YOUR BANK & THE PAYMENT SYSTEMS - Kevin Christensen, SVP, SHAZAM Network - Acting Executive Director, US Faster Payments Council - Bank Holding ...
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YOUR BANK & THE PAYMENT SYSTEMS Kevin Christensen, - SVP, SHAZAM Network - Acting Executive Director, US Faster Payments Council
DISCLAIMER
This presentation and the information contained
herein are classified as confidential and shall not
be divulged, copied or distributed without the
express prior written consent of SHAZAM.
This presentation is based on industry and
financial information available at the time of its
creation; this information may be subject to
change at any time.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general
• Strengthening community financial institutions
• Member-owned and controlled
• Making sure your voice is heard
• Choice and flexibility promoting interoperability and nondiscriminatory access
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general
PAYMENTS INDUSTRY TRANSFORMATION
Proprietary & Confidential.
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Confidential.
SHAZAM, © Inc.
2019AllSHAZAM,
rights reserved.
Inc. All Information
rights reserved.
is of Information
general
PAYMENTS DEVICES
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SHAZAM,&Inc.
Confidential.
All rights reserved.
© 2019 SHAZAM,
Information
Inc.
is All
of general
rights reserved.
applicability
Information
and
PAYMENTS INDUSTRY TRANSFORMATION
Security not Make it
my problem easy
Consumer Make it fast
I want it when
I want and how
I want
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability and
CORE DYSFUNCTION JUNCTION
IS THERE A SOLUTION?
JUST MAKE
IT WORK!
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability and
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information
current asisofofdate
general applicability
of presentation.
THE BIG GET
BIGGER AND
YOU’LL HAVE THE
OPPORTUNITY TO
PAY MORE
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general
CONCERNS AND CONSIDERATIONS
MILLENNIAL
CONSIDERATIONS
Proprietary & Confidential.
Proprietary © 2019
& Confidential. SHAZAM,
© 2019 Inc.Inc.
SHAZAM, All rights reserved.
All rights Information
reserved. is ofisgeneral
Information applicability
of general and
applicability
current as of date of presentation.FUTURE OF CONSUMER ACCOUNTS?
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability andINDUSTRY INFLUENCE
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalTHE POWER OF TECHNOLOGY
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability andTHE INFLUENCES — MARKET STRENGTH
Rules complement
technology and Ownership of
security to restrict EMVCo
competitive choice
Market influence over Ownership of
hardware vendors PCI
Ownership of
the BIN
Proprietary & Confidential. © 2019 SHAZAM, Inc. Information is of general applicability and current as of date ofINFLUENCE HAS IMPACT
Technology
influences New fees for
route of the issuers
transaction
Fees are used Reduced
as incentives to margin and
merchants profit
Proprietary & Confidential. © 2019 SHAZAM, Inc. Information is of general applicability and current as of date ofWHY THIS MATTERS
Propensity to let the market determine outcome
Not a bad thing, but not a good thing
What has history shown us?
Efforts to circumvent routing choice during the
deployment of new technology
Current “security tech” deployed is not working
Ahead vs. behind
No freedom to develop
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalIMPACT ON FASTER PAYMENTS
WHAT IS “FASTER”
Another development similar to what we have experienced in the past
Security, EMV, Mobile, Tokenization
Not contrived technology but fundamental (e.g. text messaging)
Is there a problem your institution needs to solve?
How does “Faster” fit into your strategic and tactical plans?
Where’s the industry heading and how does it fit with your institution?
What solutions are there?
Leverage existing systems – already here
New rails – TCH RTP
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalProprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general
The Reality:
Choice in faster
payments has been
harmed by network
fragmentation and
institutions that refuse
payments
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalProprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability and
Proprietary & Confidential. © 2019 SHAZAM, Inc. Information is of general applicability and
current as of current
date as of date of
of presentation.WHY “FASTER” TACTICAL
Business Value
Shorten receivables easier to manage working capital
Reduce back-office costs.
• Efficiencies in exception management and improved posting and
reconciliation of invoice-related information associated with the
payment.
• As ISO 20022 standards are widely adopted, businesses will be
better equipped to integrate payment data with their enterprise
resource management (ERP) systems for further treasury efficiency.
Information that flows with the payment transactions. Allowing
straight-through processing and better data management to make
operational decisions. Where’s the industry heading and how does it
fit with your institution?
Improved security and fraud protection due to “push” transactions and
tokenization.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalWHY “FASTER” STRATEGIC
How critical are payments to your institution?
Offense vs. Defense
Millennials
The FedEx / Amazon Effect
Beware “wait and see” ----Blockbuster Video
“The one that enrolls is the one that controls”
Richard Crone
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalProprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general
DIGITAL STRATEGY
VISION
Be the primary experience and
content partner between our
clients and their consumers
OBJECTIVE
An integrated consumer
experience providing
convenient access to mobile
banking and card management
capabilities
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability and current
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved.asInformation
of date of presentation.
is of generalFASTER PAYMENTS - RTGS
SHOULD
MY
INSTITUTION
WAIT?
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability andTCH RTP BUSINESS PRINCIPLES
Recognizing the unique position of the RTP®
network in the current U.S. payments market as
the only provider of faster real-time clearing and
interbank settlement, the Supervisory Board of The
Clearing House Payments Company L.L.C. (TCH)
has determined and directed TCH to operate and
maintain the RTP network in accordance with the
following principles:
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalTCH RTP BUSINESS PRINCIPLES
Every federally insured U.S. depository institution
is eligible to directly participate in the RTP
network in accordance with publicly available,
nondiscriminatory eligibility requirements.
TCH runs the RTP network as a utility for the
benefit of the industry and RTP fees shall
continue to be flat for all participants regardless
of size, and shall not include volume discounts or
minimum volume requirements.
The RTP rules, message specifications, use
cases, and other educational resources are and
shall remain publically available.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalTCH RTP BUSINESS PRINCIPLES
The RTP network is designed and shall be
maintained to promote safety and efficiency, and
to support the stability of the broader financial
system and other relevant public interest
considerations.
The rules, overall strategy, and major decisions
related to the RTP network shall reflect
appropriately the legitimate interests of its direct
and indirect participants and other relevant
stakeholders.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalTCH RTP BUSINESS PRINCIPLES
To ensure relevant stakeholder interests are
considered in the governance of the RTP
network, TCH shall
(i) establish one or more advisory committees with
representation from non-TCH owner stakeholders (e.g.,
corporate end users, community banks and credit
unions, consumer advocates),
(ii) participate in the Faster Payments Council,
(iii) periodically solicit input on the RTP rules, and
(iv) actively engage with regulatory agencies charged
with responsibility for consumer protections, and safety
and soundness of the financial sector.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalTCH RTP BUSINESS PRINCIPLES
All major decisions concerning the RTP network
will be clearly disclosed to relevant stakeholders
and, where there is a broad market impact, the
public.
These principles apply so long as the RTP
network is the only provider of faster real-time
clearing and interbank settlement.
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalIBUPROFIN FOR THE
HEADACHE
And the fight for standardsHOT ON THE LEFT, COLD ON THE RIGHT?
Proprietary & Confidential.
Proprietary
© 2019&SHAZAM,
Confidential.
Inc.©2018
Information
SHAZAM,
is of general
Inc. Information
applicability
is ofand
general
current
applicability
as of dateand
of cuHOT ON THE LEFT, COLD ON THE RIGHT!
Proprietary & Confidential. © 2019 SHAZAM, Inc. Information is of general applicability and current as of date ofSTANDARDS ARE IMPORTANT!
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of general applicability andWE THE PEOPLE FINTECH
FINANCIAL INSTITUTIONS GOVERNMENT
Proprietary & Confidential.
Proprietary©&2019
Confidential.
SHAZAM, © Inc.
2019AllSHAZAM,
rights reserved.
Inc. All Information
rights reserved.
is of Information
generalProprietary & Confidential. ©2016 SHAZAM, Inc. Information is of general applicability and current as of date of presentation.
ENGAGEMENT And how you can get involved!
SOLVING THE ISSUES
WE ALL NEED TO ENGAGE
Issues are important to all of us
Community institutions need your voice
Your accountholders need your voice
Grassroots, grassroots, grassroots
Partner with those advocating on your behalf
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalADVOCACY AND POLICY
SHAZAM is engaged with stakeholders to
educate everyone on these issues
Federal agencies
Elected officials
Our financial institution members
Proprietary & Confidential. © 2019 SHAZAM, Inc. All rights reserved. Information is of generalBe Part of the Faster Payments Future Introducing the U.S. Faster Payments Council © 2018 U.S. Faster Payments Council. Materials are not to be used without consent.
Mission 2020: A Path to Faster Payments Ubiquity
Americans require a world-class payment system, where they can safely and securely pay anyone,
anywhere, at any time, and with near-immediate funds availability
Consumer Corporations Small
Business
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 43Taking On Key Challenges
The FPC will address the issues that inhibit adoption of faster payments in the United States
Enhance safety and Address opportunities
security for service and emerging issues
providers and users openly and
of faster payments collaboratively
Education and
awareness to foster
understanding of
faster payments
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 44How It All Started
Timeline
2015 2016 2017 2018
January 2015 January 2016 January 2017 April 2018
Publication of Federal Publication of the FPTF Publication of the FPTF Publication of the GFFT’s
Reserve’s Strategies for Effectiveness Criteria U.S. Path to Faster draft Operating Vision
Improving the U.S. Payment Payments Part One
System paper April - June 2018
July 2017 Broad Stakeholder Feedback
May 2015 Publication of the FPTF
Start of the Faster Payments Final Report (with key August 2018
Task Force (FPTF) recommendation for a Stakeholder Survey
governance framework) Results Report
Summer 2017 Fall 2018
Formation of the Establishment of the FPC
Governance Framework
Formation Team (GFFT)
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 45Geared for Problem Solving
Build confidence
in faster payments
• FPC members will work together to identify and
support market practices that enable high
levels of market expectations for safety and
security as the U.S. faster payments
ecosystem matures.
• FPC will work with existing fraud sharing
forums to more efficiently share information
on fraud scenarios, attack vectors and
prevention techniques, to help the industry
pre-empt similar attacks.
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 46Breaking Down Barriers
Resolve issues
that inhibit ubiquity
• FPC will support strategies that provide
end users with transparency into what to
expect when making faster payments.
• FPC efforts will identify and assess a
multi-entry directory model approach
for the faster payments ecosystem.
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 47Partnering for Success
Foster a better
understanding
of faster payments
• The FPC will develop an educational and
awareness program that will complement
initiatives led by other stakeholders.
• FPC education programs will offer the broadest
reach across target audiences and focus on
general information about faster payments
that does not promote one solution over
another.
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 48Driven by Common Goals
Guiding principles are at the core of how the FPC operates:
Inclusiveness and Fairness
Through segment-level representation on the Board and open opportunities to serve on committees
and work groups, all active members have a voice in the direction of the FPC’s work.
Flexibility and Responsiveness
The FPC focuses on the broader good while upholding competitive prerogatives and respecting
members’ ability to manage their own business operations. Members choose whether to
adopt FPC recommendations and are able to implement them consistent with their individual
organizations’ unique needs.
Transparency
The FPC has clear processes for deliberations and decision making that are open, transparent
and objective. Open and inclusive opportunities to exchange opinions and resolve differences will
ideally result in broad member support for FPC recommendations.
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 49Members Make it Happen
FPC members can influence the future of faster payments in a variety of ways
Dialogue
FPC Community: Be part of safe forums for dialogue that support innovation,
inform system design, and enhance cross-solution risk mitigation.
Influence
FPC Board: Set strategic direction and ensure processes, activities and
recommendations of the FPC are consistent with its fundamental principles.
Solve Problems
FPC Workgroups and Committees: Influence decisions affecting the direction
of the FPC and its priorities.
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 50Board Structure
• Board of Directors sets strategic direction and ensures FPC remains consistent with its
fundamental principles
• The Board comprises up to 21 voting members representing the voting membership segments
• Each voting segment is allocated 3 seats, with 3 at-large seats
• No membership segment may have more than 4 seats
• Each membership segment will vote to fill its own segment’s board positions.
Voting Segment # of Board Seats
Financial institutions 3
Payment network operators 3
Technology providers 3
Consumer organizations 3
Business end users 3
Other 3
At-Large Seats 3
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 51Application Update
As of April 2nd h
151 total
144 apps 7 apps in
apps
invoiced process
received
APPLICATIONS BY REVENUE TIER APPLICATIONS BY SEGMENT
Consumer
Associate Organizations
3%
PaymentAssociate
< $5 million
Network 5%
$5 million - $10 million Operators
6% Financial
Business End Institutions
$10 million - $100 million
Users 34%
$100 million - $500 million 8%
$500 million - $1 billion
$1 billion - $5 billion
Others
$5 billion - $10 billion
21%
$10 billion - $20 billion
Technology
>$20 billion Providers
23%
0 10 20 30 40 50 60 70 80
© 2019 Faster Payments Council. Materials are not to be used without consent. 5220 Founding Sponsors
• Banker's Bank • North American Banking
• BNY Mellon Company
• Ceridian HCM • Open Payment Network, Inc.
• Corporate ONE FCU • SHAZAM
• Early Warning Services LLC • Target Corporation
• First Data Processing, Inc. • TD Bank, N.A.
• Goldman Sachs Bank USA • The Bankers Bank
• ICBA Bancard • The Clearing House Payments
• JPMorgan Chase Company, LLC
• MasterCard • Visa
• New England Automated Clearing • Walmart
House Association (NEACH)
© 2019 Faster Payments Council. Materials are not to be used without consent. 53116 Members and 8 Associate Members
Continued on the next slide ➔
• 1debit • Commerce Bank • First National Bankers Bank
• Abhishek Gupta • Community Bankers Association of • FirstBank
• Accredited Standards Committee X9 Georgia, Inc. • FIS Global
• Allan Stevo • Community Bankers Association of • Franklin Square Group LLC
• Alston & Bird LLP Illinois • Frimp Giant Industry
• Amerant Bank • Community Bankers Association of • Heartland Bank (Ohio)
Kansas
• American Banker's Association • Hunton Andrews Kurth LLP
• Community Bankers Association of
• American Express Ohio • ICBA - Independent Community
• Aptys Solutions, LLC Bankers of America
• Community Bankers of Michigan
• Ascert, LLC • Icon Solutions
• Community Bankers of Washington
• Association for Financial Professionals • InCircl Inc
• Consumer Action
• AvidXchange • Independent Bankers Association of
• Cypherium Blockchain Inc. New York State
• Axletree • David Wishnick (Univ. of Pennyslvania
• Bankers' Bank of the West • Independent Bankers Association of
Law School) Texas
• Barclays Bank Delaware • Debit Network Alliance, LLC • Independent Bankers of Colorado
• BMA Banking Systems • Discover Financial Services • Independent Banks of SC
• Bridge Community Bank • Dorado Industries • Independent Community Bankers of
• Catalyst Corporate Federal Credit • Ed Bachelder Minnesota
Union • Electronic Payments Core of • Independent Community Bankers of
• CDT Technologies, LTD a Texas Knowledge (EPCOR) North Dakota / ICB Services, Inc.
Corporation • Electronic Transaction Association • Independent Community Bankers of
• Center for Responsible Lending • EMVCo South Dakota
• CFM Communications LLC • ePayResources • International CyberBanque Ltd.
• Click Payments Inc. • ExcheQ, LLC • Iowa Bankers Association
• CNB Bank & Trust • Ferly, Inc. • Iowa Independent Bankers
© 2019 Faster Payments Council. Materials are not to be used without consent. 54116 Founding Members and 8 Associate Members
Continued on the next slide ➔
• Jack Henry • Payroc Oklahoma
• Juniper Payments • Payveris, LLC • The Cooperative Bank
• Liberty Bank • PRM Payments • The Mid-Atlantic Clearing House
• Lipis Advisors GmbH • PSCU Association, Inc.
• Mercator Advisory Group • Q2 • Tiller Endeavors
• Merchant Advisory Group • QCheque • Tunnel Money
• Midwest Independent Bank • Radhakrishna Info Business Services • U.S. Bank
• Mindful Insights IN IFFI SRO • U.S. Dataworks
• Missouri Independent Bankers • Randolph Brooks FCU • UNB Bank
Association • Reef Karson Consulting, LLC • United Nations Federal Credit Union
• MWBT LLC • Regina Williams Hendrick • Upper Midwest ACH Association
• NACHA • Reinvestment Partners (UMACHA)
• National Association of Convenience • ReliaFund • Viewpointe Clearing, Settlement, and
Stores • Retail Industry Leaders Association Association Services, LLC
• National Consumer Law Center • Ripple Labs • Vments Inc
• National Consumers League • Sanjeeb Kumar Panda (Individual) • Volunteer Corporate Credit Union
• National Retail Federation, Inc. (NRF) • Schuyler, Roche & Crisham P.C. • WACHA the Wisconsin Automated
• Navigant Consulting Inc. Clearing House
• Secure Payment Systems
• North Salem State Bank • Wells Fargo
• Shore United Bank
• Pacific Coast Banker's Bank • Western Payments Alliance
• SnapCheck, Inc.
• Parity Pay • World Currency
• Southern Financial Exchange
• PayGility Advisors LLC •
• Springcoin, Inc.
• PaymentsFirst Inc. • Sun Trust
NOTE: These lists show all applications received
through 3/7/2019, including those still going through
• Payrailz, LLC • The Community Bankers Association of the vetting and approval process. Some Associate
applicants may be required to reapply through their
organizations rather than as individuals.
© 2019 Faster Payments Council. Materials are not to be used without consent. 55Join Us!
To learn more, request a consultation, or complete a
membership application, visit
FasterPaymentsCouncil.org
“Alone we can do so little; together we can do so much.”
– Helen Keller
© 2018 U.S. Faster Payments Council. Materials are not to be used without consent. 56Thank You! Kevin Christensen kchrist@shazam.net 515-418-0374
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