Sean Breen, Dell Services Director, Industry Solutions

Enterprise Payments Modernisation Reducing Business and Technical Complexities to Drive Service Innovation

Nick Senechal, VocaLink Head of Corporate Strategy

Financial Services Industry Group

Payments business has emerged as the key revenue contributor for banks over last 3 years…

Payments represents one-quarter of total banking revenues and the revenue

contribution is expected to grow at CAGR of 8% to reach $1.4 Trillion by 2016

Payments growth has reached an inflexion points – Growth rates reducing in US and EMEA

North America

48

bn

90

bn

23

2b

n

36

9b

n

13%

17%

8%

Europe & Middle East

54

bn

84

0b

n

17

6b

n

31

1b

n

9%

13%

10%

Asia Pacific

13

bn

31

bn

58

bn

17

3b

n

19%

11%

12%

US Mobile Banking

Forecast

11

mn

52

mn

51%

US EBPP

Forecast

53

mn

99

mn

23%

Pre-paid Cards

Growth Forecast

2b

n

16

4b

n

140%

Total Worker

Remittances

37

4b

n

53

9b

n

13%

New Instruments, channels and methods of making payments have increased scope and complexity

2

Financial Services Industry Group

Key Challenges

3

North America Europe & Middle East Asia Pacific

International

ACH Rule

Back Office

Conversion

Check 21

2009

2007

2001

SEPA Direct

Debits

UK Faster

Payments

SEPA

CreditTransfers

2009

2008

2008

Dubai: RTGS

Australia: LVP

Roadmap

Hong Kong:

RenminbiRTGS

2009

2008

2007

Move towards Electronification Borderless, Single Europe Regional Developments

…with increased compliance requirements

Banks response to changes in complexity and regulation has been adhoc addition of systems…

1999(Basic)

Cust. Channel

Clearing /

Settlement

Bank ApplicationsTeller

ATM

Paper

Clearing

ACH

Corres.

Bank

Cheque

Payments

Card Payments

2004(Intermediate)

Cust. Channel

Clearing /

Settlement

Teller

ATM

Web

Lockbox

Paper

Clearing

ACH

Corres.

Bank

RTGS

Image

Clearing

Bank Applications

Private

ACH

Cheque

Payments

Debit Card

Payments

Credit Card

Payments

High Value

Cross Border

2010(Advanced)

Cust. Channel

Teller

ATM

Web

Lockbox

IVR

Mobile

Direct

Access

Call

Center

Clearing /

Settlement

Paper

Clearing

ACH

Corres.

Bank

RTGS

Image

Clearing

Private

ACH

Non.

FI’s

PEACH

Bank Applications (Original)

1. Cheque

Payments

1. Debit Card

1. Credit Card

1. High Value 1. Cross Border

1. Check

Conversion1. Online ACH

1. Online Wires1. Mobile

Banking

2. International

ACH Rule

Inherited Bank Applications

2. Cheque

Payments

2. Debit Card

Payments

2. High Value2. Cross Border

New Applications

EBPP Pre-paid Cards

Mobile PaymentsRemittances

Faster Payments

Back Office

Conversion

SEPA Direct

DebitsSEPA Direct

CreditsCheck Truncation

2011 (Advanced)

Financial Services Industry Group

Framework Oriented Approach

Integrate Payments in a staged

approach prioritized around the

bank’s vision and strategy

Near State aims to

streamline processes in

short term ensuring max.

reusability

End State Landscape is a shared

service approach providing max.

leverage and cost advantages

Stage I : Business & Technology Architecture and Roadmap

Stage II : Selective Consolidation and Rationalization

Stage III : Consolidation and Selective Outsourcing

4

Financial Services Industry Group

Driving Principles

Prioritize goals, align with your strategy, and there is no silver bullet.

Principles every plan should consider:

– Start with your customer

– Focus on what we do best

– Partnerships

– Information is power

– Strong governance

5

Financial Services Industry Group

Value Creation

Near Perfect

STP rates:

• Substantial reduction in manual interventions required for payments processing

High Scalability:

• Easy future addition of new customer interfaces and channels

• Improvement in profitability due to greater efficiency and effectiveness

Higher Profitability:

Va

lue

Better Risk Management: • Centralization will

lead to better control over processes and will make compliance easier

Lower Cost of Ownership:

• Improving governance to permit greater focus on leveraging core capabilities and strong partnerships

• Agile systems that enable continuous innovation

Time-to-Market Advantage:

6

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Enterprise payments modernisation: Reducing business and technical complexities to drive service

innovation

Nick Senechal Head of Strategic Business Development, VocaLink

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VocaLink: safer payments – smarter partner

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VocaLink in numbers

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Where we deliver value

Economies

of scale

“Never fail”

service

Platform

for

innovation

Manage

industry –

wide

projects

Collaborative

payments

space

Competitive

payments

space

Focus for

Bank

investment

Focus for

Bank

investment

Competitive

space

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Where we deliver value – and face challenges

Control

underlying

cost base

Retaining

reputation

for quality

Control of

product

and project

portfolio

Scale of

projects

and

demands

Focus for

Bank

investment

Focus for

Bank

investment

Competitive

payments

space

Collaborative

payments

space

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A smarter partner needs a smarter partner

In 2003 we were BACS

• Not for profit – focus on IT

• One clearing service

• Serving only banks

• 75% staff operations/IT

• Reputation for service delivery

In 2011 we are VocaLink

• For profit - focus on business

development

• 5 clearing products operational

• Products for other sectors

• Multiple business units

• Reputation for service delivery

INTACT

In 2002 we engaged Dell (then HPS)

• Basic resource supplementation

2004 – Dell took on 2nd line support of

key live systems

2006 – Dell became our development

partner for technology renewal and

major projects

In 2011 – Dell provides VocaLink:

• Flexibility of resourcing

• Consistency of domain knowledge

• Key elements of the VocaLink team

• Critical skills transfer (e.g. In testing)

• A partner in commercial bids

• Support for our reputation