The future of payments in Australia - Cuscal

Cuscal Limited, 2015

VIC/TAS INSIGHT SEMINAR 2015

THE FUTURE OF PAYMENTS Nathan Churchward, Cuscal


INTRODUCING CUSCAL

1

Our purpose

To make payments easy,

accessible and secure

Our vision

To be Australia’s

payments leader:

empowering our clients,

as stakeholders in our

platform, to achieve

their goals


CUSCAL BY THE NUMBERS

2

5.5 million

cards under

management

>100 clients

1/3 Australia’s

ATMs 14% Australia’s EFT

transactions

1st commercial HCE launch

140 million Direct Entry and BPAY transactions p/a


The forces changing payments in Australia

PAGE 3

How the NPP will change payments

How the industry is getting ready for NPP

What’s next?


THE FORCES CHANGING PAYMENTS IN AUSTRALIA

EXPLORING FOUR KEY TRENDS

PAGE 4


Innovative new offers

by competitors

Increase revenues from innovative

new offers and business models

Margin compression

Increased revenues from new products,

distinctive digital sales and

using data to cross-sell

Lower operational costs from

automation/digitalisation

and transaction migration

Increased

operational risk

TOTAL TOTAL

Source: McKinsey analysis PAGE 5

TREND #1 Digital transformation in banking

Potential threats Potential opportunities

+5

+10

+30

+45

-13

-16

-6

-35


TREND #1 Digital transformation in banking

MOBILE BANKING AND PAYMENTS COMBINED

6


PIN change

Screen customisation and targeted messaging

Enhanced deposit capability

Cardless withdrawals

TREND # 1 Digital transformation in banking

DON’T DISCOUNT THE TRUSTY ATM

7

PIN change

Screen customisation and targeted messaging

Enhanced deposits for cash and cheques

Cardless withdrawals

Digital self-service and branch automation capabilities to improve

customer experience while reducing service delivery costs


TREND #2 Increasing volume of non-cash transactions

Growth in debit cards shows

positive use of bank account

balance for digital purchases.

Source: RBA’s 2014 report ‘The Changing Way We Pay’. PAGE 8

When their bank account can

be accessed conveniently,

customers are happy to use

their own funds.

Non-cash transactions per capita in Australia

Cuscal Limited, 2015 9

Frequent payments: from cash to contactless to invisible


TREND #3 Disruption from fintech startups

Up-and-coming fintech

companies are playing a key

role in reshaping payments

Global Fintech financing has

grown from less than $930

million for the whole of 2008 to

over $1.04 billion in the month

of October 2014 alone.

Source: KPMG PAGE 10

Future Earnings

Fintech financing activity

Fin tech startups are building

niche products that meet the

needs of specific segments

more effectively than the

incumbents


http://www.afr.com/technology/twitter-founder-jack-dorseys-square-opens-up-australian-headquarters-20150521-gh6a90


?


Agile development enables

banks to test and learn from

their target markets

They can respond quickly

to changes in requirements

It reduces the risk of launching

products that don’t meet the needs

of their target market

PAGE 13

TREND #4 Major banks are using customer-centric approaches


http://www.insidehr.com.au/cbas-4-step-plan-developing-a-customer-centric-mindset

https://realas.com/blog/realas-wins-westpac-innovation-challenge/


HOW THE NPP WILL CHANGE PAYMENTS

PAGE 15


THE OPPORTUNITY

The launch of the NPP in 2017

wil help the whole banking industry drive payments innovation

PAGE 16

The launch of the NPP in 2017 will help the whole banking industry drive payments innovation Watch our animation which explains the NPP in simple terms

https://vimeo.com/128343711

Cuscal Limited, 2015 PAGE 17

NEW PAYMENTS PLATFORM

By the end of 2017 the NPP will support 24/7 payments, faster payments,

more meaningful payments and simpler ways to pay

FASTER

PAYMENTS

MORE

INFORMATION

ADDRESSING

SERVICES

OVERLAY

SERVICES

Payments in real-time, with close to immediate funds

availability, 24 hours a day seven days a week

Greatly increased amounts of data (up to

100kb/message) can be sent with payment information

Payments can be initiated using mobile phone numbers,

email addresses, or Australian Business Number

(ABN) as opposed to BSB and Account Number

Market driven tailored payment and data solutions to suit

a range of consumer and business needs


Use

24/7

Low value

payments

Rich data

messages

Addressing

Service

Real time

settlement

Individual

transaction

settlement

Irrevocable

funds

Reconciliation

Data

NPP

Direct

Entry

RTGS

Cards

BPay

PAGE 18

THE NPP DISRUPTS EXISTING PAYMENT SERVICES

A SPECTRUM OF BENEFITS FOR THE

CUSTOMER, BUSINESS AND BANKS


NEW, USER FRIENDLY WAYS TO MAKE PAYMENTS WITH A CENTRALISED ADDRESSING SERVICE

19

Mobile numbers

Email addresses

ABN/ACNs for

Businesses

BSB and Account


NEW COMFORT THAT PAYMENTS HAVE BEEN SUCCESSFUL AND WILL BE RECOGNISED BY THE INTENDED PAYEE

20

Payee details

confirmed in real time

by addressing service

Transactions that

support up to 280

characters of data

Cuscal Limited, 2015 PAGE 21

INTRODUCING ‘PAYMENT REQUESTS’: A GAME CHANGING INNOVATION

Sarah splits a

restaurant bill

with her friends

Sarah requests payment

from each friend using her

bank’s mobile app

Sarah confirms her friends’

details in real time as part of

the request process

Friends receive a request

with amount due, in their

bank’s mobile app

With a couple of clicks,

each friend authorises

their payment

Sarah receives the

payments in her account

immediately


THE INITIAL OVERLAY SERVICE WILL IGNITE DEMAND ACROSS BANKS, BUSINESSES AND CONSUMERS

22

Request and Pay

Person to Person payments

Business or government

payment with attachment

Payments between consumers and

Business or government


HOW THE INDUSTRY IS GETTING READY FOR NPP

PAGE 23


Cuscal is one of the founding Participants

which have invested in creating the NPP

PAGE 24

BUILDING AUSTRALIA’S NEW PAYMENT PLATFORM


NPP Australia Ltd

sets the rules, runs

the NPP, owned by

the 12 founding

Participants including

Cuscal

PAGE 25

NPP STRUCTURE

Participant is a

shareholder of NPP

Australia and contributes

to the design and

establishment of the

payment system

Account Servicer –

financial institutions that

connect to a Participant to

access the NPP and provide

payment services to their

account holders

Customer – uses the

payment services

provided by their

financial institution as

either a payer or payee.

Overlay Provider leverages the real

time and data capabilities of NPP and

establish standardised customer

experiences across a range of financial

institutions and their customers


Cuscal will connect

directly to the NPP –

some participants will

connect via agency

arrangements offered

by Cuscal.

PAGE 26

CUSCAL IS PLAYING AN ACTIVE ROLE

Craig Kennedy,

Cuscal CEO, is on

the board of NPP

Australia Ltd.

Cuscal has

senior executive

representation on

all five NPP Working

Groups, including those

for Design, Testing and

Operations.

Our dedicated technical,

product and marketing

experts will ensure our

clients are able to offer

their customers fast,

convenient and reliable

payments around the

clock.

Cuscal Limited, 2015 THANK YOU. PAGE 27

GET IN TOUCH

Nathan Churchward Product Development Manager

E: [email protected]

T: twitter.com/cuscal

L: linkedin.com/company/cuscal

mailto:[email protected]

The future of payments in Australia - Cuscal

Economy & Finance