RETHINKING CARDS BUSINESS Erick Ho, Head of Payment Services, SunGard 17 September 2015 Break through.
Agenda 01 02 03 04 05 Trends and Growth in cards and payment business Sharpening Business Focus The Need for secure payments Card payments Analytics SunGard can help 2 Rethinking card business
01 Trends and growth in card business
Global cards and payment market 46% 46% OF THE WORLD POPULATION IS UNBANKED UNBANKED POPULATION 48% 48% CONSUMERS USE CREDIT CARD TO MAKE PAYMENTS WHEN MAKING ONLINE PURCHASE IN 2014 CONSUMERS USE CREDIT CARD WHEN MAKING ONLINE PURCHASE 1 IN 10 CONTACLESS PAYMENTS 4 SunGard Confidential PREPAID CARDS SOARS 200% DEBIT CARDS REPRESENT PAYMENTS 1 IN 3 1 IN 3 OF ALL PAYMENTS * CNBC, Apr 2015 * Cards International, Sept 2015
Cards and payment market in the Philippines World s 12 th most populous country ~8 million credit cards issued ~36 million debit cards issued 100M prepaid cards growth at a CAGR of 17% ~4 million in circulation: of those, ~3 million with 1 card and ~1.5 million with multiple cards 23% bad credit averagely Average interest rate 15% among the highest in the world 5 SunGard Confidential * Timetric 2014, 2015 * Informa research
The Philippines: huge potential for payments * DataMonitor Financial 2013 6 SunGard Confidential
Market drivers summary Macroeconomic Fundamentals GDP Growth Decreasing inflation pressure Business drivers Growth in ecommerce market Retail sales POS terminal connectivity Evolution of payments 48% Infrastructure drivers Increasing smartphone users CONSUMERS Growing USE number CREDIT of ATMs CARD TO MAKE PAYMENTS WHEN MAKING Increasing number of POS terminals ONLINE PURCHASE IN 2014 Enhanced security features Rising internet usage New technology DEBIT CARDS REPRESENT 1 IN 3 Consumer drivers Lifestyles OF & ALL spending PAYMENTS habits Banked, Underbanked and Unbanked Innovations Security 7 SunGard Confidential
Growth opportunities Macroeconomic Fundamentals Selling beyond plastic Cross-sell, up-sell Non-card customers Analytics Location-targeted marketing campaign Co-branding, White-labelling Business drivers Customer retention through Loyalty/Rewards 2.0 & Purchase through points Bonus programs Flexible instalment programs Real time customer alert Fraud, payments, re-payment, anniversary 48% Infrastructure drivers Strengthen non- credit card strategy CONSUMERS Digital payments USE CREDIT transformation CARD TO MAKE PAYMENTS WHEN MAKING ONLINE PURCHASE IN 2014 DEBIT CARDS REPRESENT 1 IN 3 Consumer drivers Targeting the underbanked and unbanked OF ALL PAYMENTS with cardless payment tokens Need for secure payment, better security measures & Fraud handling 8 SunGard Confidential
02 SHAPENING BUSINESS FOCUS
Sharpening business focus Target Customer Segments Products & Services BUSINESS MODEL Distribution Channels Technology OPERATING MODEL Processes Organization & People 10 SunGard Confidential
The four corners Cardholder Merchant Issuer Acquirer 11 SunGard Confidential
Acquirer Merchant Cardholder Merchant Issuer Acquirer Merchants Perspective Cash Flow Minimize dispute Staying Relevant Acquirers Perspective Merchants Compliance Innovation Cost 12 SunGard Confidential
Trends for Acquirer - Consolidation of processing platforms and processing infrastructure - Delivering value-added services to Merchant - Increased focus on fraud detection and prevention to minimize merchant losses 13 SunGard Confidential
The evolution of payment token 1970s 1990s EMV/ Smart Cards 2000s Contactless/ Secured Card 2010s & Beyond Cardless?? Magnetic Stripe 1950s Plastic Card 14 SunGard Confidential
Digital payments Trends The shifting landscape from physical to digital Payment Innovation - Contactless adoption - Mobile point-of-sale (mpos) - Mobile payment (NFC/BLE) - Offline Security Measures - Cloud-based payment solutions through Digital Issuance, Tokenization & HCE Supply chain integration - End-to-end digital procurement - Retail innovation & Retailer apps - Real-time payments - Micropayments - Crypto-currencies 15 SunGard Confidential
Digital payments ecosystem Cloud Cardholder Plastic Card Mobile Apps Digital Wallets Card Info - Card#, CVV, expiry date, credit Press The Button - Purchase - Decline - Refund Issuing Bank Merchant Retailer Apps Online Shop 16 SunGard Confidential
Issuer Cardholder Cardholder Merchant Issuer Acquirer Cardholders Perspective Value Secure Convenience Issuers Perspective Cardholders Compliance Innovation Cost 12 SunGard Confidential
Trends for Issuer - Increased security measures for customers to prevent online fraud, and Identity Thief - Rise of EMV - Increased innovations in Mobile Commerce with the introduction of Mobile Wallet - Deliver value-added services to cardholder 18 SunGard Confidential
Personalization New norms in the industry Satisfying the emotional appeal Suitable for all cards type Push for Prepaid or Gift cards On-demand payment cards Personalization with an attitude Attracting underbanked and unbanked like Gen Y/Z Online card acquisition with personalization capability 179% more profitable 19 SunGard Confidential
Quick facts about Personalization Cardholder acquisition 15% increase in acquisition rates over non-personalized card Activation rates 50%+ increase over the non-personalized card activation rates Cardholder retention 3% lift with rates of cardholder retention Increase wallet share 30%+ increase of transactions 10% increase of balances 15-20% increase of card usage ** Source: Serverside Group 20 SunGard Confidential
Selling beyond plastic All in one card ewallet End-to-end convenient Digital Coupon Cross Sell, Up Sell Marketing Focus from the values/benefits and not from the card when selling - Prepaid multi currency card (multiple or unlimited different currencies) - The Travel Money card provides practicality and security to travellers who can now purchase foreign currencies for loading onto their cards when exchange rates are low - Can also use the card to withdraw money in local currencies from ATMs worldwide 21 SunGard Confidential
03 The need for secure payments
Payments regulations and compliance - Payment Associations - PCI-DSS/ PA-DSS - Central bank regulations - Internal compliance regulations - International guidelines - KYC & Credit Check - EMV 23 SunGard Confidential
Credit card fraud Compliant doesn t mean SECURE, fraud came in many faces - Card not present transactions - Identity Thefts - Skimming Manually or Electronically - Stolen Card - BIN Attack - Tele Phishing Famous credit fraud attacks - In 2012, about 40 million sets of payment card information were compromised by a hack of a major software company - In 2013, about 40 million credit cards were exposed due to a breach of systems at a major retail company - In 2014, about 56 million credit cards were compromised due to a breach of payment systems at a major retail company 24 SunGard Confidential
Statistics * Nelson report 2015 * The AP Card Association 25 SunGard Confidential
Ensuring security Regulator Regulations to fight misuse & fraud Consumer protection law Technological features EMV 3-D Secure Strong authentication BillGuard Secure Credit Card Merchants PAN truncation not displaying the full number on receipts Tokenization (data security) not storing the full number in computer systems Perform geo-location validation, such as IP address Use of Reliance Authentication Card issuers Fraud detection and prevention software Multi-factor & Multi possession-factor Authentication Out-of-band Authentication Industry information sharing about known fraudsters and emerging threat vectors 26 SunGard Confidential
04 Card payments Analytics
Card payments analytics Product & Segmentation Value, behaviors and needs/lifestyle segmentation to help create better product offer and target market Revenue & pricing Tying pricing to pricing and product strategies Select and implement a pricing and billing solution to execute business strategy Cost of Service & Quality Capture as-is costs and compare with bank and industry benchmarks Enabling the realization of right first time Fraud & risk management Reduce the incidence of fraud by combining control process definition with skills in leading industry platforms for risk management Enable value-added services Building a body of knowledge from customer data points can help structure value-added services (VAS) and provide opportunities for cross selling 28 SunGard Confidential
05 SunGard can help
Online status update, online enquiry & batch interface Switch Driver SunGard Card Management Solutions AMBIT OMNICARD AMBIT ATM MANAGER Back Office System (BOS) Merchant acquiring Merchant Account Payable (MAP) Front End Processor (FEP) Access Control ATM Management & Switching AMBIT 3D Protect Card issuing Core Configuration Access Control Server Customer Profile Account & Billing Application Processing Customer Services Credit Authorization Customer Services Merchant Plug-in POS, Payment-Scheme and Domestic Network Payment Plan Account Collection POS Manager Share modules Fraud Monitoring Access Control Core Configuration Incident Management Domestic payment network Dispute & Chargeback Loyalty Program Recurring Payment Event Alert Incident Management Event Alert Banking Switch / Channels Payment Analytics
One-stop solution Covers all stages in card application including application review, approval, card account setup & card behavior setting One-stop Card Payment Needs Covers all stages and payment schemes in card payment processing including switching, authentication, authorization, risk management & transaction alerts Retains and deepens customer and merchant relationship with loyalty programs, bonus programs & automated fraud incident Built-in collection capability to facilitate quick recovery of outstanding customer balances Installment plan and recurring payment to cover all card business areas Consumer / corporate card, prepaid, postpaid, gift card, etc. Fraud monitoring, incident 3D protect, secure token Billing cycle, transaction and fee posting, statementing Ageing, account classification and allocation, account movement Merchant details, terminal details, merchant settlement and payment Application Card Processing Fraud/ Protection Customer Alert Customer Billing Reward Collection Customer Services Merchant Management Others Switching authorization, risk management, transaction logging Transaction alert & notification via SMS/email Reward points, cash rebate, lucky draw, gift redemption Customer dashboard, cash management Installment plan, recurring payment, marketing programs
Competitive edge Rich in products and services support Open technology Comprehensive card and payment processing functionalities Allows banks to quickly set up new card products, new merchants and new payment services Supports all payment association schemes Supports authentication for magnetic stripe card, EMV card contactless card and many more Built on open technology and supports 2 main commercial database (DB2 & Oracle), allowing banks to ride on their existing technology platform and provide wider range of deployment options Comprehensive and complete card and payment processing functionalities enable banks to quickly launch payment cards business and payment services Meet various business requirements easily with flexible customer account structure and merchant account structure Provides add on modules that helps banks to improve their customer satisfaction such as Loyalty and bonus scheme, event and alert, fraud detection and incident management, as well as dispute and charge back 32
Salamat! Questions. 33 SunGard Confidential