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Driving Innovation in payments Philip Gomm Director, Capgemini Tuesday 10 th September 2013

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Page 1: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

Driving Innovation in payments

Philip Gomm

Director, Capgemini

Tuesday 10th September 2013

Page 2: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

2 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Driving Innovation in payments is the result of „alignment and interplay‟ of at least six aspects pivoted on „Proposition play‟

2

3

1

6

5

4 Proposition / Product

Ambition

Customer Needs Regulation

Platform

Process

Efficiency Frontier (Internal Innovation)

Innovation Frontier

4a Collaboration

Page 3: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

3 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

For the chosen customer base, understand Vanilla and Value-added needs

1

Customer Needs

Product mix

Product access

Convenience

Consumption embedded to into normal life

Smooth on-boarding and management

Insight

Customised Vs Canned

Need ?

Today‟s value add is tomorrow‟s vanilla

Velocity

Resilience

Transparency

Page 4: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

4 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Regulation is Rhyming (if not repeating) 2

Regulation

Component View

Capital

Bu

sin

ess

Mo

de

l P

rod

uc

t

Licensing

Pricing

Features / Options

Reporting

Processing

Pro

ces

sin

g Origination

Security

Alternative Payments

Account Access

Section 1073

Durbin / EC

EU - PAAS

AML

FATCA

PSD

RTP

Mature Markets Emerging Markets

UK Bank Account Switching

PSD 2

Basel ii / iii

Access

Transpar

ency

Switchin

g

Pricing

Standard

Segregate „in radar‟ and „off radar‟ propositions

Interchange

Switching

Acquiring

RTP

Page 5: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

5 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Time to make choices 3

Ambition

Based on your competencies and view of industry, what would you like to do ?

Page 6: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

6 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

The expanding payments universe 3

Ambition

Source: Capgemini research and analysis, 2011

Bu

sin

ess

Mo

del

(V

alu

e p

rop

osi

tio

n)

His

toric / A

s-is

To-b

e / N

ext g

en

“As-Is proposition” of banks Payments and cards mainly

delivered and processed in

the inter-banking space

‘Derivative’ transformation Build on existing network/

clearing infrastructure to

transform value proposition

combine with a newer delivery

channel. Traditional players

react through partnerships and

innovation

Operating Model (Delivery capability, scale, good practices etc)

Historic / As-is To-be / Next gen

‘Disintermediation’ transformation

Newer players bypass banks,

card networks to engage

customers directly with alternate

options (payments and funding).

Traditional players react through

partnerships and innovation

‘De-leverage’ transformation Traditional players engage in

transformation like Hubs,

outsourcing, etc., as part of their

cost-focussed strategy while

building/running their revenue-

focussed strategy

Va

lue

Ga

me

Volume Game

D1

D2

D3

Page 7: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

7 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Successful payments innovators have to choose specific innovation value spaces / propositions

Corporate Payments Common Retail Payments

„Lend‟ the Money Money Lending

„Be‟ the Money Virtual Currency

„Change‟ the Money Currency Conversion

„Store‟ the Money Prepaid Cards

„Move‟ the Money Money Transfer

„Analyze‟ the Money Payment Analytics

„Secure‟ the Money Security Services

„Process‟ the Money Payment Processing

„Risk‟ of Money Risk Management

„Time‟ the Money Information VAS

„Match‟ the Money Trade/Supply Chain Mgmt

„Manage‟ the Money Treasury Management

1

2

3

4

5

6

7

8

9

10

11

12

4

Proposition / Product

Chosen „Value Space combination‟ will define roadmap for downstream capabilities

Page 8: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

8 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Product harmonisation is important to steer away from pitfalls of „lift and drop‟ and aligning Platform and Process to the Innovation agenda

Product 1 specific component Product 2 specific component

Product n: specific component

Common component Option

Product Harmonisation Benefits

• Reduced time to market

• Reduced development cost

• Group liquidity savings

• Lowered transaction cost

Product Harmonisation Challenges

• Poor understanding of existing functionality (customer/country)

• Lack of awareness about specificities

• Identification of shared components

Clearing Channel

Routing Criteria

Account Management

User Access &

Reporting Pricing

Execution &

Cut off Times

Exception Handling &

Customer Service P

RO

DU

CT

AS

-IS

PR

OD

UC

T

TO

-BE

4

Proposition / Product

Page 9: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

9 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Across markets „Collaborative models‟ are re-defining product / price / processing equations

4a

Proposition / Product

Industry-wide "dynamic credentialing" system that will improve the safety of digital payments.

Collaborative model for ‘shared’ ATM infrastructure

India

EU

(MyBank)

Sweden

US

(TCH)

Guaranteed SEPA Credit Transfer SEPA Direct Debit mandate (create,

modify, cancel) for a: One-off collection, Variable amount, Fixed amount, Fixed number of collections

Payment on delivery Person-to-person payment Transactions outside the euro area Subscription to e-invoices E-identity services Confirmation that the buyer is over 18

IMPS

AEPS

White label ATM

NACH

• Emerging Utility Co as an APCA led industry response to the RBA Innovation in Payments agenda

• NZ Paymark initiative • Bpay and ePal shared infrastructure future overlay service models

AU

Page 10: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

10 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Lean principles come in handy to align payments operations to „new-age PSP cost models‟

Waiting Overproduction Re-work Motion& Transport

(Over)-Processing Inventory

Waiting for

FX conversion rate

Fiat approval (overdrawn)

AML compliance clearance

customer on-boarding / entitlements

Lack of work balancing over time causing ‘feast or famine’ environment

Statementing – e statement and physical statement to all types of customers (follow-up with a call?)

Customer complaints

Repair (non-STP)

Incorrect billing

Writing transaction case histories on emails (e.g. Investigations)

Incorrect static data maintenance (holiday etc)

Manual processing when automation is available (less cumbersome ?)

Movement of paper

Scanning and sharing transaction

archival and retrieval

Re-keying same data in multiple systems.

Customised reporting (beyond SLA/TAT)

Inter departmental handover processes

Audit compliance – concurrent audit, BU audit , risk audit etc -

Un-processed transactions

Missing transactions

Referring to information on contracts,

5

Process

Page 11: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

11 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Pro

du

ct

Lea

de

r

Distributor Utility/Processor

Ph. 0 (Decision/ Foundation)

Phase 1 (Must Have) Phase 2 (Differentiators)

Differentiating Leadership

Position in one of Six Models

Strategic (or Design)

Tactical (or Execution)

Balance Sheet Driven Risk Management

Regulatory Compliance

Customer Segmentation

Customer Driven Product Design

Product Mix Product

Innovation

Relationship Pricing

Product Pricing

Multi-Channel Experience

Leading Channel Capability

Front Office Integration

Back end Integration

Channel Investment Decisions

Current Transaction Speed

System Downtime

Technology Innovation

Transaction Volume

System Security

Operating Margin

Data-driven Compliance

Data-driven Market Intelligence

System Scalability

Independent Network

Standard Products

Time to Market

Channel Analytics Channel Delivery Excellence

Highest Service Levels

Rationalize IT

Make decision on future model

Improve BI

Capgemini has developed a two tier „Must Have‟ & „Differentiators‟ approach to help guide program priority definition

Source: Capgemini Analysis, 2012; Capgemini 2012 Global Retail Banking Executive Survey

Transform to a new

technology landscape to

bring the “must haves”

on a sustainable level

Strict governance

model not to include any

differentiator (at least as

a starting point).

6

Platform

Page 12: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

12 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Client propositions are „transcending‟ traditional product boundaries with „Platform to Platform‟ alignment the key

6

Platform to Platform

Rationalize product portfolio

Define roadmap towards Bank of the Future

Final check: Decommission legacy system?

Adopt the DNA of your package

Adopt the concepts of SOA

Use Process Reference Models

Reduce the number of products by i.e.

50%

Redesign your products based on the

services provided by the package

Reconsider your customer

segmentation

Concentrate on Must Haves

Select product-customer combinations

that require no enhancements from

vendors

Design procedures and teams for a

factory based approach

No scope change after “ordering”

Concentrate on the product services

provided by the package

Re-use the the functionality build-in

on request of your competitors for

free

Regulatory upgrades are “pushed”

For each legacy system has to be defined

when it is fit for decommissioning

Roadmap includes separate

decommission projects

Decommission projects require a

significantly different skill set

The connectivity principle of the new

“Landing Strip” approach

Say good-bye to point-to-point

interfaces.

Enables you to leap-jump in the future.

TOM design based on

Process Reference Models of

Capgemini

Model Bank processes of the vendor

Current way of working takes 40 years of

legacy processing into account

Payments

Core banking

Page 13: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

13 Copyright © Capgemini 2012. All Rights Reserved

Presentation Title | Date

Driving Innovation in payments is the result of „alignment and interplay‟ of at least six aspects pivoted on „Proposition play‟

2

3

1

6

5

4 Proposition / Product

Ambition

Customer Needs Regulation

Platform

Process

Efficiency Frontier (Internal Innovation)

Innovation Frontier

4a Collaboration

Page 14: Driving Innovation in payments - FST Mediafst.net.au/sites/default/files/file/conferences/presentations/5_11... · Driving Innovation in payments Philip Gomm ... Capgemini 2012 Global

The information contained in this presentation is proprietary.

© 2012 Capgemini. All rights reserved.

www.capgemini.com

About Capgemini

With more than 120,000 people in 40 countries, Capgemini

is one of the world's foremost providers of consulting,

technology and outsourcing services. The Group reported

2011 global revenues of EUR 9.7 billion.

Together with its clients, Capgemini creates and delivers

business and technology solutions that fit their needs and

drive the results they want. A deeply multicultural

organization, Capgemini has developed its own way of

working, the Collaborative Business ExperienceTM, and

draws on Rightshore ®, its worldwide delivery model.

Rightshore® is a trademark belonging to Capgemini