the future of payments (is now)

The Future of Payments (Is Now)

Jeffrey Clennon

Senior Treasury Manager

Discover, Inc.

David Hudson

VP, Global Payments

ADP

Steve Bernstein

Executive Director

J.P. Morgan

1

Agenda

Page

1 Changing Payment Environment

◼ Current Payment Trends

◼ Industry Trends

◼ Mobile Adoption

2

2

8

14

2 Faster Payments 16

3 Looking Ahead 32

4 3DS 41

Federal Reserve Annual Supplement DataAnnual growth rates by payment type, by number and value, 2012-17

Source: Federal Reserve Payments Study 2018 Annual Supplement2

Card Based Payments on the RiseTrends in Noncash Payments, 2000-17

Source: Federal Reserve Payments Study 2018 Annual Supplement

Num

ber

of

paym

ents

in b

illio

ns

3

ACH payments increased 5.7% from 2016-2017

Source: Federal Reserve Payments Study 2018 Annual Supplement

ACH Volume Trend

4

The ACH network is thriving – below reflect the 2018 same day ACH volumes as reported by NACHA

Source: www.NACHA.org Feb 2019

Same Day ACH

5

http://www.nacha.org/

Sources:

“ADP Investor Presentation, Summer 2019” – linked from https://investors.adp.com/events-and-presentations/default.aspx

“ADP Corporate Overview” (last updated November 2018 – linked from https://www.adp.com/about-adp.aspx

Focus on Human Capital Management (HCM) and Payroll

ADP Overview

• Global leader in Human Capital Management (HCM)

software and solutions

• 810,000+ clients in 140 countries

• Delivers payroll for 26 million (1 in 6) US workers and 15

million international workers

• Partners with over 7,100 tax agencies across all levels of

government throughout the US

• Moved $2.1 trillion of US payroll and taxes on behalf of

our clients and our clients’ employees in FY19

• 18M+ ADP Mobile Solutions App users

6

https://investors.adp.com/events-and-presentations/default.aspx

https://www.adp.com/about-adp.aspx

Source:

“Evolution of Pay” Report, May 2019, ADP Research Institute: https://www.adp.com/resources/articles-and-

insights/articles/e/evolution-of-pay.aspx

Current Payment Methods: What Employers Offer

Versus What Employees Use

From an online survey of ~7000 employers and employees across 13 countries in companies with 50+

employees to assess their perceptions of pay methods, pay cycles and elements of financial wellness

In North America

7

https://www.adp.com/resources/articles-and-insights/articles/e/evolution-of-pay.aspx

Agenda

Page



◼ Industry Trends

◼ Mobile Adoption

2

2

8

14


3 Looking Ahead 32

4 3DS 41

Payments analytics

of thefuture

Personalized Customer Engagement:

Contactless mobile wallets and data

partnerships with merchants lead to

contextualized offers based on “asking

the right question”

Real-Time Transaction Flow:

Real-time transaction graph analysis

provides insights for merchants to

manage cashflow, inventory, and

service levels

Digital Onboarding:

Use digital onboarding to collect

KYC data, automate account

opening forms, and identify

customer needs promptly

Leverage Compliance Investments:

Consumer Financial Protection

Bureau(CFPB) compliance and KYC/AML

investments lead to better “voice of

customer” measurement and customer

experience

Faster Payments:

Innovation produces faster rails,

international transfer, and B2B solutions

to enable cheaper payments and reduce

reliance on cash

Robotics & Process Automation:

Automate transactional testing,

fulfillment, and dispute

management to reduce manual

work

Preferred Payments:

A single card becomes “top of wallet,”

so include this in behavioral

segmentation to target the “moments

that matter’”

Real-Time Fraud Analytics:

Issuers use scalable machine

learning platforms to generate

fraud alerts and mitigate cyber

risk

Focusing on and responding to the payments trendsAnalytics allow the payments ecosystem to respond to change

Source: Deloitte December 2018 – The Financial Brand8

◼ Digital Payments are a multi-initiation, multi-rail payment engine with powerful intelligent routing capabilities

◼ Mobile and web-based solutions enable you to issue electronic payments to your customers using their email address or

phone number1

80%◼ U.S. usage of smartphones

(and growing)2

Improve customer experience

$3.00 ◼ Average cost to process a

single check3

Reduce total costs

75%◼ Organizations experienced check

fraud in 20164

◼ Online and mobile portals have the ability to use strong

password requirements and multi-factor authentication for

enhanced security

Increase payment security

1 Consumer must provide consent in order for their phone number to be used to initiate payments. 2 Source: ComScore, February 2016 U.S. Smartphone Subscriber Market Share3 Source: 2015 AFP Payments Cost Benchmarking Survey4 Source: 2017 AFP Payments Fraud & Control Survey

The Move to Digital Payments

9

Omnichannel Payments on The RiseConsumers expect to buy anytime, anywhere and any way they choose

Source: PWC Holiday Outlook December 201810

Giving Clients a Choice

Simple Seamless Immediate Analytical Interconnected

Transform cross-product capabilities: Store all payments data in one place

and create optimization capabilities

Inventory

ManagerOptimizer

Global

Payments

Redefine core bank processing: Clear and track payments in many currencies, by

account, anytime

Network Payments

Payment Tracking

FX end-to-end

Real-time data:

Provide interactive

reporting/recon in real-

time

Interactive

Dashboard

Virtual Account

Management

Visual

Mapping of

Accounts

Open connectivity:

Flexible data exchange for

all clients

Enterprise

Resource

Planning

(ERP)

Adapter

Managed

Payments

Application

Programming

Interface (API)

Simplifying Package Solutions that Focus on the Client’s Objective

11

Access Several Payment Rails from a Single Point of Contact

Client initiates payment

◼ Restricted to

participating banks1

◼ Transaction limit of

$25,000

◼ Leverages traditional

ACH rails for payment

◼ Member Bank 2: Straight

through

– If payee’s bank is a

member of Zelle and

payee enrolled via their

bank

◼ Receive check if

notification is declined or

expires

◼ No e-mail address? Send

payments direct to check

without having to pass

additional files

Zelle®

Day 0

Check

Day 3-5

RTP

Day 0

ACH

Day 0-2

◼ Transaction limit of $25,000

◼ 1pm EST acceptance cutoff,

if missed will convert to

Standard ACH process

Same Day ACH

Day 0

1 Visit www.theclearinghouse.org/payments/real-time-payments for current member list2 Visit www.zellepay.com for current member list

Bank

Intelligent routing logic would facilitate payments based on your preferences

Did the customer

accept the payment?

Is the payment less

than $25,000?Is ABA RTP eligible? Real Time Payment

Check ACH Payment

Same-day ACH if before 1PM EST

Next-day ACH if after 1PM EST

12

Source:

“Evolution of Pay” Report, May 2019, ADP Research

Institute: https://www.adp.com/resources/articles-and-


“Nontraditional” options: Pay Card, Mobile payment (pay deposited to a mobile wallet), Digital platform

(similar to Venmo or PayPal), or Cryptocurrency)

In North America

• 43% of Employers offer

Nontraditional options

• 5% of Employees use

Nontraditional options

• 49% of Employees willing to

accept Nontraditional

options

Employee usage/acceptance Employee views (% selecting)

Globally

Nontraditional pay options: Employer offerings, Employee

usage, and Employee acceptance is growing

13


Agenda

Page



◼ Industry Trends

◼ Mobile Adoption

2

2

8

14


3 Looking Ahead 32

4 3DS 41

Mobile AdoptionSmartphones ultimately influence 56 cents of every dollar spent in brick-and-mortar stores

◼Around the world, 36% of smartphone users

currently make mobile payments

◼In 2018 the 55 million people who made

mobile payments equates to 20.2% of all

Americans

◼Expected to grow to 39.2% within the next year

◼When Google Pay launched in 2014, 3% of U.S.

retail stores accepted it; now, half do

◼One thing Starbucks does that Apple and Google

don’t is incentivize consumers to use its app

◼66% of shoppers who use WalMart Pay, which is

also on track to surpass Apple and Google in users,

end up using the service again within 3 weeks

◼These payment apps facilitate seamless

transactions, which drive loyalty and repeat visits

Source: https://www.clickz.com/mobile-payments-2019-beyond/222602/

Deloitte Digital research;

https://www.emarketer.com/content/the-mobile-payments-series-the-us

14

https://www.clickz.com/mobile-payments-2019-beyond/222602/

Mobile Wallet Usage SurveyConducted in 2018 of over 120,000 consumers reflecting usage of mobile payment providers

Source: Statista 201915

Agenda

Page

1 Changing Payment Environment 2

2 Faster Payments

◼ U.S. Updates

◼ Regional Updates

16

16

23

3 Looking Ahead 32

4 3DS 41

Greater payment flexibility: With 70 different consumer and business options, same day ACH is greatly enhancing payment processing options for

our clients.

Consumer to Business

◼ Bill pay

◼ eCommerce

◼ POS check conversion

◼ Merchant debit

◼ Collections

Consumer to Consumer

◼ Person to person

◼ Account to account

Business to Business

◼ Trading partner

payments

◼ Due-date and invoice

payments

Business to Consumer

◼ Payroll

◼ Insurance

◼ Refunds

September 2019 March 2020 March 2021

1Funds from Same Day ACH credits

processed in the existing, first

processing window will be made

available by 1:30 p.m. in the

RDFI's local time credits exchanged in

the 10:45 as ET Same Day ACH window

2 3Expanding the dollar limit for

Same Day debits and credits from

$25,000 to $100,000

Adding a third Same Day ACH

exchange at 4:45 pm ET with end

of day availability

Upcoming and Proposed Same Day ACH Rule Changes

Same Day ACH Updates

16

1

2

3

4

5

6

◼ Real Time Payments (RTP) are immediate,

irrevocable, secure, contextual, and

convenient

◼ API based, which supports unified

payments integration and contextual

commerce

◼ Robust remittance detail allows for

streamlined reconciliation with payment

confirmation and reporting of information-

rich content

◼ TCH owner banks include (total 25):

Key featuresInitiative overview

Amount: Credit transfers in USD of up to a $25,000 maximum (currently)

Speed: Money is available to payee within 15 seconds

Availability: Payments available 24/7/365

Messaging: Extensible messaging (ISO 20022) supports more sophisticated

applications (e.g., bilateral messaging)

Security: Sender initiates the transaction from own funded DDA

Reach: Today the RTP network reaches 50% of U.S. transaction accounts, and is on

path to reach nearly all U.S. accounts in the next several years

RTP– 1st new U.S. payment system in 40 years

Source: https://www.theclearinghouse.org/payment-systems/rtp/institution

17

What is Request for Payment?1

Available 24/7,

including holidays

Once the request is

paid, money is

available to

requestor within

seconds

Credit transfers in

USD of up to a

$25,000 maximum

Payer initiates the

transaction from their

own funded DDA

Instant confirmations

when funds are

transferred

ISO 20022 supports

sophisticated

remittance, including

PDFs and additional

attachments

$25,000

Availability

Payment

Acknowledgements

SecurityAmount

Remittance

Speed

Request for Payment allows

a sender to initiate a notification

requesting payment from another

party, typically for goods or services

rendered.

1Request for Payment is a future technology that is under development and timelines are subject to change. 18

Request for Payment1 Benefits

Payers

Instant reconciliation streamlines the accounts

receivable process and gives full visibility into

payment details in the remittance

Immediate funds availability reduces chance of

funds arriving late

Enhanced customer experience creates a

competitive advantage and reduces costly manual

billing processes

Bill delivery through secure banking channels (not

through e-mail or public internet) reduces risk for

both parties

Instant notifications that the customer has

successfully received the bill

Bill delivery through secure banking channels (not

through e-mail or public internet) reduces risk for

both parties

Instant notifications that Verizon has successfully

received funds

Easy access for customers to records of all bills

paid via online banking portal

Instant payments adds the potential for a day of

extra liquidity and allow for last-minute bill-

pay/emergency transfers

Straight-through digital processing reduces the need

for high-cost checks and mail

1Request for Payment is a future technology that is under development and timelines are subject to change.

Billers

19

What is Zelle®?Zelle® is a digital payments network that facilitates the transfer of money to anyone with a U.S. domiciled bank

account and email address or U.S. mobile phone number

The solution

◼ Zelle is a product of Early Warning®, which is a private company owned by seven of the nation’s largest financial institutions The Zelle network consists of 220+

financial institutions, over 100 million customers1 who have access to Zelle through their bank or credit union

◼ For consumers who are already enrolled with Zelle through their bank, email or U.S. mobile phone number act as a “token” that is linked to an existing bank

account, allowing payments to be automatically pushed to recipients

Key benefits

◼ Speed – Consumers do not have to manually register to a new portal and accept payments, allowing for faster funds transfer

◼ Efficiency – Clients only need to provide an email or U.S. mobile phone number to identify Zelle-enrolled consumers

◼ Reach – Zelle financial institution participants represent nearly 80% of the online DDAs in the U.S. and can reach 97% of the U.S. debit card holders. On average,

more than 100,000 consumers are enrolling daily2

◼ Safety – With the security consumers already know and trust from their financial institution1 Source: http://www.zellepay.com/

Note: Zelle is a trademark of Early Warning Services2Source: 2018 Zelle in a nutshell webinar hosted by NACHA 20

http://www.zellepay.com/

Adoption of Mobile Money TransfersIn the US, the number of mobile P2P users is expected to increase to 126 million (57% of all mobile device owners) by 2020

Transfer of funds from one person’s bank account to another person’s bank account via online/mobile using an email address or mobile phone number

◼With mobile P2P you don't need the correct change, a paper check, or a

nearby ATM

◼Transactions are also fast compared to the time it often takes to wait for

a check or bank transfer to clear

◼Mobile P2P payments remove some of the stigma of asking for money—

users can request money remotely

Source:

https://www.forbes.com/sites/ronshevlin

/2019/02/11/venmo-versus-

zelle/#63fbb3043c62

Data based on Q2 Cornerstone advisors21

https://www.forbes.com/sites/ronshevlin/2019/02/11/venmo-versus-zelle/#63fbb3043c62

Source:




Employees: Security, Speed, Tracking, and Details are the

most important elements of pay

Employee View: Most Important Elements of Pay, by Generation (% Selecting, respondents asked to pick the top three most important)

22


Agenda

Page


2 Faster Payments

◼ U.S. Updates

◼ Regional Updates

16

16

23

3 Looking Ahead 32

4 3DS 41

PSD2 Open Banking – XS2A (Access to account in EMEA)

◼ XS2A concept provides the ability for regulated Third Party

Providers (TPPs) to offer services to account holders for

accessing account information and initiating payments from

their bank account

◼ AISP – Account Information Service Provider

◼ PISP – Payment Initiation Service Provider

◼ Regulatory Technical Standards (RTS) are being developed

by the EBA, which will cover the communication standards for

AISP and PISP to interact with banks and PSPs

◼ The connection between AISP/PISP and banks is likely to be

enabled using Application Programming Interface (APIs)

which enable companies to connect directly to financial

institutions

Bank

(TPP)PSU Bank

Access Data

PISP

PSD2 allows regulated third-party PISPs to initiate payments

directly from customer payment accounts so long as they

have the customer’s consent.

AISP

Regulated third-party AISPs can access customer data (with the

customer’s consent) to provide an overview of a customer’s

payment accounts (balances and transactions) with different banks

in one place Bank

(TPP)

PSU Banks

Access Data

Overview: Access to Account (XS2A) Bank acting as a PISP

Bank acting as a AISP

Bank

Client

Bank

Client

23

Real Time Payments landscape

24

A focus on selected Instant Payment solutions

◼ Credit transfers in GBP within 15 seconds, with a maximum value of £250,000

◼ The clearing is facing an overhaul through the creation of the NPSO (New Payment Systems Operator) and the merger of U.K.’s

three ACH-clearings (Bacs, FPS and C&CCC)

◼ J.P. Morgan currently operates as an indirect agency with 18 by 5 availability. Our strategic ambition is to become a Direct

Participant and offer 24 by 7 processing during 2019

◼ For further information, please visit; http://www.fasterpayments.org.uk/

◼ Credit transfers in Euro within 10 seconds, with a value of up to EUR 15,000

◼ SEPA ‘inst’ payments available 24 x 7 x 365 across the SEPA region

◼ J.P. Morgan is an original funding member of EBA Clearing’s SEPA Instant Payments, and launched SEPA Instant in April

2019

◼ For further information please see; https://www.ebaclearing.eu/services/instant-payments/introduction/

◼ Credit transfers within 20 seconds in any currency – settled on accounts held with the European Central Bank

◼ No value limit applied for any available currency, however the clearing is expected to be predominantly Euro focused

◼ The European Central Bank has announced plans to enhance TARGET2 with TARGET Instant Payments Settlement (TIPS);

J.P. Morgan is a direct TARGET2 member and part of the Central Bank’s TIPS Contact Group

◼ J.P. Morgan is currently evaluating the business case and the proposed requirements by direct members. For further

information please see; https://www.ecb.europa.eu/paym/initiatives/html/documents.en.html

U.K. – Faster Payments (FPS) – live since 2008

SEPA Instant Payment – Live Nov 2017, critical mass expected by 2020

TARGET Instant Payments Settlement (TIPS) – Live Nov 2018 across markets with Euro as currency

25

http://www.fasterpayments.org.uk/

https://www.ebaclearing.eu/services/instant-payments/introduction/

https://www.ecb.europa.eu/paym/initiatives/html/documents.en.html

A focus on selected Instant Payment solutions

◼ The Saudi Arabian Monetary Agency (SAMA) is playing a pioneering role in the region when it comes to transforming the payments landscape

by establishing an innovative and efficient payments infrastructure

◼ SAMA is initiating the development of a new market infrastructure for low-value retail payments that aims to reduce reliance on cash and

improve the efficiency of the financial ecosystem. The new infrastructure will have 24/7 capabilities and support ISO 20022 messaging

standards

◼ J.P. Morgan is closely monitoring the development across the region through our local branch. For further information, visit;

http://www.sama.gov.sa/en-US/Pages/default.aspx

◼ Switzerland was one of the very earliest adopters of real-time payment systems which handles a combination of low, medium and high value

transactions

◼ Today’s system is the 4th generation, processing Swiss franc payments between financial institutions in real time on a gross settlement basis –

24 hours per day from Monday to Friday

◼ Proprietary message formats with introduction of ISO 20022 was initiated in 2015, with full migration completed by 2018

◼ J.P. Morgan is currently supporting SIC (same-day) transactions through our local branch with direct membership of the clearing. For further

information please visit; https://www.snb.ch/en/iabout/paytrans/sic/id/paytrans_swiss_interbank_clearing

◼ BIR is a Bankgiro developed clearing, mainly to support the mobile-app ‘Swish’, which allows C-2-B and C-2-C users to make instant

payments via mobile phones to recipients based on their telephone number The advantage of not having to utilise account numbers, IBAN etc

excels the user experience and the app has more than 6 million users - 60%+ of the population

◼ The rapid uptake has accelerated the already steep decline is cash, making Sweden one of the least cash dependent countries in the world

◼ J.P. Morgan is currently supporting Bankgiro (next-day) transactions through our partner bank arrangement across the Nordic region. For

further information please visit; https://www.bankgirot.se/en/about-bankgirot/our-offer/payment-systems/payments-real-time/

https://www.six-interbank-clearing.com/en/home/payment-services/sic/how-it-works.html

Saudi Arabia - Future-Ready ACH – In planning phase. Expected to be deployed during 2018

Switzerland – SIC – setting an industry standard since 1987

Sweden - BIR (Betalning i Realtid) – Instant Payments via phone numbers – live since 2012

26

http://www.sama.gov.sa/en-US/Pages/default.aspx

https://www.snb.ch/en/iabout/paytrans/sic/id/paytrans_swiss_interbank_clearing

https://www.bankgirot.se/en/about-bankgirot/our-offer/payment-systems/payments-real-time/

APAC Real Time Payments Real time payment capabilities progressively expand across APAC

Client Benefits

E-commerce

Enabler

Instant

Payment

Finality and

Visibility

Industry

Digitization

Asia Pacific Real-time Payment landscape

▪ Allows 24x7 availability

▪ Instant payment confirmation

▪ Rich payment format with ISO20022

▪ Real-time transaction confirmation

▪ Real-time view of cash position

▪ No return, reversal or chargebacks

▪ Introduction of Pay Alias (e.g. Pay Now SG)

▪ API-based, supports frictionless payment integration

▪ Supports value-added services e.g. QR code, Request to

Pay

Improved

Liquidity

Management

▪ Increased DPO via last second initiation

▪ Better controls

▪ Immediate funds availability and visibility

JPKR

CN

SG

HK

AU

TH

PH

IN

MY

Markets Live in APAC

Money is available to payee

within seconds

Credit transfers in local

currency of up to

permissible limits

Instant payments

available 24/7/365

ISO 20022 supports

sophisticated

applications

Sender initiates the transaction

from their own funded DDA

SpeedAmount AvailabilityMessaging Security

ISO 20022

27

eCommerce Global Growth

APAC leading the opportunity

APAC e-retail revenue is expected to

nearly double by 2021

Evolving Payments Landscape

E-wallets dominant

Technology Disruption

Internet penetration will be ~49% by 2019

Significant growth in online mobile

usage and internet penetration

APAC eCommerce sales1 (U.S. $’B)e-Commerce sales by payment methods

Digital wallets are overtaking traditional

cash payment methods

30%

22%

16%

11%

7%4%

10%10%

51%

16%

9%7%

4% 3%

CreditCard

eWallet Banktransfer

Cash onDelivery

Debitcard

Pre-PaidCards

Others

2016 2021E

1,8

59

2,2

90

2,7

74

3,3

05

3,8

79

4,4

79

1,0

53

1,3

65

1,7

23

2,1

20

2,5

52

3,0

01

56.6%

59.6%

62.1%

64.1%

65.8%

67.0%

50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2016 2017 2018 2019 2020 2021

Worldwide eComm Sales

APAC eComm Sales

APAC % of Total

Source: eMarketer Jun 2017;Note:Includes products or services

ordered using the internet via any device, regardless of the method

of payment or fulfillment; excludes travel and event tickets; 1Dollar

amount of Retail e-commerce transactions (includes both B2C and

C2C) - gross merchandise value

Source: Worldpay as of Nov 2017

Online Penetration Asia Pacific

29.5% 32.8% 35.7% 38.5%

40.6%

43.1%45.8%

48.8%

25%

30%

35%

40%

45%

50%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2016 2017 2018 2019

Smartphone Penetration

Internet Penetration

Source: eMarketer Nov 2017, Statista Aug 2015

Note: Individuals of any age who own at least one

smartphone and use the smartphone(s) at least once per

month

More than 75% of connected consumers in APAC made their most recent eCommerce

purchase via mobile, attributed to emerging, mobile-first markets in the region

Source: Kantar TNS annual study of digital behaviors, Dec 2017;

Digital disruption is sweeping Asia, making it the next big

eCommerce opportunity

28

Further expansion of mobile payment users and rapid

growth of mobile payment transactions

2.15

3.55

4.62

5.606.44

6.9865.1%

30.1%

21.2%15.0%

8.4%

0%

10%

20%

30%

40%

50%

60%

70%

0.0

2.0

4.0

6.0

8.0

2014 2015 2016 2017 2018E 2019EMobile payment users Growth rate

0.21.2 6.0 12.2

58.8

98.7

165.9

229.0

89.2%

707.0%

391.3%

103.5%

381.9%

68.0% 68.0% 38.0%

0%

200%

400%

600%

800%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2012 2013 2014 2015 2016 2017 2018E 2019EOnline payment Mobile payment

Online payment growth rate Mobile payment growth rate

2014-2019E China user scale and forecast (100 million)

2012-2019E online and mobile payment transactions

(CNY tn)

◼ 2017 total mobile payment users of 560mm; increase of 21.2% compared to

2016

◼ 2018E flattening growth rate for mobile payment users; forecasted to amount

to 644mm

◼ 2017 online payment transactions of CNY 26tn; increase of 30.7% compared

to 2016

◼ 2017 mobile payment transactions of CNY 98.7tn; increase of 68.0%

compared to 2016

Market share of third-party payment providers by transaction size

31.5%

19.3%16.7%

32.5%

54.4%39.8%

5.8%Mobile payment Online payment

◼ Alipay

◼ Tenpay.com

◼ ChinaUMS

◼ Others

Source: iResearch

◼ Alipay

◼ Tenpay.com

◼ Others

29

Source:




Global Employer and Employee perspectives on

Nontraditional pay options: Offerings and Usage

30


Source:




Global Employer and Employee perspectives on Nontraditional pay options

Employee

usage/acceptance

Employee views (% selecting)

31


Agenda

Page



3 Looking Ahead

◼ Impact of New Technologies

◼ Innovation through Blockchain

32

32

38

4 3DS 41

Prepare for Real-Time TreasuryWith markets moving to 24/7 clearing, treasurers should be prepared to receive payments at any time. With cash settlement taking place

24/7, the need for real time visibility, automated processing and dynamic liquidity management becomes critical

Decision Making

APIs

Data

Analytics

Virtual

Accounts

Robotics

Machine

Learning

Unitized Time

Deposits

Virtual

Accounts

Real time

balance

reporting

Real time

transaction

reporting

Automated

reconciliation

Automated

postings

Real Time

Treasury

Real time

analytics

Automated

payments

Automated

collections

Automated

cash

concentration

Automated

FX

Automated

investments

Enhanced working capital

Reduced operating cash buffers

Improved yield optimization

Increased straight through

processing and reconciliation

More time to focus on strategic

activities

Benefits to Treasury

32

Role of Technology in Treasury ManagementHowever the technology tools to help Corporate Treasurer’s achieve their objectives have evolved over time

Batch

Processing

Task Driven Physical

Systems

Real-Time

Processing

Intelligence Virtual

ACH

Host-to-Host

Treasury Systems

ERP SystemsSpreadsheets

Specialist Tools Machine LearningBlockchain

CloudAPI Robotics

Technology Tools

v

Past Future

33

The Six D’s of Technology DisruptionUnderstanding the technological progression of these new technologies is critical to planning for their disruption.

The Six D’s:

1. Digitized

2. Deceptive

3. Disruptive

4. Demonetized

5. Dematerialized

6. Democratized

Exponential Growth Path of New Technologies

Growth

Deceptive

Disruptive

Blockchain

Cloud

Machine Learning

Robotics

APIs

Exponential growth

Linear

growth

Demonetized

Dematerialized

Democratized

Data

Analytics

Digitized

Time

Source: Singularity University

34

Transforming the Future of Payments

◼ Providing unparalleled access to the

market

◼ Enabling opportunity to grow your

business locally, regionally and

globally

Growth

◼ Providing the tools you need to put you

in the driver’s seat

◼ Enabling you to Implement automated

controls to help mitigate your risks and

improve visibility and control over your

payments

Control

◼ Creating efficiencies helping you to

save time and money

◼ Visibility into global payments

information in one place to effectively

mange cash position, FX exposure and

…

Optimization

Innovation fueled by emerging technologies

Other technologies

Machine Learning, Artificial

Intelligence and Data

Streaming, etc.

Application Programming

Interfaces (APIs)

Set of integration tools and

rule sets that specify how

counterparties interact with

each other

Cloud Computing

A shared computing model

that provides resources and

data on demand

Distributed Ledger Technology

(Blockchain)

A distributed network that

uses cryptography to validate

transactions in real time

without relying on a central

intermediary

Emerging technologies continue to impact change and fuel innovation across all industries

Innovative Technology Examples in Treasury Services:

◼ Enhanced client experiences

◼ Create new revenue streams

◼ Operational efficiencies

Innovative Technologies drives J.P. Morgan Treasury Services:

◼ Big Data – Liquidity/Cash Management Dashboard

◼ Cyberfraud Detection – Wire Positive Pay

◼ AI / Machine Learning – Intelligence Repair System

35

Source:




Employers and Employees agree: Optionality on pay will be

critical for talent management and recruitment

Employers agree that…

companies will need to

customize payment options

to remain competitive in

the war for talent.

their company has seen a

need for different employee

payment options.

it is important to have the

ability to customize pay

methods for different types

of workers.

When making a decision to accept a job offer,

employees say…

the ability to

select pay frequency would

make a difference.

the ability to have early

access to earned wages

would make a difference.

the ability to receive same

day pay would make a

difference.

36


Source:




Employers: a majority believe changes are needed in the

delivery of pay and the benefits outweigh the risks

37


Agenda

Page



3 Looking Ahead

◼ Impact of New Technologies

◼ Innovation through Blockchain

32

32

38

4 3DS 41

How Blockchain Can Improve Global Payments

Source: https://gomedici.com/overview-of-the-payments-industry/

• Through smart contracts,

foreign exchange can be

sourced from participants

willing to facilitate the

conversion of fiat currencies

• Enable international

regulators to monitor

transactions in real-time and

enforce AML Policies.

• Allows transfer of funds with

minimal fees and efficient

delivery without need of

correspondent banks

38

◼ IIN’s first application called Resolve streamlines and automates compliance related

inquiries reducing payment delays, increasing efficiency, and improving the payor

and payee experience

◼ Enables cross-border payments to reach beneficiaries faster while reducing costs

associated with compliance inquiries

◼ Maintains Personal Information (PI) within secure network provisioned for validated

payments

◼ Actively growing network with key foreign correspondent banking clients to further

enable faster payment execution

Interbank Information Network (iiN)A global distributed network for real-time, interconnected flow of information that will address immediate pain points across the financial industry and

enable new services

◼ An industry platform that leverages J.P. Morgan’s Quorum,

a blockchain technology, to enable frictionless information

exchange across banks

◼ Information is exchanged and maintained through a

secure and permissioned network

◼ IIN’s first application called Resolve streamlines the

process for resolving compliance inquiries

◼ Platform provides the foundational technology and

architecture for participants to develop new applications

or value-added services

◼ Applications will facilitate informed, real-time risk

management, fraud prevention, compliance screening and

reduce timely payment errors and returns

Interbank

Information

Network

Remitter

Remitter

Bank

Correspondent

Bank B Beneficiary

bank

3

22

Compliance

inquiry

1 4

1 Data request 2 Data exchange 3 4 Data remittanceClient benefits

Key developments

Scan the QR code with your smartphone or

click the image to view the video on Interbank

Information Network

IIN model for compliance inquiries

39

https://players.brightcove.net/887906362001/default_default/index.html?videoId=5676374580001

iin Continued

40

Agenda

Page



3 Looking Ahead 32

4 3DS 41

State of Industry

• Fraud is shifting from POS to online now that EMV is

rolled out

• Phishing and hacking of PII information is becoming more

prevalent

• Proliferation of wallets and migration of commerce to

mobile

3D Secure (3DS) is the industry standard protocol that

allows the issuer to authenticate digital transactions pre-

authorization

3D Secure Summary

41

How 3DS Works

1. The 3DS Merchant contacts Directory Server (DS) to complete a 3DS request

2. If the Issuer participates the DS will attempt to connect the Issuer’s Access Control Server (ACS). If the

Issuer does not participate or the DS cannot connect to the Issuer’s ACS, the DS will generate and send the

3DS data to the merchant via the Attempts ACS

3. The Issuer will use the data supplied by the merchant and customer to authenticate the cardholder and

provide a response back to the DS (it is during this step that the consumer may be challenged with OOB)

4. The 3DS data required for the authorization is provided to the Merchant by the DS

5. The Merchant (or Merchant’s Processor) transmits the 3DS data in the Authorization Request

6. The Issuer provides response results of the 3DS data validation in the Authorization Response

Risk Assessment

ALLOW CHALLENGE

DENY

42

In App User Experience

• ALLOW transactions bypass the challenge view and move to checkout

• ACS provides HTML in accordance of mobile template to enable issuers to provide consistent experience across merchants

Step 1:

CM visits Merchant site

Step 2:

CM selects item and

moves to checkout

Step 3.

Issuer challenges CM

for further verification

(Risk-based)

Step 4:

Transaction is completed

Discover

43

Phone fraud by the numbers

1 in 2500Fraudulent calls to financial call centers

5Avg. # of calls needed to compromise an account

$0.57Lost for every call into your call center

44

147 audio features

in each fingerprint

Phoneprinting™

LOSS

• Packet loss

• Robotization

• Dropped frames

SPECTRUM

• Quantization

• Frequency filters

• Codec artifacts

NOISE

• Clarity

• Correlation

• Signal-to-noise

ratio

Phone Type Geo-Location Risk Score

Call Audio

45

the future of payments (is now)

Documents