Evolution in Payment Platforms

Removing the Straightjacket of Legacy Thinking October 22, 2014

Background

Pat Naples, Manager of Operations Joined PSE&G in 1969 and held various union positions

(Meter Reader, Bookkeeper, Service Rep, Field Collection Rep, Collection Rep, and Exception Processor)

Accepted a Customer Relations Management position in 1979 and held various positions (Methods Analyst, Sr. Methods Analyst, Collection Process Lead, Collection Process Owner, Call Center Office Supervisor, and Customer Operations Facility Process Owner)

Accepted current position in 2007 Involved with payment processing for PSE&G since 1977

About PSE&G

Headquarters in New Jersey One of the 10 largest electric companies in the US >12,000 employees $32.5 billion in assets in 2013 $10 billion in revenue in 2013 Ranked 284 on the Fortune 500 List for 2014

Presentation Objectives

Discuss the evolution of remittance platforms in our utility environment

Identify why legacy systems do not effectively adapt to today’s new demands

Share benefits and lessons learned

Agenda

What is legacy thinking? PSE&G’s legacy timeline PSE&G’s system selection process Conversion away from legacy Lessons learned Outcomes / results Questions and answers

Defining Legacy

Do you process exceptions?

If YES …

… You have a legacy system!

Physical Exceptions

Transaction types Check only Multiples Money orders Full-page checks Correspondence

Methods of handling Outsort Separate job Write amount Separate check Physical routing

Electronic Process Exceptions

Transaction types Unreadable Image Skewed Image Unknown Account Illegal Transaction Cash Pay Required

Methods of handling Reject Reject Reject Reject Reject

Legacy Systems

Let’s define legacy systems: Methodology

Preconceived assumptions aboutcurrent process

Inflexible design Resistance to new ideas

Technology Implementation options limited Built-in processing methods are locked in Exceptions are patches or separate workflows Limited innovation in new software releases Upgrades and changes are required, time

consuming, unreliable, and costly

Previous Platforms

Timeline of platform evolution Previous, previous system (J&B) 2002 – 2008

First generation image remittance Based on stub / check design Limited automation of clean work Two pass processing / paper deposits

Previous system conversion (Wausau) 2008 – 2014 Integrated remote branch transaction capture Common archive for all payments Second generation e-deposit (ARC and ICL) Automated many manual exception payments Many components, but also multiple vendors

Accumulated Business Pain

Despite evolving …Why was the previous system not optimized? Some exceptions handled, but many remained Capture workflow not completely efficient and needed

expansion for new capture items Upgrade process was expensive, significant in time

commitment, and error prone Infrastructure not optimized Security audit issues Complexity in changing workflow Difficulty in issue resolution due to

complex setup limiting true root cause analysis

Addressing Change

Justification for a project Address audit requirements

Encryption and redaction of data Eliminate data access risk

Reducing complexity within the system to lower total cost of ownership (TCO) Lower cost of upgrade Lower cost of on-going system change Lower cost of infrastructure and reduce hardware footprint Improve supportability by removing fragile components

Expand for more features Optimize capture devices for one-touch scanning New workflows for non-payment capture

Project Scope

What was required at PSE&G? Capture operations for central and remote branches Centralized operations conversion and optimization Archive replacement

When did it have to be live? 90 days from order!!!

System Replacement Process

Timeline – Key Milestones

Go-Forward for Conversion Approved

On-Time and

SuccessfulGo Live!!!

Discovery,Installation, Testing, and

Training

RFP Completed and New Vendor Selected

Jan Feb Mar Apr May Jun Jul Aug Sep Oct

Provider Selected

ProviderFully Implemented

RFP Sent toThree Vendors

Project Management Approach

Initiation ClosingExecutionPlanning

Project Phases

Focus on optimization

without preconceived

notions or limitations

Key Factors for Success

Establish great communications

and transparency to foster trust and teamwork

Design application-

specific testing scenarios and

don’t skimp on training

Provide continuous and honest feedback

to vendor for additional

improvements

Benefit #10

Hardware optimization Two production servers

Core processing Archive

Eliminated import PCs, CAR/LAR PCs, Queue PCs

Benefit #9

Security improvements End-to-end encryption

Seamless (single vendor) from capture to archive All data and images encrypted

True client-server architecture Limited data access

Redaction of customer data Selective zones / data files – MICR line, signature, etc. Configurable at user level

Benefit #8

Advanced virtual batching True one-touch scanning with no stopping

or rejects Automated classification of pages and

transactions Transaction validation and repair All transaction types handled

Benefit #7

Advanced image processing Bitonal enhancement

Advantage of grayscale Money orders and gel pens New image to ICL and archive

Deskewing Clean-up reduces bank

rejects

Benefit #6

Intelligent check separation Example of

innovative approach Reduced scanning

labor Capture of account

information

Benefit #5

Enhanced data capture Interactive OCR for complicated check and list Point and click on data fields Advanced address reading and USPS validation Check only lookups

Benefit #4

Integrated archive Encryption and

redaction Advanced

searching Remote capture

Benefit #3

Workflow monitoring Real-time status Operator and machine performance Disk full Email alerts

Benefit #2

Smart Track™ physical tracking Life cycle tracking: scanning to destruction Essential for compliance Check pulling accuracy

Benefit #1

Advanced and optimized workflow Single workflow Sequential, logical, configurable Eliminates legacy constraints Platform for future expansion

No exceptions!!!Free upgrades (software and

professional services)!!!

Metrics

Increased kill ratio Improved CAR/LAR read rate Significant reduction in bank rejects and

exceptions Faster handling of rejected items Cash review process automated One click end-of-day process

The Right Partner is Key to Success

Trust Responsiveness Transparency Accuracy

Teamwork Knowledge Collaboration

Track record Client references

Technology Demonstrated Continuous innovation

Summary

Dynamic platform optimized for payment and forms processing - Customized without custom code using modular approach - One-touch scanning with advanced virtual batching - Optimized remittance and Check 21 experience - Superior imaging technology Improved audit compliance - Eliminated risk from third party component sunset/incompatibility - Encrypted data and flexible redaction at field level Significant ROI and lowest TCO - Free annual upgrades on-going - Reduced dependence on and cost of hardware infrastructure - Continuous innovation and collaboration for on-going improvements

Questions & Answers

THANK YOU

For More Information

Pat Naples contact info Patrick.Naples@pseg.com

Mavro Imaging booth #204 info@MavroImaging.com www.MavroImaging.com Connect with Mavro