9/24/2018

1

How Financial Cooperatives Cope with Big Technology’s Trends – Payments, Remittances,

Artificial Intelligence.

How Financial Cooperatives Cope with Big Technology’s Trends: Payments; Remittance: Artificial Intelligence.

Murray Gardiner, TemenosSeptember 14th 2018

9/24/2018

2

1. Sylvia Paraguya, CEO NATCCO, Philippines

2. Atty Gloria Fulatan, Chair PFCCO

3. Murray Gardiner, Business Director, Temenos Inclusive Banking

Introduction

1. Introduction

2. Fintech world: the future is mobile

3. ACCU Platform: NATCCO & PFCCO experience

4. Commercial Banks: Financial Inclusion strategies

5. Digital Financial Inclusion: more than just paying the bills

6. Fintech: competition is at the door

7. Fintech Future is now: Temenos Marketplace

1. Blue Code optical payments and interoperability scheme

2. Finn AI, artificial intelligence

3. Neuroprofiler, machine learning and financial behavior

8. Credit Union Digital Transformation: Lessons learned from financial inclusion

Agenda

9/24/2018

3

FintechThe future is mobile

9/24/2018

4

Inclusive Banking is all about mobile, payments

and digital

Inclusive Banking is all about mobile, payments

and digital

9/24/2018

5

FintechACCU Platform: Kaya example

9/24/2018

6

ACCU PLATFORM: SG Channels pre-integrated to T24 IBS

Smart App

T 24 IBS Stand‐alone instance‐ Pre‐configured model bank for financial inclusions‐ Pre integrated to middleware‐ Integration to bank T24 core system 

Customer App‐ Fund Transfer‐ Send / Receive Money‐ Bill Payment‐ Balance Inquiry‐ Mini Statement

Core Banking System

Mobile Wallet

Agent App‐ Account Opening‐ Cash Deposit‐ Cash Withdrawal‐ Fund Transfer‐Bill Payment‐Balance Inquiry

Agent Teller ServicesRealtime Payments‐ Integrated with CBS /MIS‐ Transaction processing‐ Inter ‐bank transfers‐ Intra ‐bank transfers‐ OTC Services

Bulk Electronic Funds & Voucher Transfer‐ Upload data of users to send payment and vouchers in bulk

Pay BillIntegration to existing utility companiesIntegrate with Payment Aggregators

Communications‐ USSD ‐ SMS‐ Mobile DataAirtime Purchase

Integratewith mWallets

Integration with FSPs

Payment Services

Telcos

Government  / NGO

Administration

Integration with CBS

Bulk Payments , Vouchers Fees ,  limits  &  Commissions Business logic for all connected systems Automated SMS alerts  &  Notification Transaction monitoring  &  Auditing Blacklisting

Admin WebUser interface for web browser

Integration Layer  +  Payment Gateway ( Digiwave)

Payment Platform

ATM

ATM InterfaceCash OutCash InBill PaymentBalance InquiryMini Statement

Card not present ATM

Merchant App‐ Instant cashless settlement with Blue CodeCash withdrawals

Mobile token instant settlement scheme

‐

SME merchant acquisition

‐Retail services merchant acquisition

‐ Merchant loyalty program management

Low cost non card domestic scheme

Optical Merchant  Payment

Reconciliation &  SettlementSettles electronic funds transfer on accounts

Merchant

Smart App

Smart App

SME merchant acquisition

9/24/2018

7

FintechTier 1 Banks: Digital Transformation

T24 IBS Integration: “Digital Banking Platform in a Box”

Platform & applicationsPlatform &

applications 5Channels: mobile applications; quality services, cash in/out, DFAs, USSD ATMs, and smart phone apps. Local

channels

Bank LegacyBack Office

Bank LegacyBack Office

QR non-PCI platform

QR non-PCI platform 3

Blue Code mobile (non-card based) token payments; silo inter-operability; domestic schemes; merchant acquisition

SME Agency bank outletsSME Agency bank outlets 4

SMMEs agency banking; agent network & merchant acquisition – cash points and customer interaction

1T24 IBS, MB stored value account and all financial product management and administration

Modern digital core bankingModern digital core banking

2Integration framework, Switch, payment hub, FC and Data Analysis

MiddlewareSI

MiddlewareSI

Platform

9/24/2018

8

T24 IBS Integration: “Digital Platform in a Box”

BI Data AnalyticsBI Data

Analytics 7Temenos Insight and DFAs geo-location transactional analysis analytics

Fintech Marketplace

Fintech Marketplace 9

Callsign; Neuroprofiler; Blue Code; Pushfor; Metaco; several others

Operationalefficiency

Operationalefficiency 8

Middleware and payments switchSI, optical mobile payments, scheme interoperability, TLC, other Temenos

6T24 IBS to replace a smaller bank legacy or run parallel to a tier 1 legacy;

Continuous Core Releases

Continuous Core Releases

Inclusive Banking Fintech

Bank LegacyBack Office

Bank LegacyBack Office

FintechFinancial inclusion is more than just paying bills

9/24/2018

9

Financial Inclusion Business Model

Structured contract savings

Bill pay Short term instant cash flow loans

Term loans for SMME

SME cash flow and capex finance

Insurance brokerage

Electronic payments: P2P, P2G, G2P

Social payments

ATM Non-card OTP

Optical payments

SME and merchant acquisition

Airtime Top up and others

Providing quality affordable and profitable financial products to more people

Remittance Interoperable Domestic scheme

Mobile phonee-wallets

Savings and transaction accounts

Align technology for digital today: key elements

Strong corebanking

1

Cloud Service

2 3

Better DigitalUX

4

Clear DigitalStrategy

5

DefendDisintermediation

9/24/2018

10

FintechSerious competition is at the door

China

9/24/2018

11

Huawei Mobile Money Boosts Financial Inclusion through Capacity Building in Developing NationsSep 22, 2017

Company Shares Practices and Experiences at IFCFI[Beijing, China, September 22, 2017] At the International Forum for China Financial Inclusion (IFCFI), Huawei, as an important partner of the Bill & Melinda Gates Foundation (Gates Foundation) Level One Project (LOP) initiative, was invited to participate in the forum and shared its practice and experience in the area of Africa mobile payments and financial inclusion platform construction.

Ant Financial, the payments and financial services arm of Chinese e-commerce giant Alibaba, is expanding to Africa.

In a partnership with the United Nations Economic Commission for Africa (ECA) along with the International Financial Corporation, the firm says it will promote digital financial inclusion in the continent through investments and technical assistance. The offering will target smaller businesses and would look to cater to largely unserved consumers, including displaced people and refugees with no official documents or identity papers.

9/24/2018

12

FintechThe future is now…..

9/24/2018

13

FintechOptical non-card based payments

9/24/2018

14

Platform subscription based service

Token based mobile payment service

End connection from the banks platform to the retailer

By-pass Visa / Maestro

No data passes across network

Token expressed as bar code or 8 digit code

Retailer consumes message via scanner, smart phone or any other device – no proprietary HW or SW

Either data message or API connection

Bank is merchant and can be acquirer

27Blue Code mobile optical payments and merchant acquisition

MORE VIDEOS

MY BANK LOGO

TokenA new 20 digit token triggers each payment directly from a users bank account (no cards involved).

#1 UsabilityWinner of the mobile

payment study by Mücke & Sturm

© Confidential BC Capital AG

SecureTransactions without user names and account numbers, enables security by design. No data means no PCI constraints.

FlexibleBlue Code is an SDK so it can be built into (banking) apps. Cash registers connect through a merchants API, and vending machines with our BLE module.

PowerfulBlue Code can do Android & iOS, any transmission technology (Scan, Bluetooth, NFC), and Omni-channel.

What is Blue Code?

e.g. M-Com

www.bluecode.com

9/24/2018

15

A shopping experience ... PLAY

IOT• Blue Tooth connections for devices:

• Vending machines• Parking meters• Office equipment• Movie tickets• Train and bus tickets• Many new applications

9/24/2018

16

FintechExample: Artificial Intelligence

Artificial intelligence

9/24/2018

17

9/24/2018

18

Machine-learning+ Behavioral Finance

Asks a few quesitons

9/24/2018

19

Predicts personal financial literacy

TIME GAME

Which choice would you make?

In 0 days In 3 days

Get 50 £ in 0 days Get 100 £ in 3 days

Predicts personal behavior

9/24/2018

20

Predicts personal bias

Builds personal profiles

9/24/2018

21

B+Good Borrower• Low impulsivity• Quite Optimistic• Good perception of risk

1

0.8

0.6

0.4

0.2

0

0 3 6 9 12 15 18 21 24 27

Years

Scores personal behavior and likelihood

the individual willhonour their commitments

Value

Reference point

Losses Gains

Outcome

1

0.8

0.6

0.4

0.2

00

1

0.6 0.80.40.2p

1

0,80,60,40,2

00 3 6 9 1

215

18

21

24

27

Quasi HyperbolicHyperbolicExponential

Value of

discount

function

Years

Its all about BIG data

CUs must own their data

9/24/2018

22

FintechCredit Union Digital Transformation:

Lessons learned from Financial Inclusion

Navigating Your Digital Transformation Journey

44

HumanResources

TechnicalReadiness

PartnershipsInnovation Digital Culture

9/24/2018

23

How Digitization Benefits Credit Unions 45

• Staying competitive

• Centralized cloud based operations

• Building relationships with members that are mobile,

young, tech-savvy

• Offering a range of modern digital cooperative financial

services, not just payments

• Keeping savings and revenues inside the movement

• Sustainability through new transaction revenues –

should be 40% or more

• Consistent and enjoyable member user experience

How Digitization Benefits Credit Union Members 46

Members enjoy access to their savings and loan accounts from their mobile phones;

Convenient Access

Remittances, bill-payments, account information, P2P transfers, air-time top-up, insurance and other online services can be easily included in digital channels.

Value-added Services

Equal access to innovative financial tools and resources to uplift their economic situation.

Driving Financial Inclusion

9/24/2018

24

Pressing Questions for all Credit Unions worldwide

How do we increase our competitive advantages?

How to transform and improve member services?

How do we improve the efficiency, service quality?

How share information to become one network?

How to attract the youth and the underserved?

Credit Union Digital Transformation

Complacency is the biggest threat…