ACI Worldwide's Payment Industry Media Centre

Banks and vendors need to work together to succeed

2012-05-16T09:12:00.000+01:00

Banks are under constant pressure to meet their customer expectations and reacting piecemeal to customer requests buys little time. Banks need to invest in their business so they can anticipate customer needs and offer an engaging online user experience.

By choosing a global software partner with the necessary scope and scale, a bank can start to meet their corporate customer’s needs. The right advice is crucial as banks will not succeed by simply replicating what has worked for them or the competitors in the past.

What looks like an appealing option today can soon become the bank’s next out of date legacy system; so packaged solutions have gained broad appeal as they shorten the time-to-market for new services and offer a visible return.

Software partners have had to evolve in order to rise to meet the new market dynamics. They too must adopt a new, client-centric approach that enables banks to transform payments into a business that creates strategic value. Dissemination and implementation of best practice methods is critical, but so is education and guidance. They also need to deliver solutions that offer visible strategic benefits.

At the end of the day all businesses need to meet their customers’ needs or they risk losing them to their competitors.

Craig Ramsey
Wholesale Solutions Lead
ACI Worldwide

How do we place in the new world of Smartphonatics?

2012-05-15T11:02:00.000+01:00

A study of mobile banking and payment adoption rates in 14 countries has discovered a new category of consumer: the ‘Smartphonatic’. This person uses their smartphone enthusiastically when shopping for products and services as well as when they interact with their banks. They are an emerging consumer force and are being credited for driving the adoption of mobile banking and payments because they believe mobile payments and banking is important and are more willing to try new technology if it will benefit them. However, while the smartphone is an agent for change – simply owning a smartphone does not make one a smartphonatic.

Globally, nearly 25 per cent of consumers can be classified as Smartphonatics, and as you would expect this segment trends toward youth being made up of primarily Gen Yers (36 per cent) and Gen Xers (33 per cent). The number drops significantly among both Baby Boomers and Seniors with 18 and 6 per cent worldwide respectively. The UK sees an interesting generational switch with more Gen Xers (46 per cent) than Gen Yers (41 per cent) but mirrors global trends among Baby Boomers (8 per cent) and seniors (5 per cent).

Something that may have been less expected is where the U.K. ranks as a country in the Smartphonatics league. With Smartphonatics penetration at 16 per cent, it stands in 10th place behind India, South Africa, Brazil and China, among others (but ahead of its European neighbours France and Germany.) It if were a premier football team the U.K. would be facing relegation.

With a smaller population of Smartphonatics in the U.K., there is a great opportunity for growth into a new market. The smartphone is an agent for change and its use by Smartphonatics is setting the bar for how financial institutions and retailers will have to respond over the next five years to stay competitive.

Financial institutions, retailers and processors trying to generate mobile payment interest and demand should, therefore, deploy marketing programs which clearly demonstrate the convenience and benefits of replacing cards with a mobile wallet.

Visit http://www.aciworldwide.com/en/Overview/Whitepaper.aspx to read more about the rise of the Smartphonatic and download the full report.

Gareth Ellis
Lead Solutions Consultant
ACI Worldwide

Transaction banking enters the era of customer experience

2012-05-15T10:30:00.001+01:00

Customer experience is fast becoming the real differentiator in transaction banking. It is no longer enough to offer a simple, automated payment processing. To build loyalty and drive profitability banks will need to offer a non-stop, interactive banking environment – and to achieve that, they need to pay attention to what corporate customers really want.

Today, these customers already experience rich internet applications as part of their busy personal lives. Consumer applications have set high standards in terms of usability and customer convenience. Customers are entitled to make payments where and when they choose and expect banks to offer payment systems that match their own 24/7 global operations. This is entirely understandable – if retail suppliers, for example, can offer an engaging online experience, why not banks?

So payment and cash management systems must be looked at in the context of the businesses they support and the people who use them. Systems must be functionally rich and integrated, but they must also be engaging and easy to use.

Meeting increasing customer expectations requires total commitment and reacting piecemeal to customer requests buys little time. Banks need to increase their business agility so they can anticipate customer needs and offer an engaging online user experience. The first step will be to choose the right technology and in this sense trusted, proven software partners can help banks in many ways. Banks that get it right will be richly rewarded by its satisfied customers.

Craig Ramsey
Wholesale Solutions Lead
ACI Worldwide

2012 is shaping up to be the year of payments transformation

2012-05-14T11:15:00.000+01:00

2012 is shaping up nicely to become remembered as the year when banks started reviewing their cash management and payment platforms to gain the upper hand in customer engagement and brand loyalty. During 2011 more than 200 global banks replaced their payment solutions. Why? Well, according to a recent survey, 76% of corporations that switched banks did so because of poor service or system restrictions.

So it seems likely that by the end of 2012, it will be seen as a year of payments transformation. Corporate banking is widely regarded as being of strategic importance to most global banks. In fact independent research by IBID suggests that 64% of banks plan to invest significantly in these areas, so it seems reasonable to expect quite a few system replacements by the end of the year.

Some banks have already invested heavily to build world-class solutions; others have worked closely with technical partners to build online portals that combine rich functionality with an engaging user experience. Some have yet to wake up to the new age and they will have a lot of catching up to do to meet rising customer expectations.

So what do corporate customers actually want from their banks? The list is potentially endless, but functional requirements fall into three broad categories: improved customer service, improved solution usability and improved access to critical information. In essence, banks need to give their corporate customers easy access to accurate and timely information so they can save money and earn revenue. Let’s see if the next six months sees this happen.

Craig Ramsey
Wholesale Solutions Lead
ACI Worldwide

Is the future of money digital?

2012-05-11T16:05:00.000+01:00

The Pew Research Center recently released a report called The Future of Money in a Mobile Age, in which they asked experts in the field whether or not technology will have eliminated the need for cash or credit cards in the United States in the next 8 years.

65% of the experts agreed that we would move away from cash and credit. So the headline many touted was “Cash banished by 2020, say experts!” However, when taking a closer look, you see that the experts were asked to agree with one of two statements.

Here’s the statement 65% of experts agreed with:
By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards. People will come to trust and rely on personal hardware and software for handling monetary transactions over the Internet and in stores. Cash and credit cards will have mostly disappeared from many of the transactions that occur in advanced countries.

And here’s the other statement, which 33% of experts said they agreed with:
People will not trust the use of near-field communications devices and there will not be major conversion of money to an all-digital-all-the-time format. By 2020, payments through the use of mobile devices will not have gained a lot of traction as a method for transactions. The security implications raise too many concerns among consumers about the safety of their money. And people are resistant to letting technology companies learn even more about their personal purchasing habits. Cash and credit cards will still be the dominant method of carrying out transactions in advanced countries.

Obviously, these two statements are very different, taking opposite points of view. The reality will likely end up being a combination of the two scenarios, and not simply due to security and privacy concerns. In order for people to embrace and fully adopt mobile payments as a replacement for cash, funds must be moved instantly from one bank account to another at a different bank. Currently, in the U.S., those person-to-person payments move along the same rails as checks, which can take a few days. When people send cash using their mobile phone they expect the funds to transfer immediately. They are not likely to adopt a system where funds transfers are delayed. If the banks find a way to solve this, even if it means taking on the credit risk to deliver instant money transfers between individuals, more people will be ready to go cashless.

However, even if there is a way for person-to-person payments to transfer immediately, there must be more of an incentive for people to make purchases at the point-of-sale with their mobile phones other than just convenience. People are more likely to use their mobile phone instead of cash or plastic if they receive a discount or accumulate loyalty points as a result. What’s more, banks, retailers, mobile carriers and others involved in the development of mobile wallets will need to educate consumers on the benefits of moving money via mobile phones in order to change behavior on a large scale, and that will take time, perhaps more than 8 years.

What do you think? Are we headed for a definite future with mobile money as a primary payment method, or will it be something a minority of Americans will embrace?

Pam Latulippe
Principal Product Manager
ACI Worldwide

Making money from mobile

2012-05-10T12:24:00.000+01:00

The march of the mobile wallet is gaining pace. April has seen Barclaycard roll out contactless stickers that can be attached to mobile phones held by UK Visa credit card customers. Meanwhile Ebay is promoting its plans to lead the mobile payments race with PayPal, and most recently O2 has launched a smartphone app that allows users to transfer up to £500 via text message.

The big players are scrambling to get their offering into the market first to claim ground before the mobile wallet hits the mainstream market. But it seems that the desire to be seen as having a mobile offering is being put ahead of the need to really work out how it will be monetised.

Of course the bank or financial institution will get a transaction fee like in all other payment channels, but what does the telco get out of it and why should retailers care? It’s a complex ecosystem where it’s not clear which business model will win. After all, a transaction fee can only be carved up so much before the ROI is not worth it.

So, how can mobile payments be profitable in the long run? I’m not going to answer that question here, however one view that’s being discussed, particularly by retailers, is the idea of using the customer data to add value.

Every time someone makes a mobile payment, information about purchases, preferences, locations and any other amount of information can be captured. And we all know that data – if analysed and understood - will create knowledge and insight. Retailers are already very good at analysing customer data with their loyalty programs and then pushing sales and making compelling offers. But banks are also in a good position here. Banks have all the transaction data related to their issued cards, and a number of us rely on one bank alone, for all of our cards. This is a lot of valuable information and I’m sure banks are realising that this presents a significant opportunity. Some banks may be already using data to monetise their mobile payments service.

So, the real question becomes, who is going to take the lead? Who will step in first and use this data to drive real value for customers and then create a reliable revenue stream for themselves, the banks, the telcos or the retailers? Or will they join forces to maximize information? Will data protection be an issue in the quest to fully monetise mobile? I’ll leave that thought with you, but it seems to me that we’ll need an answer soon.

Paul Thomalla
SVP & Managing Director EMEA
ACI Worldwide

Roundtable Discussion: Payments transformation and the role of mobile banking and payments

2012-05-02T16:12:00.000+01:00

Last week, I had the honor of hosting a group of banking executives for a luncheon in Melbourne, Australia. The goal was to facilitate discussion about the changing face of payments, and in particular, the role mobile is playing.

We’re finding that no matter the region, payments are undergoing a transformation. The transformation is at different stages depending on the country and its infrastructure, but across the board, banks and processors understand that this is a revolution and it will change how they do business.

The attendees agreed that mobile payments and mobile banking are critical to the future, and everyone wants to be part of the action.

In the coming weeks, ACI will release a report, in partnership with the Aite Group, which shows how consumers in 14 countries view mobile payments and mobile banking. The preliminary data indicates adoption and attitudes vary widely. It would also seem consumers with smartphones are very interested in taking advantage of the enhanced capabilities these phones provide to use mobile banking and make payments. The role of the smartphone in changing behavior and expectations should come as no surprise. Attendees at the luncheon are seeing this trend growing and are seeking ways to add products and services for an increasingly mobile customer base. This is an exciting time to be part of the payments industry. With banks, processors, retailers, mobile carriers and others all striving to create the next big thing and influence the future of payments, what do you think will be the key driver in payments transformation in the next one to two years? Check back in with us in a few weeks to review the data we collected on current mobile payment and banking adoption and see if it changes your predictions at all.

Ralph Dangelmaier
President, Global Markets and Services
ACI Worldwide

The mobile loyalty opportunity for retailers

2012-04-18T16:22:00.000+01:00

As I sat among hundreds of participants at a recent conference, I conducted of quick visual survey of who was listening to the speaker and who was on their mobile device. Easily 2 out of every 3 people in my immediate vicinity were heads down doing the Blackberry prayer or downloading the latest apps on their iPods and iPads.

What a double-edged sword this new mobile reality represents for retailers! Potential customers can so easily be reached, but the ease afforded by that same mobile device now empowers them to seek out the best bargain in today's world of diminishing brand loyalty. According to Gartner, by 2013, mobile phones will be the #1 web access device for consumers. This would mark a significant milestone in our evolution of information access, culminating in a mobile commerce age that combines ecommerce, instant loyalty marketing and mobile payments.

So the challenge for retailers today becomes how to drive consumers to their brick and mortar store and get them to make a purchase. Is it enough to just get them through the door or will they simply stand in the retailer's Electronics department while accessing competitive pricing on their mobile device, quickly departing for greener pastures nearby or online?

Mobile technology is changing consumer behavior in commerce, banking and payments. Retailers need to adapt as well, so they can know when a customer visits a store, recognize them for their loyalty and make reward redemption easy.

In the coming months, I'll be discussing the power of loyalty marketing as it relates to retailer environments with a focus on the emerging role loyalty and rewards management can have on the mobile consumer.

Brad Adams

Product Marketing Manager

ACI Worldwide

Global industry compliance - mandate for change

2012-04-16T16:34:00.000+01:00

The previous decade witnessed extensive mandated changes to the banking payments market – and this decade sees this trend continue. Government legislation in payments has explicit and direct intentions; however, the consequences can sometimes be quite different from what is intended. Additionally, regulation occurring in one major market or region will often be the precursor to regulatory changes in other geographies.

The Dodd-Frank Wall Street Reform Act levied comprehensive changes on the US banking and payments industry. The intent of the legislation was to make numerous severely-needed changes to the way in which the financial services markets conduct business. While much of the legislation in Dodd-Frank identified reforms to the commercial banking and lending business, there were substantial impacts to retail banking. The Durbin Amendment of the act was perhaps the most visible and controversial element of the new compliance reforms in retail banking – specifically debit card payments. Durbin’s effect on card issuance and processing in the US, although relatively specific in focus, is pervasive and continues to unfold as the timeline for implementation continues to hit key milestones.

Perhaps at few other points in the history of modern banking and payments has a substantial portion of overall IT investments been allocated by financial institutions and processors into compliance and regulatory initiatives. However, there also exists an opportunity to begin collaborating on global initiatives to solve problems mutually borne by banks and processors across political and geographic boundaries. We appear to be at a dawn of another cycle of innovation in payments technology, and it may actually be regulation that spurns – or dismantles – innovation.

Jim Schlegel

Product Manager

ACI Worldwide

Mobile payments: one of the next drivers of Faster Payments

2012-04-04T13:50:00.002+01:00

Since the limits to the Faster Payments Scheme were increased in September 2010 there has been an increase in use by the participant banks’ customers. Figures from the Payments Council for the 12 months to end January 2011 show a 43% increase in the volume of transactions and a 53% increase in the value of transactions proving the exceptional growth in usage of the service.

Developments driving new mobile services such as Barclays Pingit that will also use the Faster Payments Service will further increase these volumes. However although the Barclays Pingit is an initiative in the right direction, there is still disappointment in the industry that no new members have joined as direct members linked to the Central Infrastructure of the Scheme. Indeed, of the original members of the scheme, Northern Rock has dropped out and Santander has acquired Abbey and Alliance & Leicester.

The Payments Council should also be credited for driving m-payments – having started work on a central database that links mobile numbers to account details. The infrastructure is set to enable account to account mobile payments (including P2P, P2B and potentially B2P*) which could be as crucial to mobile payments in the UK as FPS is expected to be.

To quote Kevin Brown, chairman of the FP scheme, he says he is “keen to drive greater usage in 2012”, suggesting too that future mobile payments services could be built from the existing model.

Certainly as mobile becomes a more accepted banking channel, it makes sense to use the Faster Payments platform which offers a near real time service, that is now fast becoming a requirement of (particularly younger) retail banking customers and increasingly for corporates trying to manage their liquidity positions.

However, only the major high street banks are currently directly connected to the system with the majority of others linking their FPS reachable sort codes via one of the original members. These banks seem focused on ticking a PSD requirement box rather than actively promoting the scheme to customers. Realistically they are focusing on “running the bank” in the first instance rather than marketing new services to customers. But the changes to the banking infrastructure in the UK, with the emergence of Metro Bank and Virgin as major players, suggests they may ultimately need to become full members of the scheme in the long term. For these players, having the Payments Council work on infrastructure is a welcome development and will go some way to enabling their organisations to innovate further down the line. Ultimately, it is about access for all and about tailoring the right kind of service in the right timeframe to each customer be they retail or corporate.

Once this has been coordinated, the next logical step is to extend the service to handle other currencies, such as the Euro which may be the tipping point of volume/value of transactions for foreign banks with a customer base in the UK to decide to become full members.

Other countries have seen a mobile payments service change the way companies are able to make payments fitting into the life style of their customers. As reported in The Banker in October 2011, Absa in South Africa have found small businesses have used their mobile payments service to pay their staff while larger companies have used it for one off payments to consumers perhaps for competition prizes.

The industry needs to focus first on getting more banks on board as direct members linked directly to the Central VocaLink infrastructure to truly develop the service further. The fact that only Barclays offer direct corporate access to the service is another disappointment for the industry and with corporates becoming ever more demanding of their banks, this may be another area where banks will have to expand their services and their use of the Faster Payments Scheme.

(* Peer to Peer, Peer to Business, Business to Peer)

Richard Sanders
Principal Solutions Consultant
ACI Worldwide

Shock and Awe – NFA Fraud indicator puts fraud at £73bn

2012-04-04T09:58:00.001+01:00

For those for you that have been tracking the NFA’s last estimate was £38.4bn, but the rise is really buried in the detail and largely attributed to the NFA casting their net on UK PLC a little wider and completing more granular analysis. There is also some interesting comparative finger point for example UK Government sector at £20.3bn, whilst UK Financial Services sector tune in at a mere £3.5bn. Some sectors are clearly doing better than others – and those that are going better seem to be the sectors which the media focus attention on. I also suspect there may be some element of double counting going on here as ID Fraud (£1.2bn recorded against Individuals), also impacts upon other sectors i.e the fraudster impersonates someone to obtain a line of credit.

But what about the bigger picture where is all leading? Each sector will be linked to a bank account, or financial services product. Fraudsters will perpetrate their crime for financial gain. So theoretically where is all this money flowing - and where do we stand on the money laundering issue? And more importantly are we building a picture of actionable intelligence for law enforcement to bring prosecutions against the perpetrators? Clearly the NFA’s is banging the drum for the call to action.

Andy Morris
Risk Business Solutions Consultant
ACI Worldwide

Top of the internet tree

2012-03-21T10:17:00.003Z

The UK is now the most internet based economy of the G20 group, according to the Boston Consulting Group. As a nation, the Brits have emerged top in terms of how much of their hard-earned cash is spent online, ahead of Denmark, the United States and Germany.

The UK has clearly has caught the online shopping bug and by 2016 nearly 25 per cent of all retail spending will take place online compared to just 11 per cent in the next highest country – Germany – and 6 per cent as an average across the G20 nations. Government and investment spending is also set to rise online.

Electronic payments overall are also growing fast. According to the most recent World Payments Report, the global volume of non-cash payments transactions grew by five per cent in 2009 to 260 billion – and it would be a safe bet to assume this will continue to grow. With these two factors in mind, it’s clear that the role of cash in the economy will continue to decrease.

So what’s behind this trend? In terms of the internet economy, it’s because UK consumers have the confidence to shop online safe in the knowledge that their payments are secure thanks to the backbone network provided by the card schemes. It is also because financial institutions have made significant investments in fast and effective fraud detection systems, which have been promoted to and proven with customers in the UK.

It’s also interesting to see that that banking and investment activity was in the top three uses of the internet along with email and research. As we look to the future, retaining that confidence is going to be vitally important – especially as we see the growth of multiple screens being used by consumers such as mobiles and tablets. Ensuring confidence in banking through any channel, such as internet, mobile, branch or ATM will be paramount if we are to stay at the top of the internet tree in the future.

Andy Brown
Director Product Marketing
ACI Worldwide

Best of breed in payments

2012-03-15T09:14:00.001Z

There has long been a debate as to whether it is better to run one fully-integrated system or several pieces of 'best-of-breed' software in many areas of application software, and payments is no exception, especially when looking at the corporate front end through to the payment processing engine in the bank’s back office.

‘Best-of-breed’ by definition implies that the software’s functionality is better than that offered by the equivalent part of the fully-integrated system. That had to be weighed against the advantages of the integrated system, notably having just one supplier to deal with, and with reduced systems integration work. Either way, there was some kind of compromise to be reached. In many ways though, this has become something of a sterile debate. The fact is that many enterprise solutions today comprise ‘best-of-breed’ components.

We’ve seen the ‘best-of-breed’ approach largely eliminated in the hardware space (standard hardware platforms are the rule, not the exception). Perhaps payment software is moving in that direction as well, and no longer does taking an integrated end-to-end system involve compromise. Instead of 'integrated or best-of-breed', perhaps the real question is: can you trust your payments software partner vendor to be with you for the long run?

Paul Styles
Solutions Consultant
ACI Worldwide

A Tale of Two Travels

2012-03-08T19:04:00.005Z

As most people are aware, travelling comes with its own set of challenges and rewards. The challenges often fall into categories like delayed flights, crowded airports, train or bus terminals, being away from home, managing costs, and personal and financial security. These are usually outweighed by the benefits of spending time with friends and family, new experiences, etc.

A few weeks ago, I travelled out of state for both professional and personal reasons. The first part of my travel was a business trip which included a gathering of hundreds of co-workers from around the globe. The second part of my trip was a weekend with friends needing a mid-winter break to escape the cold of the Northeast. Both parts of the trip took place along the gold coast of Florida.

During parts of both trips I heard stories of people being having issues with their bank related to their ability to use their credit and debit cards while travelling. In the first scenario, a co-worker had travelled from Europe to the States and was using both personal and business credit cards for travel activity. The randomness of the transactions of the personal card (transactions within the same day on two different continents) got flagged by the issuing bank, which prompted them to call him about his transaction to confirm the validity. Luckily he had provided his mobile phone number to his account, which made it easy for the bank to contact him while travelling abroad. My co-worker was quite pleased with the experience and appreciated the proactive outreach of his bank.

My friend in the second scenario did not have as pleasant an experience. He had several transactions within hours of each other in two states located 1500 miles away, one of which was an attempted cash withdrawal of $500. His bank put a block on his account which disabled his ability to withdraw cash. After standing at an ATM for what seemed like a long time (we were hungry and trying to go to dinner) he finally got connected to the fraud department of his bank, argued for a bit with the representative on the phone, and confirmed the transactions as his. When he got back into the car, a lively discussion of bank fraud detection and prevention methods ensued and several people shared similar stories. My background in financial crime management helped me discuss the activity more rationally and helped calm down the nerves of my rattled buddy.

Banks, processors, and retailers use sophisticated software to monitor the transactional behavior of their customers as a measure of fraud prevention. When suspicious behavior occurs, flags are put up as to alert the institution (and the cardmember) about potentially fraudulent activity. These types of solutions are invaluable to protect the assets of the customer as well as the reputation of the bank. Be sure that your financial institution has a direct method for contacting you (i.e. mobile phone, e-mail, home phone, etc.) and that any changes to contact information are updated promptly. And as an added measure, contact your credit card issuer or bank when travelling abroad or for long periods of time and let them know your travel itinerary. They can note your account and often facilitate a smoother experience to avoid blocking transactions and alert bank fraud representatives to your plans in advance of any red flags.

It’s worth noting: my friend told me he came home from the trip and there was a message on his home phone from his bank on the day of the incident asking them to call him regarding recent fraudulent activity. If he had only given them his mobile phone number…

Is the War on Fraud being won?

2012-03-07T11:42:00.002Z

Two sets of industry statistics were published this week, with different and conflicting information:

BBC quoted statistics from the UK Card Association that plastic fraud losses were down by 7% to £341m, attributed to 41% fall in fraudsters impersonating card holders. Whilst CIFAS reported increase in Account takeover up 18%, account misuse (first party fraud 13%) and identity theft 10%.

So who is actually right and wrong here? OK, I accept that I am strictly not comparing apples with apples here, but I am not in denial. As an industry I recognise the excellent work the trade, industry bodies and joint ventures such as the DCPFU do to tackle fraud, but we still have a huge card fraud problem. Some of us have long memories and can remember when card fraud losses stood at £96m.

Check out the Levi Report published in 1996 if you are interested.

Andy Morris
Risk Business Solutions Consultant
ACI Worldwide

Integration mitigation

2012-02-15T09:36:00.002Z

In an increasingly commoditized payments world, it is no surprise that banks seek to differentiate their payments offering. Technology is usually the key enabler in creating competitive advantage, but soaring IT integration costs can all too easily derail the bank’s efforts.

Banks are being squeezed. They are caught in the vice of increasing competition, rising customer expectation and more regulation on one side; and falling prices with changing volume patterns on the other. And we can add innovation, flexibility, cost reduction and enhancing the end-user’s experience as simultaneous aims.

Unfortunately, the costs associated with IT integration make decisions on investment in new technology more difficult, as there is greater uncertainty regarding the payback period.

One answer may be to mitigate the integration issue by buying, for example, a front-end to back-office payments system, complete with fraud capability, from a single vendor : pre-integrated and with guaranteed interoperability. Time and cost saving aside, there are real benefits to be gained in terms of payments visibility and real-time information, which can form the basis of true differentiation. Add to this, easy-to-use self-service enrollment forms that provide immediate access to online services, and banks may well have a competitive, and more importantly, profitable offering for their corporate customers.

Paul Styles
Solutions Consultant
ACI Worldwide

Fraud around every corner?

2012-01-28T12:46:00.002Z

The latest round of industry statistics paints a bleak picture of UK fraud. CIFAS’s latest report identified a 9% growth in fraud, whilst also highlighting an 18% growth in account takeover related fraud, and 13% for misuse of facility fraud (first party fraud).

This comes of the back of last year’s National Fraud Authority report that recognized fraud was an estimated £38.4bn problem for the UK. More recently statistics on UK CyberCrime fraud tune in at estimated £3.7bn.

While UK PLC continues to shine the light and be more transparent on our national fraud problem than many other countries, I wonder what legacy we are leaving for our kids? Are we breeding a society where fraud is now acceptable......no longer a nation of shopkeepers, but fraudsters?

Perhaps the time has come for the UK to take a more mandatory approach to fraud prevention, similar to the F.F.I.E.C efforts in the USA? Clearly, we need to start tackling some of the challenges – social engineering, data breaches, customer education and ignorance all play a part in how the fraudster perpetrates their crime.

Investing in more solutions to disrupt and deter fraudulent activity from happening in the first place will also help, and more funding for targeting Police efforts in managing away this problem. Political food for thought… and perhaps a question for Mr Cameron’s big society as we step into Olympic year?

Andy Morris
Risk Business Solutions Consultant
ACI Worldwide

Talking technology just delays innovation

2012-01-24T13:57:00.001Z

With a few notable exceptions (such as Apple) the fact is that technology doesn't really matter. What really matters, especially when you are targeting consumers, is application.

Sounds controversial? Let me explain what I mean. Look at the early days of movies - were you a Betamax or a VHS fan? What about the more recent Blu-Ray vs HD DVD war? And on the early PCs, there were many different companies trying to launch their own operating system to compete with many others on the market. Ditto for the early smart phones.

But look at where we are now - in each space it has come down to just one or two main players - very rarely are there three or more. And the reason is simple - it doesn't benefit consumers or the industry to be fighting about the technology. Instead the underlying technology needs to be agreed, so it is all interoperable and makes things easier for consumers, and then vendors can start to differentiate themselves with the service they actually offer to consumers. That is where the 'bells and whistles' come in, and where customers are won or lost.

Let's think about this in the payment card space. Imagine the headaches if we as an industry didn't all use one size credit card, or if Europay, MasterCard and Visa hadn't agreed on the EMV standard. We'd all have to spend so much time and money trying to work out how we work together when our products are so different, we couldn't afford to even think about new innovations or how best we serve the customer.

The same analogy must apply in the mobile world. At the moment it is a bit like a technology land grab, where everyone is trying to stake their claim, but we mustn't forget that what is delivered to consumers needs to be as interoperable, flexible and easy to use as possible. This means we must stop fighting over the technology and start delivering real benefits and convenience to consumers.

Mitch Armstrong
Director of Solutions Consulting
ACI Worldwide

It’s 2012. Have you made your first mobile payment yet?

2012-01-18T09:46:00.002Z

The year was 1996. Email was a really new concept and the few cell phones around were the size and weight of bricks. Selling products on the Internet had just started only a few years earlier and online sales had already reached $600 million. The industry was projecting a dramatic growth rate to $2.4 billion in 1997.

At the time, I had just started a new job at Firefly Network, one of the first Internet start-ups located in Cambridge, MA. Firefly was founded by a group of engineers from MIT Media lab and some business people from Harvard Business School. They had invented new technology, collaborative filtering, that helped you find new stuff by matching you with people you never met but were swirling around in cyberspace that liked the same stuff you liked. Back then it was hard to imagine that recommendations engines would be commonplace in e-commerce sites today.

My job was to help create a toolkit that online retailers like Barnes and Noble and Yahoo would eventually use to collect user preferences anonymously, make recommendations, and send targeted advertising from within their e-commerce sites. As a product manager, I knew it was important to put myself in the role of the consumer and make my first online purchase. I held my credit card in one hand while carefully entering the numbers one-by-one into the web browser with the index finger of the other. I’m pretty sure the browser was Netscape Navigator as Microsoft was playing catch-up with Internet Explorer. Naysayers were spreading fears about security and privacy while techno-optimists were declaring the end of the “brick-and-mortar” store.

Fast forward 16 years later. From our 1996 vantage point we couldn’t have easily imagined that e-commerce would become mainstream by 1999 and is now currently heading towards 1 trillion in online retail sales worldwide. It was hard to predict that the number of mobile phones would exceed the entire population of the world. Or, that the babies the dotcom era birthed such as Google, Amazon, eBay and Facebook would eventually grow up to become billion dollar companies. And that they would become the new entrants into the mobile payments market which is expected to reach $670 billion by 2015.

So when Google Wallet launched last year, as a product manager at ACI, I knew the significance and importance of making my first mobile payment. It was surprisingly easy to find a Nexus S 4G Android smartphone at the local Sprint store. It’s one of the few smartphones on the market that contains an embedded NFC chip that can send encrypted data a short distance (“near field”) to a reader located, for instance, next to a retail cash register. Loaded on my new phone was the Google Wallet which can hold my credit card information. Armed with my mobile wallet, I headed to my local store to make my first mobile payment. While checking out at the register I told the cashier I was going to pay using my phone – no plastic required. She had never heard of this and was excited to watch. And before I knew it there was a crowd surrounding me as I tapped my phone against the reader to make my payment. We all recognized we were getting a glimpse into a different future.

As product managers, business analysts and marketing professionals we are constantly challenged to step out of our comfort zones, stay curious and be willing to take risks with our product lines. Yet we also have the responsibility of performing the careful analysis to distinguish between the leading and the bleeding edge. We need to maintain the careful balancing act of putting forth wise investment proposals while still being early enough to market so that we can play a key role in a future the is unfolding before us. It is only by embracing the new while carefully navigating the currents of change that we will become co-creators of the future of payments.

It’s 2012. Have you made your first mobile payment yet?

Pamela LaTulippe
Director, Mobile Payments Innovation
ACI Worldwide

Loyalty Programs - have we finally cracked it?

2012-01-17T13:48:00.002Z

I’m here at the 101st NRF Annual Convention and EXPO, and this year’s show is all about using technology to meet the changing needs and desires of consumers. Retail loyalty programs are one of the most successful and proven strategies for learning about and engaging with their customers.

With this in mind, we’re pleased to share findings from a new ACI Worldwide survey that found retail loyalty programs are working – the majority of American consumers report feeling their loyalty programs deliver benefits that are important to them.

Compared to similar research released by ACI Worldwide previously, the results show a marked increase in the number of consumers who are members of loyalty schemes, up from 74 percent in December 2010 to 84 percent now. This increase tallies with an apparent increase in the influence of loyalty schemes with 84 percent of members likely to choose a retailer over its competitor if they were members of the retailer’s loyalty program. Previously, nearly half (49%) of loyalty program members said that they never or rarely take advantage of loyalty program perks when shopping online.

This year’s survey also found women favor loyalty schemes more than men – with 91 percent of women having at least one loyalty scheme, compared to 77 percent of men. Men are also less likely to join as many loyalty schemes as women, with only 18% being members of more than three schemes, compared to 36% of women.

Additionally, the study revealed age plays a role in the level of consumer satisfaction with loyalty programs. More than 3 out of 4 consumers age 18-44 are pleased with the benefits they receive from their loyalty programs. However, satisfaction declines more than 10 percentage points when consumers reach age 45. On average, only 65 percent of consumers age 45 and older feel their loyalty card programs deliver valued benefits. With this in mind, retailers need to look more closely at the benefits they are providing to their customers in this age group.

Considering four out of five Americans (84 percent) are members of at least one retail loyalty card program, this adds up to a big opportunity for retailers when executed correctly. Although it takes time to build a successful loyalty program, the payoff is significant – we are now seeing proof that loyalty schemes are resonating with consumers and creating customer loyalty.

The key to success is placing the customer experience at the center of a retailer’s loyalty and rewards strategy. ACI is making it easy for retailers to integrate their loyalty and rewards programs so they can do what the programs were intended – create greater consumer loyalty.

You can find us at Booth #1362. Enjoy the show!

Rob Seward
Product Line Manager
ACI Worldwide

Banks want interactions, not just transactions

2012-01-16T12:45:00.002Z

Retailers mostly get it right, especially in the online world. They are doing really well at tracking everything their customer does and personalising the service they offer in response. Banks, on the other hand, don't tend to be very good at personalization - and I think a lot of that comes down to the inability to really understand everything that customers do with the bank, and a lack of true interaction with them.

In theory, a bank is in a really good position to understand their customer and know what is important to them. Your bank, for example, will know if you travel a lot because of where your cards are used overseas. They might even be able to tell if you travel for business or pleasure, depending if you pay for your own flights and hotel. They might be able to tell if you do a lot of driving, if you buy a lot of petrol. They know what supermarket you use, if you shop online and who your mobile phone provider is. The might be able to tell when you renew your household insurance or your car insurance, or even things like if you're a member of the National Trust!

But all too often, that information doesn't get used. Banks don't have the systems in place to take a view of a customer across all activity and use that information to create 'intelligence'.

Imagine if they could though.

Imagine if my bank knows that I do a lot of driving so they tailor my gold account 'package' to that - with breakdown cover, windscreen insurance or a free winter check for example. But if the customer doesn't do a lot of driving, but instead travels overseas, their benefits package could include travel insurance, commission free currency, or access to airport lounges. The possibilities are huge, and I know some banks do try to do this, but it certainly isn't widespread.

For many banks, this is a long way away, but I think there are things they could do now that would help them get to know their customers better - by talking to them. Don't just offer a standard package of travel insurance, breakdown cover and phone insurance for your gold account holders - perhaps give them a choice for them to pick the benefits that would make a difference to them. Suddenly you know them a little bit better. Many banks encourage customers to tell them before they go overseas - but then the bank should use that information to sell currency exchange or travel insurance for example. If a customer sets up a new direct debit for home or car insurance, perhaps plan to contact them before the anniversary to offer your services.

I really believe that there are lots of things that banks can do to strengthen their relationships with customers, and the closer those relationships, the less likely it is that the customer would change banks, and the more likely it is that they will start coming to their bank for even more services.

Mitch Armstrong
Director of Solutions Consulting
ACI Worldwide

Happy New SEPA

2012-01-03T10:03:00.000Z

About a year ago, in my blog ‘On your marks for SEPA’, I commented on the European Commission’s proposals for the setting of end dates for the migration from legacy instruments to SEPA credit transfers and direct debits. I wrote: “At least the whole industry knows that serious planning can now no longer be delayed. We don’t yet have the final ‘go’ but we now know we’re under starter’s orders.” Well, twelve months later and it seems that we now have the final ‘go’ - 1 February 2014 is when the witching hour will be upon us.

But there is still little evidence that serious planning is underway. It seems that a combination of the ‘Eurozone crisis’ (to give it a name) and the wait for the end-date regulation has induced a state of dormancy in many banks. That can no longer be justified. Sound business sense must prevail and SEPA must be viewed as an opportunity, not a compliance exercise.

It’s the time of year for resolutions. Banks must resolve to enable SEPA payments and thereby transform their payments business and fully respond to their customers’ needs. The wait really is over.

Paul Styles
Solutions Consultant
ACI Worldwide

Should banks be held liable for Ponzi schemes?

2011-12-16T12:57:00.001Z

Ponzi schemes were named for Charles Ponzi after he defrauded customers out of approximately 20 million dollars back in 1920 (over $225 million today). While the idea of paying out investors with their own money rather than any money earned legitimately via investment had been around prior to 1920, the name Ponzi become synonymous with the scheme based on the amount of publicity and high dollar loss associated with his activity (including the downfall of six financial institutions).

Over the past few years, we’ve seen a tremendous increase in the magnitude of Ponzi schemes. Fingers have been pointed at the fraudsters, as well as the SEC, and more recently, the guilty label is being extended to the financial institutions providing services for the schemes.

In recent cases, the argument made by prosecutors was that the banks were negligent in not identifying red flags for these investor accounts, making them guilty of ‘aiding and abetting’ these criminals. To be guilty of this, in most states in the US, there must be three elements: the existence of fraud, the defendant’s knowledge of the fraud and proof that the defendant provided considerable assistance to the progression of the fraud scheme. Though this is the standard primarily under US law, this does not permit international financial services firms or banks from being included in the lawsuit, as seen in the case against Banco Santander in 2010, which involved defendants from seven different nations around the world.

The question of ‘knowledge’ of the fraud and providing assistance can be a bit subjective, since the banks didn’t know directly about the scheme. The question is: if they didn’t implement the appropriate steps to look for red flags or simply failed pay attention to them, does this make them guilty? For instance, in the Madoff scheme, an activity monitoring system to detect transfers between investor and personal accounts may have triggered an internal review of the activity and shut down accounts before investors were defrauded of the full $50 billion.

So what can banks do to prevent these schemes, and also ensure they are not on the receiving end of a lawsuit? Financial institutions need to implement a sophisticated transaction monitoring tool that is flexible enough to quickly adapt to the changing fraud schemes. Activity monitoring must be implemented across the enterprise, in order to detect complex patterns of activity that may seem normal alone, but when viewed collectively may be a red flag for a large fraud scheme.

Taking proactive measures to ensure that your institution is doing everything possible to prevent fraudulent schemes will help protect customers and keep your institution out of the hotseat should a new scheme appear, despite your best prevention efforts.

Amanda Burley
Senior Business Analyst
ACI Worldwide

Card fraud arrest 'too expensive'?!

2011-12-14T08:44:00.002Z

The concern with stories like the recent one in the Telegraph about it being too expensive for the police to arrest a fraudster - so there are no consequences for the card fraud criminal - is that they erode confidence in the entire payments system. We often talk about fraudsters going for the weakest link, but we don't often think the police will be that weakest link!

The problem with stopping fraud is that the closer you get to 100% fraud prevention, the more cumbersome and expensive it is. For example, a bank could stop a lot of consumer fraud if every single transaction was verified personally over the phone with a consumer - but it would be very expensive for the bank and very inconvenient for the consumer, the trick is to find the balance.

Stories like this go to show that the best way to tackle card fraud is to prevent it. The retailers should ensure that they are working with a merchant acquirer who uses comprehensive fraud detection tools and techniques to identify and block fraudulent transactions before they happen, and before goods are delivered - so the retailer doesn't end up on the front line of trying to stop the criminals single-handed.

Paul Love
Solutions Consultant
ACI Worldwide

Don’t repeat the mistakes of the internet banking age

2011-12-01T16:57:00.001Z

Mobile payments, mobile banking, mobile commerce. These are the buzzwords around at the moment with new schemes being launched every day. Which particular concept will be successful is difficult to tell. Indeed as different countries and different population segments have different expectations there are likely to be several models needed to match the needs of customers.

One common factor behind all these schemes is the incorporation of some form of payment service. Most of the discussion and debate is around the way the service is presented to the customer, how it operates on the mobile device and related elements such as the security of the service. However, that payment has to be processed somewhere which is often the forgotten piece of the puzzle.

When internet banking came along the same focus was on the delivery of the service to the consumer and less time was spent considering where the processing of transactions was going to be happen. Many banks ended up putting in new systems or struggling to achieve good availability because they did not explore the right channels inside the bank to handle the transactions. We should not make the same mistake with mobile.

Typically mobile banking is replicating the functionality available through the ATM channel while mobile payments and mobile commerce are a mixture of ATM and POS services. So those core systems are probably the right ones to carry out the processing of the transactions. Scalability, reliability, availability are fundamentals for these services which exactly meet the needs of the mobile service. Transaction volumes are an unknown quantity so being able to scale to meet the take up is vital. Reliability, in accurately handling activity is essential to provide confidence in the new transaction services. And ensuring 24/7 availability is obviously needed from the outset. And often they are designed with the flexibility to handle traffic from many sources.

Staff in the channel development side of the business need to explore with their colleagues in the very traditional ATM and POS area how to make use of these existing processing services. Otherwise there will be more silos and complexity where many are trying to simplify a complex payments processing model.

Andy Brown
Director Product Marketing
ACI Worldwide