Mobile Banking and Payments Security and Usability: What's in Your Mobile Wallet?

Innovation in Retail Payments Electronic Invoicing: How to Increase E-Invoicing B2B Transactions
IN THIS ISSUE
Preface
From the Editors Desk
1. Innovation in Retail Payments 5
2. Mobile Payments: Sustainability of Business Models 15
3. Payment Cards: Trends, Challenges and Innovations 25
4. Mobile Banking and Payment Security and Usability: 35
What's in Your Mobile Wallet?
5. Wholesale Payments: Trends and Transformation 43
6. Electronic Invoicing: How to Increase E-Invoicing B2B 49
Transactions
7. Centralizing Wholesale Payment Services: The Key to 55
Improved Growth, Efficiency and Risk Management
8. Money Movement Automation: A Case Study 69
9. Financial Institution Opportunities in Healthcare Revenue 73
Cycle Management
10. Enterprise Payments: Breaking Barriers 83
11. Top Transformational Trends in Check Processing 95
12. SEPA: Outsourcing - The Key to Changing Times 109
13. Payments Fraud 121
Retail Payments
Wholesale Payments
Payments Transformation
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CONTENTS
The financial industry, along with other industries, faces a never ending
challenge to continuously improve and optimize its operations. One of
the key areas of improvement happens to be in the Money Movement
space. Most Financial Institutions (FIs) are taking up Money Movement
automation as one of their top priority projects. While some of them are
ahead in the game, most of them are still at the drawing board.
The following is a case study that describes the journey taken up by a
large FI to centralize and enhance their Money Movement infrastructure.
MONEY MOVEMENT
AUTOMATION: A CASE STUDY
ADITYA SIMHADRI
8
Client Context
Business Drivers
The client is a leading fortune 100 financial
services company and is one of the top 50
brands in the world. This client had multiple
redundant applications, performing Money
Movement functions across different business
lines, impairing their ability to implement
common changes across lines-of-business due
to time and cost implications. Therefore, a call
to action existed for a common Money
Movement platform across business lines. It
offers the necessary flexibility to enhance
Money Movement efficiencies, and the ability
to quickly adapt to new market trends and
compliance requirements.
Multiple business drivers led the client to
implement the multi-year, multi-million dollar
Money Movement initiative. However, the key
business drivers were:
?Creating a centralized repository of
information for strategic decision-making
?Improving risk and fraud detection
capabilities
?Reducing the time taken to realize
customer payments
?Implementing least cost routing to
optimize the float
?Building a rule-driven and highly scalable
payment scheduler that could trigger
payments automatically or on an ad-hoc
basis, in line with business rules
Like any other complex programs, this
program was also delivered in multiple phases.
Each one of these phases was focused on
addressing one or more of the business needs
described above.
Phase 1 - Architecture & Roadmap Definition:
The first phase was planning, where the goals,
architecture and the overall roadmap were
defined. At the completion of this phase, the
key stakeholders agreed to design the
platform as the one stop shop for any line-of-
business to perform any kind of Money
Movement transaction to, from or across
the organization. To do this, the entire
architecture was broken down into a few
The Solution
Existing Payments Architecture High Level Architecture of Money Movement Platform
Upstream
Systems
Downstream
Systems
Money Movement Platform
Payment Scheduler Core & Utility
Components
Payments Gateway Clearing Engine
Ledger Manager Returns Manager
Money Movement Database(s)
Administration & Reporting Screens
Corporate Systems
Customer Portals
Sales Rep Systems
Travel Offices
Lock Boxes
and more...
Banks
Ledgers
ACH, FED,
C21 Network
Vendors
AR Systems
and more...
Fig - 1
70
major components, aimed at addressing
one of the high level business functions
identified for the platform. Figure 1 briefly
describes the overall architecture for this
Money Movement platform.
Phase 2 - Centralized Data Repository: The
database component in the Money Movement
architecture, shown in Figure 1, was built to
serve as the centralized repository of all the
transactions that go through the platform. This
master database further feeds information into
a data warehouse. Apart from the storage of
transaction history, this database also received
feeds from external vendors that provided
valuable information related to the risk and
fraud history of banks. Wrapper/ access
components were built around the database
that helped the users of the platform in making
risk and fraud decisions. A reporting layer was
built around the data warehouse, which helped
with the analytics and strategic decision making,
related to business performance and growth.
Phase 3 - Reduce Time to Realize Customer
Payments: The third phase of the program was
aimed at addressing the most important
business driver i.e., to reduce the time taken to
realize customer payments. This was achieved
by taking advantage of the Check 21 law.
The advent of the Check 21 law allowed
movement of money electronically instead
of via paper, thereby helping FIs to cut down on
the time consumed by snail mail-based
processes. This also allowed FIs to increase the
number of means by which they could collect
money from their debtors. Some examples are
paper checks, money orders, electronic
remittances via phone, electronic remittances
via ATM, electronic remittances over the
Internet, recurring direct debits, etc.
Figure 2 provides a quick peek at how
operational efficiency was improved by
removing dependency of business processes
on regular postal mail and moving them to
electronic formats.
Phase 4 - Least Cost Routing Implementation:
The least cost routing functionality, along with
Existing Payments Architecture Transaction Capture & Check 21
Fig - 2
To Be
Lockboxes & Payment Centers
Paper based Monetary Instruments via
regular mail
Centralized Mail Sorting & Extraction
Semi-automatic processing with manual intervention
Image Capture, Keying, Encoding &
Endorsement
Physical Transfer of paper based instruments to
banks via regular mail
Deposit
Customers
Paper based Monetary Instruments via
regular mail
Customers
Lockboxes & Payment Centers having
associated Extraction & Imaging Capabilities
and Electronic Channels
Paper based Monetary Instruments via
regular mail
Deposit
Electronic transmission of data & images
Money Movement Platform: Rule based Data
Capture, Image Processing, Image Storage,
Automated Payment Scheduling, etc.
Electronic transmission of data & images
As Is
71
Aditya Simhadri
Relationship Manager
Infosys Technologies Limited
Aditya is a Relationship Manager with the Banking & Capital Markets Group at Infosys. He
has more than 10 years of experience in handling multiple projects involving card issuance and
processing, private wealth management, Money Movement, and credit information management.
some other complex functional requirements,
was implemented using a third party product.
There are specific components available in
the marketplace that implement the least
cost routing functionality very efficiently.
The product used, in this case, was Intelligent
Clearing Engine from a reputed vendor.
It uses a database of rules built on transaction
fee rate cards from various institutions,
to route the transactions via the most
efficient channel that optimizes the float for
the company.
Phase 5 - Payment Scheduler: The payment
scheduler needed to be a highly scalable and
robust component that could schedule
payments automatically, either on a recurring
or ad-hoc basis. This was a rule-driven
component that could schedule payments for
any line-of-business that wanted to transfer
money from a source to a target account.
The rest of the functionality to complete the
Money Movement platform was built in
parallel and as part of one of the above
phases. The last part of the journey included
enhancing the platform and bringing the lines-
of-business on board onto the Money
Movement platform.
There were numerous challenges, along the
road, when the FI embarked on the journey
of Money Movement automation. The
most significant were:
?Scaling up on multiple new technologies
Challenges Faced
and platforms
?Managing and coordinating scope,
expectations and communication with all
business units and infrastructure groups
?Extremely demanding timelines, driven by
critical business needs
?Program management and integration
of various projects to build the overall
platform
Money Movement automation provided many
benefits to the company:
?Reduced cost of operations
?Fewer manual interventions
?Optimized float by effective least cost
routing
?More efficient business processes
?Expanded customer servicing capability
?Ability to offer new feature-rich services or
products quicker
?Improved risk and fraud handling capability
?Enhanced legal and regulatory compliance
controls
?Earlier notification of problems
?Lower future implementation costs
Given the benefits and strategic advantage
provided by Money Movement process
re-engineering, it is highly likely that
the other FIs would follow suit. It is not
a question of why anymore, it is just a
question of when...
Benefits
Conclusion
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