FROST & SULLIVAN BEST PRACTICES AWARD€¦ · Competitive Analysis ... Best Practices Recognition: 10 Steps to Researching, Identifying, ... Implementing real-time payments in a strategic

FROST & SULLIVAN BEST PRACTICES AWARD

Product Leadership 2019

REAL-TIME PAYMENTS - GLOBAL

BEST PRACTICES RESEARCH

© Frost & Sullivan 2019 2 "We Accelerate Growth"

Contents

Background and Company Performance ...................................................................................... 3

Industry Challenges ........................................................................................................... 3

Product Family Attributes and Business Impact ..................................................................... 6

Competitive Analysis .......................................................................................................... 8

Conclusion ........................................................................................................................ 8

Significance of Product Leadership ............................................................................................. 9

Understanding Product Leadership ............................................................................................. 9

Key Benchmarking Criteria ................................................................................................10

Product Family Attributes ..................................................................................................10

Business Impact ...............................................................................................................10

Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices .....11

The Intersection between 360-Degree Research and Best Practices Awards ....................................12

Research Methodology ......................................................................................................12

About Frost & Sullivan .............................................................................................................12



Background and Company Performance

Industry Challenges

The digital payments industry is in the midst of a period of profound disruption. New

technology developments and shifting demands of businesses and consumers create new

challenges for the existing products, services, and costs of digital payments ecosystem

participants. The key mega trends in the digital payments industry include:

‘Bricks and Clicks’ – With the increased consumer demand for online and mobile

products and services, payments are going digital, and online and mobile transactions

are increasing rapidly.

Social Trends – As more millennials enter the workforce, the demand for

uninterrupted, anytime and anywhere service delivery will increase with an emphasis

on online and mobile transactions.

Technology Trends – Connectivity and convergence of technologies will alter delivery

models, and new types of data about the consumer will become increasingly available.

Faster payments and open APIs are two key transformational trends that have notable

implications for the financial services industry.

New Business Models – Behavioral changes, customer demands, ecosystem changes,

increased use of information technology, and advanced analytics enable new products

and services, leading to new business models.

Economic Trends – The demands of evolving demographics, financial inclusion, data

security and tighter regulations will drive change. Blockchain, Artificial Intelligence,

and Machine Learning will emerge as disruptive forces in the industry.

In the rapidly evolving digital payments environment, it is critical that banks, financial

institutions, financial intermediaries and businesses select the right set of IT tools,

technologies, and platforms for executing on their digital payments strategies. The key

industry requirements for banks and financial institutions for digital payments evolution

are presented in the exhibit below.



Real-time Payments

Real-time payments haveemerged as the most attractiveuse case for digital payments inthe recent times. Technologies toenable banks to deliver real-timepayment capabilities are likely tosee increased adoption.

FinTech & Bank Collaboration

FinTech companies havetransformed the paymentslandscape. FinTech companiesand banks must focus on greatercollaboration to deliverdifferentiated customerexperiences.

Enterprise Fraud Management

Behavioral analytics based fraudmanagement solutions that canleverage the power of machinelearning (ML) and artificialintelligence (AI) can help addressthe emerging fraud threats indigital banking and payments.

Cloud-based Solutions

Adoption of cloud-based bankingand payment platforms willcontinue to increase. Cloud-based platforms can also enablesmaller banks to deliver financialvalue added serviceseconomically at scale.

Customer Experience

FInancial institutions must deliverdigital-first, personalizedcustomer service. AI-drivensolutions present neweropportunities to connect withcustomers in ways that weresimply not possible earlier.

Universal Payments

Anytime, anywhere paymentsenablement solution that arechannel and device agnostic andcan be facilitated by unifiedidentity orchestration will beimportant for digital paymentsevolution.

Source: Frost & Sullivan

Real-time payments have emerged as a strategic imperative for next-generation digital

payments enablement strategies. Initially deployed in the mid-1970s in Asia, there are

currently more than 25 real-time payments schemes that have been deployed globally.

Not only have real-time payments schemes captured share of payments that were

previously managed through the established rails, real-time payments schemes have

proven to drive net new transactions by supporting new payment parties and facilitating

machine-driven micro-transactions. The key technical and strategic challenges that must

be overcome in order to fully capitalize on the real-time payments opportunity include:

Implementing real-time payments in a strategic manner: Banks must take a

longer-term, strategic view of their real-time payments strategies and aspire to

benefit from the value-rich digital and overlay services that the market is creating

around real-time payments. The longer-term real-time payments service needs of

banks cannot be met by core banking solution providers that are simply positioning

real-time payments as an extension of their platforms. Frost & Sullivan strongly

recommends that banks and financial institutions leverage real-time payments

solutions that offer end-to-end processing, orchestration and clearing and

settlement capabilities engineered specifically for processing real-time payments.



Efficient support for multiple payment schemes: Banks and financial institutions face

an increasing number of options to enable faster payments. For example, various

initiatives are currently underway to implement bank-centric faster and real-time

payments in the U.S. However, this wealth of modern payment options also has the

potential to further complicate banks’ business and IT strategies, particularly if banks

and financial institutions are required to individually support multiple payment

schemes. As more national and regional solutions are developed, there is a real risk of

increased fragmentation and lack of interoperability.

Implementing appropriate service and support capabilities: Banks and financial

institutions re-align existing IT systems and processes to support real-time payments.

Additionally, they must invest in customer support services and functions such as fraud

prevention, exceptions handling, liquidity management and business intelligence to

deliver a superior customer experience. Banks, financial institutions, and real-time

payments solution providers must also comply with the strict service-level agreements

(SLAs) and non-functional requirements (NFRs) for real-time payments as mandated

by real-time payments schemes.

Establishing the business case for real-time payments: Banks and financial institutions

may not be able to charge a premium for instant payments from consumers. However,

there are avenues to charge for instant payments in the enterprise or merchant

acquiring segments. Identifying the preferred business cases for real-time payments,

promoting real-time payments services as the preferred mechanism for supporting

these use cases, and demonstrating the superiority of real-time payments over the

traditional payment mechanism are among the key industry challenges. Banks

implementing real-time payments solutions, systems, and processes and must

consider both direct benefits, such as charges for real-time payments money transfers,

as well as indirect benefits such as improved customer experience when estimating

investment returns in real-time payments.

Creating an API-driven service environment: Banks and financial institutions

supporting third-party integrations into their banking systems must approach real-time

payments and open access requirements holistically. In other words, real-time

payments implementations must support open banking requirements in order to create

greater efficiencies in system deployments for new use cases. This alleviates the need

to justify the investment case for real-time payments, since many banks already

implement open APIs in response to regulatory mandates and other market demands.



Product Family Attributes and Business Impact

ACI Worldwide powers electronic payments for more than 5,100 organizations around the

world. More than 1,000 of the largest financial institutions and intermediaries, as well as

thousands of global merchants, rely on ACI to execute $14 trillion each day in payments

and securities. Through its comprehensive suite of software solutions delivered on

customer premises or through ACI’s private cloud, the company provides real-

time, immediate payments capabilities and delivers complete omni-channel

payments experiences. ACI’s payment capabilities, technologies, and solutions are

marketed under the brand name Universal Payments, or “UP,” which describes the breadth

and depth of ACI’s product offerings.

ACI’s real-time payment solution offers end-to-end processing, orchestration and clearing,

and settlement system engineered specifically for processing a real-time payment. By

enabling banks, financial institutions, and payment service providers to address the full

spectrum of their real-time payments requirements through proven, customizable, and

standards-based implementations, ACI has emerged as the preferred provider of real-time

payments solutions. The key success factors for ACI are presented below.

Comprehensive product line: Frost & Sullivan’s research indicates that ACI offers the

most comprehensive solution for real time and immediate payments. It supports both

low-and high-value, real-time payment processing for banks and financial

intermediaries globally, ensuring multi-bank, multi-currency and 24x7 payment

processing capabilities, as well as complete and ongoing regulatory compliance. ACI’s

UP Immediate Payments solution enables banks to meet multiple real-time payments

scheme requirements and to quickly create differentiated products to address

consumer, business and merchant demands and is available on customer premise,

public cloud or through ACI's private cloud. It offers pre-packaged offerings that are

tested and proven for major schemes globally, including U.K. Faster Payments, The

Clearing House Real-Time Payments System, Zelle Network, ECB TIPS, STET, EBA RT1,

Malaysia RPP and Australia NPP. ACI’s UP Real-Time Payments solution includes UP

Immediate Payments and provides the only global implementation that allows banks to

address their RTGS (Real-Time Gross Settlement), SWIFT messaging, ACH and real-

time faster payments needs with a single, universal offering. Finally ACI's consumer

banking solution, UP Retail Payments, now also includes UP Immediate Payments,

providing retail banks with a single offering to process cards, non-cards, real-time

digital payments.



Technology Innovation: UP Immediate Payments is offered on-premise, via a public

cloud or on ACI's private cloud deployment model to support the unique deployment

needs of customers. With modern, cost-effective and scalable technology running on

the Linux platform, ACIs solutions are well-suited to enable banks to address their

strategic or tactical requirements for real-time payments. ACI’s products are built for

extreme levels of availability and reliability and are designed to protect existing

investments by enabling integration and reuse of systems already in place, which is an

important customer benefit. Other key technology innovations include:

The ability to map and process any message format, including ISO 20022, ISO

8583 and XML;

Integrated real-time fraud monitoring and detection capabilities;

Pre-configured payment components and business workflow tools; and

Service packs delivering additional services such as business intelligence, liquidity

management and exceptions, or real-time balance to ensure real-time balance data

is available 24/7 to all customers across all banking channels

Proven deployments: Natively built for real-time payments, ACI’s solutions are

currently used by nearly 50 customers and partners globally to support their real-time

payments initiatives. ACI has implemented UP Immediate Payments to meet the

unique requirements of different country schemes, including UK Faster Payments

Service, Singapore FAST (Fast And Secure Transfers), U.S. RTP® and Zelle schemes,

SEPA (Single Euro Payments Area) Instant Payments in the EU, Australia NPP (New

Payments Platform), and PayNet Malaysia. The adoption of ACI’s real-time payment

solutions by leading real-time payment schemes is a clear validation of the product,

service and support capabilities of ACI. The Company continues to invest aggressively

in new product enhancements and new country schemes, to support its long-term

growth strategy and ensure that all customers – regardless of their size or location –

receive high quality service and support.

Superior operational efficiency and customer retention – ACI offers flexible service

arrangements for solution deployments. The company has developed close

partnerships with its customers, which has led to high customer retention rates and an

improved ability to promote multi-dimensional service offerings. As customers continue

to execute on their transformational digital enablement strategies, ACI offers the most

efficient approach for banks to overhaul or upgrade their payments infrastructure and

support real-time payments. ACI has been active in real-time payments for over 10

years and, as the U.S. market brings more opportunities, the company is uniquely

positioned to fully capitalize on accelerating growth. Customer feedback consistently

indicates a high level of satisfaction with the efficient operating processes, improved

service quality, and convenience of working with ACI.



Competitive Analysis

The market for digital payments enablement technologies and solutions remains extremely

competitive. In this environment, Frost & Sullivan’s research indicates that ACI is one of

the very few companies that has successfully developed and integrated the core

components in a seamless manner to offer real-time payment solutions that can be used

effectively by various categories of banks and financial institutions. The ability to serve a

wide range of real-time payments requirements and deliver an integrated portfolio of

value-added services for real-time payments is a key differentiator for ACI.

The lack of leverage globally has limited the ability of competitors to scale and drive

revenue growth and operating efficiency. ACI’s financial services industry expertise

combined with its ability to offer multiple applications, services and integrated solutions to

individual clients, enhances its competitiveness against companies with more limited

offerings. Technological excellence, global reach, product superiority, proven

implementations, and a management team focused on speed-of-execution are clear

differentiators for ACI in real time payments.

Conclusion

By continuously aligning new product enhancements with strategic market trends and

evolving customer needs, ACI has ensured that its solutions remain the best option for

real- time payments ecosystem participants. ACI’s payments solutions are deployed

globally and the company has driven innovation and thought leadership in the financial

services sector. With its strong overall performance, ACI has earned Frost & Sullivan’s

2019 Product Leadership Award for its real-time payment solutions.



Significance of Product Leadership

Ultimately, growth in any organization depends upon customers purchasing from a

company and then making the decision to return time and again. A comprehensive

product line, filled with high-quality, value-driven options, is the key to building an

engaged customer base. To achieve and maintain product excellence, an organization

must strive to be best-in-class in three key areas: understanding demand, nurturing the

brand, and differentiating from the competition.

Understanding Product Leadership

Demand forecasting, branding, and differentiating all play a critical role in finding growth

opportunities for your product line. This three-fold focus, however, must be complemented

by an equally rigorous focus on pursuing those opportunities to a best-in-class standard.

Customer communications, customer feedback, pricing, and competitor actions must all be

managed and monitored for ongoing success. If an organization can successfully parlay

product excellence into positive business impact, increased market share will inevitably

follow over time.



Key Benchmarking Criteria

For the Product Leadership Award, Frost & Sullivan analysts independently evaluated two

key factors—Product Family Attributes and Business Impact—according to the criteria

identified below.

Product Family Attributes

Criterion 1: Match to Needs

Requirement: Customer needs directly influence and inspire the design and positioning of

the product family.

Criterion 2: Reliability and Quality

Requirement: Products consistently meet or exceed customer expectations for

performance and length of service.

Criterion 3: Product/Service Value

Requirement: Products or services offer the best value for the price, compared to similar

offerings in the market.

Criterion 4: Positioning

Requirement: Products or services address unique, unmet need that competitors cannot

easily replicate or replace.

Criterion 5: Design

Requirement: The product features an innovative design, enhancing both visual appeal

and ease of use.

Business Impact

Criterion 1: Financial Performance

Requirement: Overall financial performance is strong in terms of revenues, revenue

growth, operating margin, and other key financial metrics.

Criterion 2: Customer Acquisition

Requirement: Product strength enables acquisition of new customers, even as it enhances

retention of current customers.

Criterion 3: Operational Efficiency

Requirement: Staff is able to perform assigned tasks productively, quickly, and to a high

quality standard.

Criterion 4: Growth Potential

Requirements: Product quality strengthens brand, reinforces customer loyalty, and

enhances growth potential.

Criterion 5: Human Capital

Requirement: Company culture is characterized by a strong commitment to product

quality and customer impact, which in turn enhances employee morale and retention.



Best Practices Recognition: 10 Steps to Researching, Identifying, and Recognizing Best Practices

Frost & Sullivan analysts follow a 10-step process to evaluate Award candidates and

assess their fit with select best practice criteria. The reputation and integrity of the

Awards are based on close adherence to this process.

STEP OBJECTIVE KEY ACTIVITIES OUTPUT

1 Monitor, target, and screen

Identify Award recipient candidates from around the globe

Conduct in-depth industry research

Identify emerging sectors

Scan multiple geographies

Pipeline of candidates who potentially meet all best-practice criteria

2 Perform 360-degree research

Perform comprehensive, 360-degree research on all candidates in the pipeline

Interview thought leaders and industry practitioners

Assess candidates’ fit with best-practice criteria

Rank all candidates

Matrix positioning of all candidates’ performance relative to one another

3

Invite thought leadership in best practices

Perform in-depth examination of all candidates

Confirm best-practice criteria Examine eligibility of all

candidates Identify any information gaps

Detailed profiles of all ranked candidates

4

Initiate research director review

Conduct an unbiased evaluation of all candidate profiles

Brainstorm ranking options Invite multiple perspectives

on candidates’ performance Update candidate profiles

Final prioritization of all eligible candidates and companion best-practice positioning paper

5

Assemble panel of industry experts

Present findings to an expert panel of industry thought leaders

Share findings Strengthen cases for

candidate eligibility Prioritize candidates

Refined list of prioritized Award candidates

6

Conduct global industry review

Build consensus on Award candidates’ eligibility

Hold global team meeting to review all candidates

Pressure-test fit with criteria Confirm inclusion of all

eligible candidates

Final list of eligible Award candidates, representing success stories worldwide

7 Perform quality check

Develop official Award consideration materials

Perform final performance benchmarking activities

Write nominations Perform quality review

High-quality, accurate, and creative presentation of nominees’ successes

8

Reconnect with panel of industry experts

Finalize the selection of the best-practice Award recipient

Review analysis with panel Build consensus Select recipient

Decision on which company performs best against all best-practice criteria

9 Communicate recognition

Inform Award recipient of Award recognition

Present Award to the CEO Inspire the organization for

continued success Celebrate the recipient’s

performance

Announcement of Award and plan for how recipient can use the Award to enhance the brand

10 Take strategic action

Upon licensing, company is able to share Award news with stakeholders and customers

Coordinate media outreach Design a marketing plan Assess Award’s role in future

strategic planning

Widespread awareness of recipient’s Award status among investors, media personnel, and employees



The Intersection between 360-Degree Research and Best Practices Awards

Research Methodology

Frost & Sullivan’s 360-degree research

methodology represents the analytical rigor

of our research process. It offers a 360-

degree-view of industry challenges, trends,

and issues by integrating all 7 of Frost &

Sullivan's research methodologies. Too

often companies make important growth

decisions based on a narrow understanding

of their environment, leading to errors of

both omission and commission. Successful

growth strategies are founded on a

thorough understanding of market,

technical, economic, financial, customer,

best practices, and demographic analyses.

The integration of these research

disciplines into the 360-degree research

methodology provides an evaluation

platform for benchmarking industry

participants and for identifying those performing at best-in-class levels.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth

and achieve best-in-class positions in growth, innovation and leadership. The company's

Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined

research and best practice models to drive the generation, evaluation, and implementation

of powerful growth strategies. Frost & Sullivan leverages more than 50 years of

experience in partnering with Global 1000 companies, emerging businesses, and the

investment community from 45 offices on six continents. To join our Growth Partnership,

please visit http://www.frost.com.

360-DEGREE RESEARCH: SEEING ORDER IN

THE CHAOS

http://www.frost.com/

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FROST & SULLIVAN BEST PRACTICES AWARD€¦ · Competitive Analysis ... Best Practices Recognition: 10 Steps to Researching, Identifying, ... Implementing real-time payments in a strategic