to the algorithms of file encryption and digital signature generation and verification Requirements to the Intranet users authentication Requirements to the user sessions management Requirements to the web-applications security. The BPC team especially acclaimed the flexibility of the API-interface, ease of implementation and usage of the module development tools, and well thought out integration facilities of the tested solution. The benchmark was very important for BPC as SafeNet plans to promote the new Gold line of its equipment with a complete withdrawal of Orange generation from the manufacture. We are constantly working on keeping our SmartVista Suite compatible with the most up to date solutions from the leading software and hardware providers. This ensures that our customers can use only the best technologies existing in the market, significantly raising the performance and efficiency of their IT-infrastucture, stated Vasily Grigoriev, BPC Banking Technologies CEO.

4 4 BPC INTERNATIONAL NEWSLETTER 2009, 7 NEWS BPC Service Center to support Citibank s atm network Bpc Service Center announced the beginning of collaboration with Citibank on providing outsourcing maintenance services and full support for part of the bank s extensive ATM network in both Moscow and the Moscow Region from equipment installation and setup to service maintenance, onsite repair and efficient troubleshooting as well as remote support and quality assurance. Over the past 10 years BPC Service Center has proven itself a reliable partner, offering a whole range of cost-effective end-toend outsourced solutions for the retail banking industry both in Moscow and in other regions of Russia. The company prides itself on having the most comprehensive facilities necessary for providing high-quality service, maintenance and repair. Among the advantages all the clients can benefit from are low maintenance costs and modern and effective technologies to ensure service excellence. Full outsourcing is reasonably considered one of the most efficient ways to reduce downtime and achieve high ATM availability. Especially for Citibank, BPC came up with a new incentive programme Stimulus enabling the bank to assess the quality of provided services through the coefficient of ATM network availability. This innovative programme was designed with the idea to offer a transparent pricing mechanism, based on calculation of bonuses and penalties over the reporting period, and therefore is particularly effective for extensive ATM networks. The contract with Citibank takes maintenance services to a whole new level since it provides a comprehensive approach to estimating costs of executed works. In the future, the programme Stimulus will be widely applied to other BPC service contracts. First and foremost, Citibank is renowned for its reliability and high quality services. While choosing a partner to provide maintenance services we considered a number of factors such as experience and qualification of engineers, their ability to quickly respond to any queries as well as efficient technical support solutions. We expect an outsourcing company to meet all the challenges Citibank faces nowadays, and that is one of the reasons why we chose BPC Service Center over many others, stated Sergey Lartchenko, Vice-President, Citibank. Reliable ATM operation is undoubtedly a key criterion for enhancing customer loyalty and stimulating business growth. For more than 10 years BPC Service Center has distinguished itself through its ability to work closely with its clients and seamlessly integrate with their everyday business needs. The customers can benefit from our deep industry knowledge and wealth of experience which helps us achieve zero downtime for ATM network maintenance. We value our clients time and do our best to deliver the best possible services, said Mikhail Sunkin, Head of BPC Service Center. TecHNoloGIes SmartVISta money transfer solutions (Continued from Page 1) Total global remittances in 2007 were estimated by the World Bank to be $318bn. The US was the top country from which money was sent with $42bn in recorded outward flows. It was followed by Saudi Arabia, Switzerland and Germany. Currently, the growth of remittances to developing countries provides robust support to their economies. The modern level of IT technologies allows the deployment of various schemes for funds transfers: money transfers with the use of a bank account or without it, payments to the prerequisite accounts or Share of transfers in country GDP The contribution of money transfers in GDP of the countries Tajikistan Moldavia 45% 38% 20% 10% Bosnia and Herzegovina Albany and Armenia to any banking account, money transfers through a bank office or via self service terminal channel with the use of a bank card. Following the market trends, BPC offers financial organisations an opportunity to arrange a modern funds transfer system on the basis of the SmartVista processing solution integrated with the international funds transfers system Coinstar Eurasia Limited (Coinstar Group). SmartVista MoneyTransfer Module is a reliable instrument for the creation of a bank s fully fledged money transfer system meeting the highest international requirements. The solution provides a highly efficient and reliable platform to arrange an international money transfer system with the use of bank cards. Acting as a payment gateway to the CoinStar E.L. money transfer system, SmartVista MoneyTransfer Module allows for both intrabank money transfers and third party systems money transfers within Constar E.L. services. All the payments can be done with the use of a wide range of delivery channels delivering a fully fledged funds transfer infrastructure: including, ATMs, POS-terminals, mobile handsets, Internet. SmartVista MoneyTransfer module, jointly realised by BPC and Coinstar E.L., allows a bank to launch a money transfer system under its own brand with an opportunity to develop this system in the international market. Such organisation of the business provides a bank with obvious economic advantages in comparison to the usage of the third party money transfer systems, said Vitaly Vitenko, Head of Corporate Customers Relations Department, BPC Banking Technologies. Our collaboration with BPC allows Coinstar E.L. to offer our partners and SmartVista customers an innovative intrabank technology for arranging retail money transfer services in a full integration with a card management system which provides a reliable modern platform for card to card money transfers. Such an approach allows a bank to expand the spectrum of its retail services and offer its customers a unique opportunity to use a new service on the base of their payment cards, underlines Igor Kluchnikov, Senior Vice President, Coinstar E.L.

5 BPC INTERNATIONAL NEWSLETTER 2009, 7 5 publications Vasily Grigoriev: every bank, striving to strengthen its credit business, should consider implementing credit workflow technologies Interview with Vasily Grigoriev, CEO, BPC Banking Technologies Banking Technologies Magazine, 7-8, 2009 «BT»: When was SmartVista Credit developed? Vasily Grigoriev: First SmartVista Credit implementation project was realised in In order to actively develop its credit business, Security Bank, Philippines, opted for SmartVista Credit as a tool to provide full support for both card and noncard-based credit products. The implemented system was easy to manage and allowed customers to benefit from improved service levels. However, first credit workflow implementation, based entirely on the SmartVista Suite of software products, was successfully completed in The project was carried out at the large Vietnamese financial organisation DongA Bank. Prior to that, we used to integrate SmartVista Credit module with scoring, collection and CRM solutions provided by our partners - key leaders in their respective market segments. One day we realised the urgent need for our own fully-functional solution to assure product adherence to the highest industry standards and to enable us to guarantee accurate implementation dates. As a result, we came up with the cutting-edge credit workflow module which is being continuously expanded to meet both new market trends and our clients ever-changing business requirements. As more and more banks have to strengthen their operations to cut back on operating costs and drive profitability, there is a strong demand for sophisticated technology-based solutions which aim to streamline business processes and provide comprehensive data management. It comes as no surprise that credit workflow technologies are getting more and more popular in financial institutions all over the world. Filing the pinch of the global financial turmoil, banks require a system which can seamlessly integrate with their everyday business needs. By automating banking processes, workflow technologies enable banks to better manage backoffice operations and successfully launch new credit card products and services with innovative software tools. As its business grows, a bank can expand the product line to provide clients with a wider choice of options by adding new credit offerings. «BT»: What functionality does your credit workflow solution provide? Vasily Grigoriev: Designed to meet all modern retail banking needs, SmartVista Credit Module allows our customers to fully automate credit processing and to efficiently manage the complete credit cycle from credit approval and credit card issuing and acquiring down to contract finalization and collection procedures. End-to-end credit workflow translates into improved credit application processing which significantly reduces the amount of time spent on managing credit applications. Our credit workflow provides borrower classification, application processing and verification as well as borrower scoring either by using our own automated scoring model or through integration with thirdparty scoring systems. In addition to scoring systems, banks integrate credit technologies with CRM solutions. We have developed our own CRM system which can be supplied as part of SmartVista solution. However SmartVista Credit can be easily integrated with third-party CRM systems, such as Oracle Siebel CRM. Along with automated credit processing, SmartVista Credit provides notifications and reporting in compliance with the requirements imposed by regulation authorities, which helps significantly improve both accounting and fraud prevention. This is of significant importance since credit workflow is not only a means to speed up credit decisioning in order to process a greater number of applications. First and foremost, it provides an excellent opportunity to streamline all these processes and to make them more transparent to bank managers who can now track full credit related information at any time they please. The convenient web-based user interface is very easy to browse and process information. The manager can set up their webbrowser to assess full credit information by pressing only one button on the key-board. Credit workflow information can be tracked on the end-of-day basis, which is not available in a number of other systems. Moreover, due to its smart architecture, SmartVista Credit does not significantly affect other Back-Office applications. We are keen for our software solution to meet the needs of any retail bank. Based on the principle of Open Standards, SmartVista products can be easily integrated with the bank s current IT-infrastructure. Depending on specific business requirements, the bank can integrate our Credit module with most systems it exploits - CRM, scoring solutions, data bases, retail banking systems, etc. «BT»: Can the bank set up the required settings by itself? Vasily Grigoriev: BPC prides itself on providing a truly smart and flexible solution the bank can set up on its own. However, anecdotal evidence suggests, banks rarely exploit this opportunity. To take maximum advantage of the system s functionality, one should clearly understand its technological architecture and terminology, which requires a certain amount of time on the part of bank employees. Besides, some of them are unwilling to take responsibility for the actions which can lead to wrong decisions taken. This is why most of our customers tend to leave functionality setup to us. «BT»: Are you planning to further expand functionality of your credit workflow technology? Vasily Grigoriev: We are striving to provide our customers with a truly superior solution which is second-to-none. We continuously improve SmartVista Credit integration capabilities and its scoring model. We also keep developing its modern CRM system, which enables our customers to get complete client information without applying third-party solutions. BPC pays a lot of attention to mitigating fraud through advanced technological applications. We have forwardlooking plans to integrate our credit solution with SmartVista Fraud Prevention and Monitoring module, which is widely used by our customers across the globe. The comprehensive business intelligence solution combines sophisticated fraud detection technology with real time transaction monitoring to ensure timely prediction, detection and blocking of fraudulent activities. The module provides a set of mechanisms from transactions filtering to user-defined rules and neural network based monitoring to help organisations reduce losses triggered by different types of fraud. It combines the advantages of on-line and off-line fraud detection models and enables both card issuers and acquirers to efficiently track transactions coming from traditional and emerging delivery channels. In addition to that, questionnaires are regularly designed to determine customers needs and requirements which we carefully consider while developing the product. «BT»: How many of your clients use SmartVista credit module now? Vasily Grigoriev: As of today, over 50 fully-functional processing centers both in Russia and abroad capitalize on cutting-edge technological solutions provided by SmartVista which serves as a reliable platform to give retail banking business a significant boost. About 10% of BPC's clients use SmartVista Credit module. Given that the credit workflow solution is new, we consider it a good sign. «BT»: What are your plans for further implementations? Vasily Grigoriev: In the nearest 2 years we plan to realise about 10 installation projects to deliver our credit solution to both the current SmartVista users and new clients. «BT»: Are these optimistic or pessimistic plans? Vasily Grigoriev: We are talking real plans here. Read the full article in Banking Technologies magazine, 7-8, 2009

6 6 BPC INTERNATIONAL NEWSLETTER 2009, 7 publications Modern Fraud Prevention from a Bank s Point of View Alfa-Bank, Russia s second largest card issuer, shares its experience in running SmartVista Fraud Prevention & Monitoring System Extract from an interview between Alexey Golenishev, Payment Schemes Relationships, Head of Department, Alfa-Bank and PLUS Magazine #8 [148] September 2009 As is commonly known, the growth in card issuing and purchases results in increasing volumes of fraudulent transactions. Fraud management mechanisms are also constantly developing with the evolution of risk management and security tools. The statistics-based (offline) systems of fraud monitoring, which have been widely used in the financial market for a number of years have now completely lost their position. Simply detecting the fraudulent transactions after they have been completed, such solutions cannot prevent losses. In this situation a modern SmartVista Fraud Prevention & Monitoring solution designed by BPC Banking Technologies deserves our special attention. Alexey Golenishev, Head of Payment Schemes Relationships Department, Alfa-Bank, shares Alfa-Bank s experience in running SmartVista Fraud Prevention & Monitoring Module for the online detection and blocking of fraudulent transactions. The module is used by the bank as part of the fully functional processing center based on SmartVista which has been supporting all aspects of the bank s card business for over 8 years. Simply speaking, with SmartVista Fraud Prevention & Monitoring we have a construction set allowing us to flexibly set and modify our own rules for fraudulent transaction detection. Card fraud: focusing on high technologies During recent years the global card market has demonstrated continuous growth in terms of both card issuing volumes increasing by several times a year and the development of operational activity which was especially noticeable in the largest retail banks. In regard to Alfa-Bank, in the early 2000-s it supported some 100,000 cards of Visa and MasterCard brands, while our acquiring network consisted of about 100 ATMs and a thousand of POS-terminals. These figures drastically changed by the end of 2008, when the number of issued cards exceeded 5M, with the processing center supporting over 2,000 ATMs and 20,000 pos-terminals spread all over Russia. With such dynamic growth it is obvious that the fraud prevention becomes more and more essential for our bank especially with the development of fraudulent techniques based on advanced technologies. Most of such technologies are applied at the ATMs and include the implementation of skimming devices and virus software for stealing card data. Being one of the largest Russian retail banks, Alfa-Bank pays special attention to fraud prevention. Among other measures we collaborate with the Russian Association of Europay Members and contact payment schemes on the issues of skimming mechanisms or software detection. In the latter case we immediately consolidate a list of all the Alfa-Bank cards used at the ATMs where the fraud was disclosed and inform card holders of the necessity to block and re-issue their card. It is obvious that it is difficult to receive such information in time; that is where SmartVista Fraud Prevention & Monitoring Module effectively helps our Fraud Monitoring Department to fight fraud. From monitoring to online fraud prevention Looking back to the history of fraud prevention solutions, it is important to note that the initial rules of fraud prevention were created by the international payment schemes as part of their operational rules during the early days of card business development. Nevertheless the first fraud monitoring systems operated in an offline mode and simply gathered the reports on fraud operations after the fraud had already occurred. It is known that having accessed the card data, criminals withdraw money from the card account within 1 or 2 days. That is why it is essential to block the card immediately during the fraudulent transaction. Online fraudulent transaction blocking is the only way allowing the bank not to simply identify fraud but to prevent it. It is worth mentioning that the requirements of the banks towards the fraud monitoring solutions have always mainly based on the Visa Inc. and MasterCard Worldwide standards. Nevertheless, recently the security requirements of the banks have gone beyond the international payment schemes standards, as these standards have not changed much from the beginning of the century while fraud techniques have greatly evolved and go on evolving. In these circumstances, successful risk management requires modern flexible tools allowing for the bank s quick reaction to the new types of fraud through changing the rules used to detect the suspicious transactions. It is also important to remember that the fraud does not have boundaries: the data copied from a magstripe card in Russia can be used in any other region of the world. The only opposition to this rule is the bank s own experience received from its fraud prevention history. For example, if a large quantity of cards issued by a bank was used in the same shop whose database was stolen, the data of these cards can be used in any part of the world. In such a case the bank should be able to quickly create a rule to detect transactions from these cards coming from other regions and take appropriate measures to block them if they prove to be fraudulent. In comparison to offline fraud monitoring systems, SmartVista Fraud Prevention & Monitoring used by Alfa-Bank since 2008 represents a fully fledged solution for card fraud prevention. The system provides our specialists with every tool necessary for efficient and timely detection and online blocking of suspicious transactions. It allows us to quickly adjust to detect new types of fraud, ensures dramatic decrease of financial and image losses, and raises the efficiency of the bank s total security and risk management system. The module was designed to support the fraud monitoring rules developed by the international payment schemes. In addition, it allows for quick implementation of new rules as well as flexible configuration and modification when necessary. The analysis and blocking of fraudulent transactions in SmartVista Fraud Prevention & Monitoring is performed with the use of special templates, business With 5M cards issued, the estimated amount saved by Alfa-Bank thanks to the SmartVista Fraud Prevention & Monitoring system reaches 1M USD a month. rules, and so called neural networks special mechanisms working on the base of statistics and behavior models of a card holder. Business rules: flexibility and versatility The fraud detection model of SmartVista Fraud Prevention & Monitoring system based upon business rules provides opportunities for the online transaction monitoring in the process of authorization. The rules used to check a transaction can be either simple or complex. The latter are based on the estimation of the transaction parameters modifications in comparison to the preceding transactions whose data are gathered and stored within the system. The bank can set the period of the transactional history itself to ensure optimal results. Simply speaking, with SmartVista Fraud Prevention & Monitoring we have a construction set allowing us to flexibly set and modify our own rules for fraudulent transaction detection basing on the history of earlier detected fraud cases and other banks experiences. Such configuration does not require an IT specialist and can be easily done by the bank itself. As for now, we have created and implemented several scores of such rules allowing the system to classify a transaction as suspicious. Therefore, SmartVista Fraud Prevention & Monitoring is a universal and flexible solution analyzing a wide range of events against a set of operational and business rules. For example, we may receive information that the Russian cards data have been stolen in a given city. We do not know either the time of the theft or the device where it was done. Nevertheless, using only this limited information, we can upload the name of the city or the acquirer to the system after which the history of the transactions from this city or this acquirer will be

7 BPC INTERNATIONAL NEWSLETTER 2009, 7 7 analyzed during subsequent card usage. When detecting a suspicious transaction made with the card previously used in the registered city, the system will automatically send an alert to the operator which will allow the timely blocking of the card preventing a fraudulent operation. Besides the model based on business rules, SmartVista Fraud Prevention & Monitoring supports a template based mechanism for the automated checking and blocking of a transaction in accordance with certain conditions (templates) during the authorisation. This model has proven to be especially effective for the prevention of mass fraud attacks. At present we are completing the second stage of the project for SmartVista Fraud Prevention & Monitoring launch in Alfa-Bank. In the first stage we used the module in a half automated mode to test its capabilities and develop our own rules. During this stage the module analyzed the transactions with the blocking done manually by the operator. The transition to the fully automated mode is a coherent step in the development of our fraud prevention mechanisms: now the module which has already proven its efficiency and performance in detecting risks will be used to block the fraudulent authorisations basing upon a set of rules and settings. In addition to such advantages as the opportunity to use different filters for different types of transactions, reduction of charge-back operations and efficient prevention of mass fraud attacks, the implementation of this system will allow us to free up our employees time. Now they do not have to focus on high risk transactions as the system will take decisions on the required actions by itself, including the decision to block the card in the most risky cases. In the latter case it notifies the operator of the blocking who will then have the opportunity to analyse the transaction more thoroughly. publications How much can a bank save on fraud prevention? As a rule, these are only small and middle sized banks which can easily calculate their potential losses due to fraudulent transactions as well as ROI of fraud prevention systems. Nevertheless, judging from my experience, potential losses prevented after the implementation of a fraud detection solution fully justify the investments made in such solutions. Usually, such a solution covers the expenses for its implementation within the first year of operation. With 5M cards issued, in certain months the estimated amount saved by Alfa-Bank thanks to the SmartVista Fraud Prevention & Monitoring system reaches 1M USD. This figure includes the account balances saved due to the timely blocking of our cards in cases of fraud detection as well as the money saved due to the card blocking as a result of analysis of third party issuers and acquirers messages. It is crucial that even during the peak workloads our processing center based on SmartVista solution does not reach the highest level of its performance. Such performance shows the unlimited capabilities of SmartVista Fraud Prevention & Monitoring solution and its round the clock availability. Alfa-Bank and Bpc: Future development of the collaboration To conclude, I would like to underline that one of the significant advantages of the use of BPC s SmartVista Fraud Prevention & Monitoring Module is that the company quickly responds to our needs. Certainly, while selecting a solution for fraud prevention we kept in mind that both front-end and back-office systems of our processing centre are based on SmartVista solutions, which allowed us to avoid various integration difficulties. At the same time the quality and efficiency of Bpc s maintenance services deserve special praise. Any additional function or the need for system changes which cannot be realised through the inherent system s rules and settings are provided by Bpc rapidly and efficiently. I do not think any vendor providing similar solutions could react to our demands so quickly. The successful long term collaboration of Alfa-Bank and Bpc is to a wide extent a result of the vendor s flexibility and customer oriented policy. Project realisation is performed in a close collaboration: BPC is always ready to meet our requirements and needs; offering various initiatives for future development. The fact that Bpc s fraud prevention and monitoring system has proven to be so highly efficient for solving our tasks is a result of the Bpc s approach to its SmartVista Fraud Prevention & Monitoring is not an artificially created product but a solution with perfectly well-thought functionality smoothly integrated to our processing centre. development. SmartVista Fraud Prevention & Monitoring is not an artificially created product but a solution with perfectly wellthought functionality smoothly integrated to our processing centre. Alfa-Bank has extended plans for the future collaboration with BPC. As of today, the bank pays special attention to the development of such promising business as e-commerce. Alfa-Bank s processing centre has been successfully running the BPC s Internet gateway supporting our Internet acquiring network. The fraud monitoring system integrated with this gateway allows us both to ensure secure e-commerce transactions and to prepare online reports for the security departments of the acquired Internet merchants. This allows our customers to estimate the risk level of every payment transaction in a real time mode. At present BPC s team is enhancing this system by adding extended functionality. For example, we developed a special software module designed to fit the requirement of air carrier companies. This module has been adapted to make the fraud monitoring mechanism even more convenient and flexible in terms of creating new fraud prevention rules. This mechanism will be used as a coherent part of SmartVista Fraud Prevention & Monitoring Miodule which will serve the whole e-commerce business. This is a unique solution whose e-commerce fraud monitoring module will be integrated into the whole bank s fraud prevention system and will use all the models, databases and business rules of SmartVista Fraud Prevention & Monitoring solution. Architecture of SmartVista Fraud Prevention and Monitoring Module Read more at or in PLUS magazine, #8 [148] September 2009.

8 8 BPC INTERNATIONAL NEWSLETTER 2009, 7 TecHNoloGIes Double Pin technology as a means to protect cardholders against criminal assaults BPC has developed double PIN technology which can be used as an effective means to notify both the bank and the police of robbery incidents. As of today, the solution provides significant support for protecting cardholders from criminal assaults. With double PIN functionality a cardholder can change their PIN code on an ATM, so that the new PIN could be used to perform card transactions, whilst the initial PIN is limited in its use and provides a mechanism to indicate an attempted or actual robbery. In the simplest case, there might be a possibility to withdraw a limited amount of money from an ATM so as not to alert the thief, but the police will be notified that a robbery is in progress. In this scenario, further transactions will not proceed and an error message, not directly related to card blocking, will appear on the ATM screen (for example, «Card limit exceeded» or «Sorry, ATM has run out of cash»), which allows the cardholder to avoid further losses. The flexible SmartVista solution provides a sophisticated tool to manage both the system s parameters (while setting the limits of financial transactions) and various notification channels, among which are SMS, direct communication with police hotline and an electronic message to the bank s operator. The application also supports ATM status management: the machine can be temporarily out of service. All duress transactions, performed by using double PIN technology, have a number of distinguishing features, which enables the processing center operator to immediately detect them and take appropriate security measures. This technology can be realised at any self-service or POS terminal. Such intelligent solutions will allow banks to significantly enhance financial transactions security, and therefore they are in high demand all over the world, especially in Latin America, USA and Asia. «We at BPC are striving to provide our customers with the best and most effective solutions to give their card business a boost. Broad SmartVista functionality is being continuously expanded to meet the latest market trends and to offer an even wider choice of services to clients. In response to an increase in the number of robbery attempts, banks across the globe aim to take impactful measures to enhance safety of ATM users. Double PIN technology will become an effective means of protecting cardholders against violent robbery attacks», - Vasily Grigoriev, director, BPC Banking Technologies. SmartVista MediaExtension allows for enhancing quality of the retail customer servicing BPC announced the launch of a new software solution - SmartVista Media-extension. The system provides multi channel online customer support via Internet and self-service devices with the use of modern media technologies. The technology is intended for the integration of remote delivery channels self-service devices, Internet bank systems and Internet shops - with contact-centres and allows the clients to choose from a variety of communication means including video and audio connection and text messages. The solution ensures significant enhancement of retail customer servicing. SmartVista MediaExtension provides a platform that allows the creation of VoIP services with the use of SIP protocol, which are launched directly in the web-browser and apply Adobe Flash technology. Such a solution is used for the integration of Internet shops, self-service terminals, and Internet banking systems with contact centers, allowing immediate online video and audio connection of customers with representatives of a commercial organisation. Cross platform configuration, scalability, and compatibility with hardware and software of third party vendors makes SmartVista MediaExtension a really universal and flexible solution. Realised on self service terminals, the service is used for online consulting and technical support of the customers. It is activated by simply clicking the banner on the ATM or kiosk screen or picking up a phone receiver. The solution can be deployed on any self-service terminal converting it to a fully functional mini branch of a bank. SmartVista MediaExtension may be applied to support the Internet banking users and Internet merchants clients. The users do not have to install any special software which makes the service especially convenient. The customer connects to the contact center immediately through the Internet browser by a simple click on the banner located in the web site. The time to reach a specialist is optimised as the customer does not connect to the switch board but reaches directly the employee responsible for the services presented on the given Internet page. The communication can be set with the use of either audio or video technology as well as through text messages providing a customer with a freedom of choice for the most convenient way of servicing. Such communication can be initiated by both a customer and a contact centre for example to prevent the fraudulent operations with a card. SmartVista MediaExtension provides financial organisations with a new, innovative way of customer interaction, allows the reduction of fraud risks and servicing expenses, and enhances customer support quality thus raising customer loyalty. In comparison to other solutions of the kind available in the market, SmartVista MediaExtension does not require any special software to be installed on the customer s side but uses Flash technologies applied on over 98% of internet enabled PCs in mature markets as well as a wide range of devices, stated Vitaly Vitenko, Head of Corporate Customers Relations Department, BPC. The first bank to implement SmartVista MediaExtension is Sberbank of Russia the largest Russian bank, paying special attention to the development of its retail business. The bank first demonstrated the new technology to the global financial market at its stand during the St Petersburg Economic International Forum 2009 where the technology was a success and was highly praised by specialists. SmartVista MediaExtension will allow Sberbank to raise its customers servicing to a new quality level, providing them with timely consulting and technological support and thus contributing to the popularity of cashless payments and self-service devices with the bank s customers, states Evgeny Kublanovsky, Head of Bank Card Department, Sberbank of Russia. BPC BANKING TECHNOLOGIES INTERNATIONAL NEWSLETTER 7, 2009 Address: Bld. 2, 50A/8 Zemlyanoy Val St., Moscow, Russia, Tel.:+7 (495) Fax: +7 (495) [email protected] Editor: Irina Uzhegova Design and page layout: Dmitry Churilin