Faster Payments: Implementation Considerations for Corporates in a Large Global Context

May 1, 2018

Rene Schuurman, Global Product Manager Channel

Services, Citi Treasury and Trade Solutions

Luc Belpaire, Head of Product Management and

Business Development, Trax, FIS

Ken Shuyama, Vice President, International Treasury, FIS

Speakers:

Faster Payments

What is in them for

a global company?

International treasury centralization journey at FIS

Setting the scene

• About FIS

Rapid Growth Acquisitions 130+ countries

Domestic Treasury

Cash management,

liquidity, risk debt and

investments

Monitor ACH files that

move billions for FIS’

clients in US

• Treasury structure & other considerations

International Treasury

Int’l treasury ops

policies, procedures &

technology

Implementing building

blocks of modern

treasury organization

Other considerations

Treasury uses FIS

technology, where

possible

Int’l business units

move or manage cash

for our clients

International treasury centralization journey at FIS

Changes to international payments

4

Who

What

How

Banks

Start End

Corporate Treasury

Business units

Accounts Payable

Corporate Treasury

Accounts Payable

ACH files (AP, Payroll)

Wires, drawdowns

Manual FX trades

Manual through bank portal

H2H submission of files

File Upload

72 different banks used

ISO 20022 Pain 001.001.03

Pain 008.001.02 (drawdowns)

Electronic trading for FX

TMS or ERP to payment

aggregator (Trax); FX platform

SWIFT rails

2 main banks globally

Pooling structures

Local exceptions

Looking at the future… it is here!

5

Faster / real-time payments

Available in various countries where FIS operates

Opportunity to replace costly wires / RTGS

payments

FIS executes some faster payments

~5K payments issued in the UK; 60K/quarter in India

Through bank portal

Limitation on max value and/or focus on consumer

payments

In Singapore used mainly for payments to consumers

Focus on domestic transactions

Being developed but not ready in many countries

APIs

• Alternative connectivity

with bank

• Fastest way to connect

systems with bank

• Ensures consistent

execution and status

feedback

International treasury centralization journey at FIS

Would faster payments work for me?

6

International treasury centralization journey at FIS

Do we need this?

Define need for

faster payments

Don’t look for a

problem that

does not exist

but…

Anticipate

future uses

Are we ready?

Is there visibility

of payment

flow?

Are adequate

controls in

place?

Do you have the

right technology

/ configuration?

Is it possible?

Identify

availability of

service and

technology in

desired country

Is your bank

ready?

Is it valuable?

Develop a

business case

Competitive

advantage?

Efficiencies?

Look at impact

on credit lines

RTP and Banking APIs

Technology

Provider’s

perspective

8

Corporate Liquidity

Enterprise

Treasury

& Payments

SaaS

Treasury

Messaging

Recievables

Corporate Liquidity:

Providing

technology directly

to corporations FIS: Providing Services

to Banks to offer their

corporate customers

BANK

Corporation

Corporation

Corporation

Corporation

The race is on towardreal-time/faster payments

9

Real-time payments has become a global phenomenon with regional impact

and national schemes with 23 percent viewing it as a challenge or driver for a

payments project. Real-time transaction processing is viewed as both an added

convenience and control for treasurers.

Another channel to the banks: Open APIs leadto real-time/faster payments

10

35 percent of study participants have or plan to have an API banking initiative

in place within the next 18 months. Open APIs are just another channel into a

bank. They also offer the possibility of additional services, which can be

offered to consumers or corporations, like balance inquiries, cut-off time

checks or checking credit line availability.

half full or half empty..

The question is what’s in it

for you?

11

Digital Treasury

Digital

Treasury

Changes in Sales

Channels

and Supply Chains:

online channels and

integrated supply chains

require transactions to be

settled in real time

Real time settlement

and cash reporting

Instant payments require

real time liquidity view

and payment tracking

New connectivity

channels

Real time liquidity and

tracking require APIs

Analytics

Data visualization,

dashboarding and

business intelligence

Payment Factory Solution

TraxPaymentFactory

Statements

Treasury

Management

System

ERPsManual Payments

Supplier Payments

Payment

Screening

Engine

Payment transactions

Response

Statements

bank

connectivity

Payments

Banks

HRMs

Salary Payments

TreasuryPayments

StatementsCash flow notifications

Statements

Payments

USE CASE – RTP AND API

• Insurance Customer submits claims

request via digital channel

– Mobile app

– Web

• Request is assessed and if below a

threshold claim payment is made

– Preference for ‘immediate’ payment for better

customer service

• FIS solution:

– Corporate payment hub Trax for integration

and workflow

– Bank API connector: REST Webservice and

JSON formats

– Real time credit on customer’s account

– 60 seconds round trip from claims system and

back

Key points

• Treasury as an adviser

and service provider, not

an observer

• Payments hub supporting

RTP and non RTP

• Leveraging existing

infrastructure without any

major investments

• Live in 3 months

REAL-TIME PAYMENTS A REALITY

A Banking Perspective

Jade section

divider

Changes Influencing Expectations and Outcomes

Changes in

Consumer

Preferences

Rise of Alternative

Payment networks

Impact of New

Economy

Payments

Industry

Engagement

Expectations for simple,

personalized payment

experience

Consumer expectations being

shaped by frequent interaction

with Uber, Air B&B, Facebook

and other new economy

New payment networks and

communities are influencing the

Global payment landscape

Infrastructure upgrades

and investment to focus on

speed and ease of use

1 Background - Payments

Implications for Treasury | Present and Future

Current State of Treasury Future State of Treasury

Innovations in processing, connectivity and data management are leading to leaner, faster and better

transaction management

Faster

Payments

APIs

5/12 Availability

Batch Process

EOD Process / Multiple Cut-offs

Reactive Fraud and Transaction

Security Management

Advance Payment

Funding

Data as a

Byproduct

365/24/7 Availability

Instant Processing

Immediate Settlement and

Reconciliation

Better Liquidity Through Enhanced Funding

Embedded Digital Security Features

Data Driven IntelligenceData & Analytics

Technology is significantly influencing all aspects of treasury management and transaction processing

2 Background - Payments

The Impact of API for Our Clients

Direct Consumption from

Their Treasury Workstation or ERP

Embedding eCommerce Solutions in

Citi’s Channels

New opportunities—market

infrastructures offering new

integrated payment experiences

Integrated User Experience—

seamless transition from

procurement to payment

Accelerated adoption—

enabling rapid expansion of

new business services

Omni-banking Services by

Offering Control, Visibility,

and Complimentary

Services though all Channels

API

Flexibility and Choice for clients

to consume Citi TTS’s financial

services ‘a la carte’

Rich Set of Services – enable all

TTS products and services to be

available via API, including

customer service

Strategic Partnerships –

collaborate through an API

ecosystem with ERP and TWS

vendors

22 CitiConnect APIs

API Use Case 1 - Acct Visibility in Real-time via Acct Balance API

• Access to account balance

information for all its accounts

throughout the world

• Enable Treasurers to make more

informed decision (e.g. FX

booking, investments)

Benefits

• Treasurers in need of visibility of

various accounts via their TMS

(Treasury Management System)

in real-time manner.

• Currently, companies rely on

balance reports that are sent

every 15 mins via email, which

are not real-time and inefficient.

Challenge

• Company has successfully

implemented Account Balances

API to pull account balance real-

time on-demand into their TMS

Live Solution

Customer requests refund

Treasurers login to

TMS and view

account balance

TMS triggers CitiConnect

Account Balance API to request

for latest account balance

TMSTreasurers

1 2 CitiAPI retrieves account

balance and sent back to

TMS real-time

3

Account balance is displayed in TMS4Message flow

Citibank Online

system

Live Use Case | Flow Chart

25 API Use Cases

Customer requests refund

Merchant onboards on

e-commerce marketplaceWebsite auto-triggers “penny

testing” using Citi API

Marketplace Payments-ordering

System

Merchant

1 2

Penny-testing result provided in instant manner

and confirms correct bank account details3

API Use Case 2 - Instant Bank Account Validation via Pay API

Message flow

• Eliminate risk of subsequent

rejects and returns that results in

merchant payment delays,

customer service investigations,

bank fees and internal

reconciliation costs,

Benefits

• When onboarding to portal, there

is risk of incorrect bank account

details provided by merchant.

• Rejects of subsequent payments

to merchants result in high bank

fees and reconciliation cost.

Challenge

• At the time of merchant

onboarding, portal triggers Citi

API to validate merchant’s bank

account details.

• Merchant is made aware if

validation fails and to rectify

immediately.

Live Solution

Live Use Case | Flow Chart

26 API Use Cases

API Use Case 3 – Instant Refunds on Receipt of Returned Goods

• Transform the refund process

from days to instant

• Buyers’ experience is improved

• Enhanced confidence by buyers

to purchase from website

Benefits

• After a buyer returns a wrongly

delivered item, the reconciliation

process is oftentimes manual

and time consuming

Challenge

• Company plugs in Citi API to

trigger instant payment as soon

as payment is approved through

refund management process

Solution

Customer requests refund

Buyer requests

refund on

e-commerce

website

Refund request

captured on

backend system

e-commerce

website

e-commerce

backend systemBuyer

1 2

Customer returns goods3Returned goods

inspected and

refund is

approved

4

Citi API triggers

instant payment5

Message flow Goods flow Funds flow

Buyer receives

refund as soon as

it is approved

6

Live Use Case | Flow Chart

27 API Use Cases

Questions?

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