Remote Deposit Capture Leveraging RDC as a Payments Platform Presented By: Ed McLaughlin, Executive Director RemoteDepositCapture.com
A Unique Perspective RemoteDepositCapture.com is an independent information & services resource for the Payments Industry. We are NOT a reseller, solution provider, etc. We ARE experts in, and an open resource for the industry. We work with the vast majority of leading solution providers, FIs, processors. Thousands of FIs, corporations, businesses and consumers visit the site each month. We were directly involved in the formulation of the guidance and training of hundreds of auditors. Services News & Research RDC Marketplace Solution Provider Directories RDC Overviews White Paper Central FREE Webinars, and more. Contacts: Ed.McLaughlin@RemoteDepositCapture.com 2
Agenda Definitions RDC Payments Hub Application Overview RDC Architecture & Process RDC Payments Hub Architecture & Process Business: Drivers Challenges Timing Benefits Role of Standards 3
Payments Hub Definitions Remote Deposit Capture The definition has been in the past associated with only the check. Refers to a platform and the process of electronically capturing check images and data, transmitting that information for deposit and clearing, and truncating the original paper checks. This definition has been evolving to include additional payment types, including card payments. There are many differing views of what a Payments Hub is and therefore as many definitions. Our version is: A payments hub is an engine that initiates and receives electronically multiple types of payments, processes those payments, settles and disburses funds as required in the most timely and cost effective method available. 4
Payment Application Overview The Problem is that there are multiple payment types and multiple reports that a business has to manage PAYMENTS LOCATIONS DEPOSITS BANK Corporate Financial Application/AR REPORTING Checks/ Money Orders Regional Offices Credit Card Files Credit Card Processing AR Cash Position Cash Credit Cards / Wires Web/Tel Electronic Checks LockBox Etc. International Locations Portal/Web ACH Credits RDC ICL & Stranded Payments Files Smart Safe Electronic Deposit ACH Processing RDC ICL & Stranded Payments Files Smart Safe Electronic Deposit Processing Treasury Financial Application Credit/Risk Exposure GL Reporting (Business Objects / Data Warehouse) Manual Reporting 5
Payment Application Overview The Answer is a single bank platform that manages all payment types and produces a single report that a business can ingest into its systems PAYMENTS LOCATIONS DEPOSITS BANK Corporate Financial Application/AR REPORTING Checks/ Money Orders Regional Offices Credit Card Files AR Cash Position Cash LockBox Etc. ACH Credits Consolidated Reporting (IS0 20022) Treasury Financial Application GL Reporting (Business Objects / Data Warehouse) Credit Cards / Wires International Locations RDC ICL & Stranded Payments Files Credit/Risk Exposure Web/Tel Electronic Checks Portal/Web Smart Safe Electronic Deposit 6
Remote Deposit Capture Component Architecture Source Capture Devices Desktop Terminal Flatbed PDA/Mobile Desktop Scanner High Speed Sorter Payment Types Check 7
Remote Deposit Capture Component Architecture Source Capture Devices Desktop Scanner High Speed Sorter Payment Types Check Capture Applications Remote Client (RC) Branch LockBox ICL Corporate Correspondent 8
Remote Deposit Capture Component Architecture Credit/Risk Source Capture Devices Desktop Scanner High Speed Sorter Payment Types Check Capture Applications Remote Client (RC) Branch LockBox ICL Corporate Correspondent Authentication Validation/Risk Review Transaction Processing Landing Zone Data Perfection Operations Routing Engine Files Transaction Data Base 9
Remote Deposit Capture Component Architecture Credit/Risk Archive System GL System DDA System Source Capture Devices Desktop Scanner High Speed Sorter Payment Types Check Capture Applications Remote Client (RC) Branch LockBox ICL Corporate Correspondent Authentication Validation/Risk Review Transaction Processing Landing Zone Data Perfection Operations Routing Engine Posting Credit Risk Image Files Transaction Data Base Characteristics: Point to Point Interfaces Many Shared Services: Routing Database Authentication ACH Network Direct Send Partners Image Exchange Network (send) The Fed Customer Reports On-Us 10
RDC - SOA (Service Oriented Architecture) Shared Services Messaging, Orchestration, Process Data Management/ Registry & Repository Database 11
RDC Payments Hub (SOA) Customer Web Based Channels (Transaction Based) Treasury Systems OFAC/AML Other DDA/ GL Payment Types Check Card Cash ACH Wire Swift SEPA Corporations Merchants Branch ATM POS/PDA/ Mobile LockBox ISO Device Drivers Management Operations IQA/Validation Normalization Reporting & Analytics (BI, Dashboards) Shared Services Risk/Fraud (GRC) RDC Payments Hub (Messaging, Orchestration, Process) Data Management/ Registry & Repository Security & Entitlements Payment Types Check Card ACH Wire Swift SEPA Correspondent Message Types Cash Vault Batch Channels (File Based) Payments Customers Business Processes Image Archive Payment And Deposit Processing Plus Initiation 12 Message Types
RDC Payments Chain RDC Payment Lifecycle Setup Initiation Receive Processing Risk Management Clear & Settle Posting Reporting Identify Acquire Setup Check EDI Swift Web ATM Mobile Tel IVR Authorization Entitlements Validation IQA Acknowledge BPM Process Normalization Translation Perfection BPM Mapping (Legacy Systems) Routing Protocol Service Activation Risk Exposure Duplicate Detection OFAC Fraud BSA/AML PCI SOX GLB FFIEC Check ACH Wire Card International On-Us Update Accounts Archive Customer Reports Post and Balance BI Dashboard/Monitor 13
RDC Payments Hub Business Drivers Financial Institutions Convergence of Payment types Reduces costs, aggregation of transactions across payments channels Improve customer service, through better reporting and improved clearing Share data (information) across multiple applications Improves information management Transparency Improved GRC risk management and fraud prevention Competitive - Faster cycle time to introduce new products and services Corporations Integration into ERP and Financial Applications SAP, Oracle, etc. Purchase to Pay lifecycle management Unified process flow Efficiencies and cost reduction Reduced DSO Improved availability/cash flow 14
FI Business & Infrastructure Challenges Operational Silos Multiple Legacy Systems Independent adoption of technology and applications by line of business Point to Point Interfaces TREASURY RETAIL CASH CARD WIRE DDA ACH ATM TECHNOLOGY OPERATIONS INTERNATIONAL Multiple Applications Providing Similar Solutions Multiple data sources and inputs Multiple currency and output file formats Multiple GRC (Governance Risk and Compliance) requirements Evolving standards - ISO 20022 15
RDC Payments Hub Implementation Strategy Be transaction agnostic ACH Wire Cash Swift Check Card Sync RDC investments with Hub strategy Front Office Back Office Investment Timing Build strategy by point of entry Lock Box Corporate/ Merchant ATM Branch Teller Item Processing 16
Benefits in an RDC Payments Hub Uniform User Interface (UI) for use with all applications Processes can be reused to support multiple payment sources and types Efficiencies and the elimination of duplicate processes and applications More effective and comprehensive Risk Management Better Customer Service and more Transparency Agility Faster response to the market It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change Charles Darwin 17
Evolution of Standards Convergence in the Cooperative Space Competitive Space Cooperative Space Competitive Space Financial Institutions High Value Payments: RTGS, EURO1 and CHIPS FX and Money Markets: Rule Books, CLS Financial Institutions Public Administrators Corporates Commercial Payments: Rule Books, Clearing Houses, Processors Cards: Rule Books, Card Schemes, Cards Processors Public Administrators Corporates SME s Merchants Bank A Tradefacilitation: ICC Rule Books, e-invoicing Cash: NCB rules, Industry Standards Securities: Rule Books, Exchanges, CCP s CSD s, Standardisation Bank B SME s Merchants Consumers Certification & Networks: NACHA SWIFT Consumers Source: ISO 20022 Cooperative space for business rules Cooperative space for standards 18
Questions? 19