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The Need for SpeedHolger EbertDivision Manager, Treasury ManagementGovernment & Institutional BankingWells Fargo Bank, N.A.
April 17, 2018
11
Hold on to your seats
The pace and promise of change has never been greater
safercheaperbrighter
smar
ter
faster sharpernewer
bigger
bet
ter
safer
better
brighter
bigger
smarter sharp
er
newercheaper
22
The pace of change is getting faster
0 10 20 30 40 50 60 70
AirplaneAutomobileTelephoneElectricity
Credit cardTelevision
ATMPC
Debit cardCell phone
InternetContactless credit cards
FacebookTwitter
Years to get to 50M users
Oracle and Efma, "Digital transformation," February 2016, adapted from Banking 3.0 by Brett King
68
2
The Need for Speed“Drivers”
44
Millennials driving change
Largest generation in the U.S.
Represent 1/3rd of the U.S. population
Source: June 2, 2014 Brookings Institute post, 11 Facts about the Millennial Generation
Most diverse and educated generation to date
Raised during most child-centric time of our history
Last recession helped shape outlook
Digital native versus digital immigrant
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>50% millennialsuse non-traditional payment
methods
76% consumerssay real time payment delivery
is highly important
Have you considered:
Have you considered:
66
Millennial Payment Practices
1. "There's no slowing down millennials, A First Data White Paper," First Data Corporation, 2015.2. Steven Anderson, "Are Millennials Not Interested in Mobile Payments?" Payment Week, July 15, 2015.3. "The Future of Payments and Currency," JWT, October 2014.
have never written a check to pay a bill¹
have at least one debit card²
are comfortable connecting payment info to a retailer or service app they use often³
21%
91%
62%
77
Millennials and Mobile
4. “The Modern Wallet: Mobile Payments Are Making Life Easier,”Nielsen’s Mobile Wallet Report, July 10, 2014.5. Cleveland Brown Payscout, “Millennials Lead The Charge On Mobile Payment Adoption,” Payments Journal, April 5, 2016.6. “The Future of Payments and Currency,” JWT, October 2014.7. “2015 North America Consumer Digital Payments Survey,” Accenture
The Need for Speed“Boosting”
99
Apigee 2016 Report – the State of APIs
API Stats
of organizations expect partner APIs to be broadly adopted across their industries within the next two years1
71%
of Expedia’s revenues now flow through APIs, 60% of eBay’s revenues290%
websites use the google maps API31MM1 Accenture Technology Vision 2015 Survey2 Otto Berkes – The Biggest Tech Innovation That You Never Notice3 Google 2013
1010
API | Application Programming Interface
An API is a real time message between two different systems. One system initiates a message/request and the 2nd system replies with a response that occurs within seconds.
111111
FASTERSame Day ACH
< 12 hours
1212
Same Day ACH
Transactions > $25,000
International transactions (IAT and domestic IAT)
Credits and debits
Nonmonetary transactions
Returns
Federal government payments
On-us transactions > $25,000
Phase 3
March 15, 2018
New credit funds availability time
Funds available:by 5:00 p.m.
RDFI local time
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Same Day ACH use cases
Emergency payrolls
Hourly workers
Insurance Claims
Refunds
G2C Vendor
payments Tax
payments Payments to
release goods or provide services
G2B Consumers
can make bill payments on their due dates
Faster credit for late payments
C2G Consumers
can move money between accounts
Person to Person Payments
C2C
In 2017, 75.1 million payments totaling more than $87.1 billion.¹
¹ Source: NACHA
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Business to Person (B2P) payments via Zelle®
FAST< 2 days
What is Zelle®?
90+U.S. Banks
& Credit Unions in network
90MMConsumers have Zelle
available via their bank
app
100KAverage
daily enrollment
Alias-based directory
Supports Peer-to-Peer (P2P) and Business-to-Consumer (B2C) disbursements
Connects nation’s leading financial institutions
15Source: Early Warning Services, LLC, March 2018
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Benefits of B2P via Zelle?
Easy consumer payments
No account data to collect or store
Low cost payment alternative compared to checks
Expedites payments to consumers
171717
FASTESTPush to Card
< Minutes
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Real time/Anytime:Originate/settle disbursements in real time, anytime, with guaranteed funds and near real time availability to your consumers
FlexibleA safe, fast, and reliable method for disbursing payments to your consumer’s debit card
EfficientEliminates the need to wait and watch for checks/ACH files to clear; real time reconciliation upon transaction posting
Saves $$Can hold funds until the last minute
Description:Send payments to consumers in near real time using only their U.S. debit card number
Push to Card
1919
Push to Card — workflow
Customer Customer’s system Bank
3.
Debit networks
Real-time status file
Disaster Relief
Refunds
On Demand Services
Emphasize innovation with instant claims
Reduce the cost of processing checks
Constituents get their money when & where they need it
Ease your reconciliation process
Electronic payments are now an option with the use of tokens and debit card numbers
Freelance / contract workers expect to get paid quickly
Terminated employees get paid faster with less hassle
Students or employees no longer have to pick up a stipend check
Faster Payments Use Cases for Zelle and Push to Card
Changes to the way you will reconcile – Faster Payments will post instantly to your account
Cash Flow changes – Improve cash forecasting
Irrevocable transactions, like mini-wires
What to consider when sending faster payments
Technology – Do you have the ability to send payments in real time and obtain status back in real time (e.g. APIs)?
The Need for Speed Risk Management
2323
Financial crime costs $620 billion annually
$80$40 $40
$21$40
$200 $200Annual losses (billions)
Chris Swecker, “The cyber crime wave: The most profitable crime model,” 2016
Trade fraud
Health care fraud
Insurance fraud
Mortgage fraud
Identity theft
Stimulus grant fraud
Payments fraud
2424
Faster transactions reduce your window to detect fraud
Check
Days
ACH
Days
Wire transfer
Minutes
Same Day ACH
Hours
Instant payment
Seconds
2525
Know what you need to protect
Data Identities ReputationCredentialsHacking, data breach, misuse Account
takeover fraud Impostor fraud, phishing, social engineering Counterparty
risk, financial fall-out, loss of confidence
2626
Due diligence questions to ask
Who has access?
How will systems connect?
What security protocols are in place?
How will the data be protected?
Who is responsible? What is authorization process?
Can we manage it with dual controls?
And for payment methods:
The Need for SpeedWhere do I begin?
2828
How can digital tools transform your treasury?
Your digital transformation is a journey
Goal
Plan
Scope Discover
Clean up
Envision
Prioritize
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Invite the right team to the table
Treasury leadership
Frontline staffIT
Key Depts/ Agencies Bank
3030
Digital Transformation – Why care?
Your constituent base is changing
Your workforce is aging
Millennials care about technology
Millennials have a different view of dealing with issues
3131
The Need for Speed: Where are you?
Your constituents are changing, are you?
How will you meet the Millennials focus on technology and client experience?
Where is your organization placing it’s spending bets?
How are you monitoring your user experience?
What is your electronic collection strategy?
How efficient is your procur to pay process?
3232
Contact Information
Division Manager
Government & Education Treasury Management
704.410.0727
The Need for SpeedAppendix
3434
Registering with Zelle
Any individual with a domestic accountNo need to bank with an in-network bank
An email address or U.S. mobile phone number& a personal domestic checking or savings account, or a debit card linked to such account
Who can register?
What is needed?
Where to register? Individuals can go to zellepay.com to get started. For individuals who bank with an in-network bank, they can also register through their bank’s online portal or bank app
&
3535
Two instances when due diligence is vital
Evaluate new payment method
Connect to new provider or system
Before you:When you:
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You’ll need to manage three generations of technology—all at the same time
Futuretechnology
New technology
Legacysystems
3737
Evolving expectations mean adopting new tools
Mobile experiences
Real-time speed
Omnichannel access
Must haves:
3838
Complexity will increase as you evaluate and work with new providers
FintechsBanks
Specialty vendors
Innovators
ERP providers
IT companies
3939
Begin with a destination in mind
Link your strategy to:
Entity priorities
Treasury management goals
Start
4040
Use as a tool for making high-level decisions
How: Build vs. buy; new tool vs. enhance existing
When: This year vs. longer term; independent schedule vs. simultaneous with other upgrades
Who: In-house vs. external resources; current vs. new providers; to serve customers vs. suppliers
Plan
4141
Procure-to-pay Order-to-cashCash
management and liquidity
Define a manageable scope
Tackle one area at a time:
Scope
4242
Understand your current processes
Document your work flows
Obtain front-line input
Attach real numbers
Conduct usability studies
Discover
4343
Make good data a priority
No more “garbage in, garbage out”
Clean up
4444
Envision a better way to work
Think differently
Break down internal silos
Take an outside-in perspective
Consider user experience
Assess information needs
Envision
4545
Prioritize and define your path
Evaluate your options
Involve IT and outside resources
Goal: Match your level of investment and pace of change to your goals
Prioritize
