payment and settlement systems(swift,neft and securities cycle)

PAYMENT & SETTLEMENT SYSTEM

BY-Mihika Baisya (12030141003)

Vyshak Reghukumar (12030141036)

Savita Marwal (12030141094)

Ruchika Sharma (12030141097

INTRODUCTION

• DEFINITION-• Payment is the transfer of one form of good, service or financial

asset in exchange for another form of good, service or financial asset in proportions that have been previously agreed upon by all parties involved. Payment can be made in the form of funds, assets or services.

• Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against ( in simultaneous exchange for) payment of money, to fulfil contractual obligations, such as those arising under securities trades.

• Cash Settlement is a method of settling forward contracts or futures contracts by cash rather than by physical delivery of the underlying asset. The parties settle by paying/receiving the loss/gain related to the contract in cash when the contract expires.

NATURE OF SETTLEMENT

• Settlement involves the delivery of securities from one party to anotherTraditional (Physical) SettlementElectronic Settlement

• LEGAL SIGNIFICANCE• IMMOBILIZATION & DECENTRALIZATION• DIRECT & INDIRECT HOLDING SYSTEMS

SETTLEMENT ACROSS VARIOUS GEOGRAPHIC LOCATIONS• INDIA

Real-Time Gross SettlementNational Electronic Funds TransferIndo-Nepal Remittance Facility

• UNITED STATES of AMERICAFedWire

Immediate Payment Service

• Immediate Payment Service (IMPS) is an initiative of National Payments Corporation of India (NPCI).

• To avail the facility, both the sender and receiver of money needs to be registered for mobile banking service of their respective banks.

Comparison

• The key difference between RTGS and NEFT is that while RTGS is on gross settlement basis, NEFT is on net settlement basis.

• RTGS facilitates real-time ("push") transfer, while NEFT involves twelve settlements from 8 am to 7 pm on week days and six settlements from 8 am to 1 pm on Saturdays. Customers can access the RTGS facility between 9 am to 4:30 pm on weekdays and 9 am to 1:30 pm on Saturday

FEDWIRE

• The Federal Reserve Banks, of the United States, provide the Fedwire Funds Service, a real-time gross settlement system(RTGS) that enables participants to initiate funds transfer that are immediate, final, and irrevocable once processed

• The Fedwire Funds Service business day begins at 9:00 p.m. eastern time (ET) on the preceding calendar day and ends at 6:30 p.m. ET, Monday through Friday, excluding designated holidays.

LIFE CYCLE OF SETTLEMENT PROCESS

• Clearing Corporation• Clearing Members• Custodians• Clearing Banks• Depositories• Professional Clearing Member

Clearing & Settlement Process

Core processes involved in clearing and settlement

• Trade Recording• Trade Confirmation• Determination of Obligation• Pay-in of Funds and Securities• Pay-out of Funds and Securities

DISJOINTED PAYMENT SYSTEMS• CPSS (standard setting body):- It serves as a forum for central banks

to monitor and analyse developments in domestic payment, clearing and settlement systems as well as in cross-border and multicurrency settlement schemes.

Interdependencies

CROSS-BORDER PAYMENT CHALLENGES• Based on local laws and practices

• Lack of a common global standard and variations between systems

• Government regulations are changing how payments are made

• Domestic infrastructures are not designed to handle cross-border payments.

• Lack of common message standards.

• Impact of regulatory requirements

Working of Cross-Border Payments• Often banks do not separate domestic and cross-border

payments, blurring the line of demarcation in payment flows.

maintain correspondent banking relationships with local banks in important cities of

world

16

Current State – Functional View

Shared Services

Fraud, Credit and Risk

Integrated Processing Centre

Centralized

Exception Handling

IT ServicesChannel

Identify Customer

Initiate Time Triggered

Receive Transaction

AuthenticateInitiate

Transaction

Process Payment Order

Issue Documents & Notifications

Perform Transaction

Reconciliation

Prepare for Settlement

Monitor and Report on

Performance

CIBPerform Inter-bank

Settlement

Customer Insights and Offerings - Strategy

Manage Customer

Agreements

Design Offerings Features

Design Feature and Service Specification

Switch Account Payment Orders

Set-up Future Dated

Payments

Respond to/or contact

Customer

Investigate Irreconcilable Transactions

Create corrective Payment

Instructions

Develop Offerings Strategy

Manage Agreements

(Industry)

Reporting and Analytics

Data Store

SLA / OLA Management

Source transaction data from Channels /

RT and Bulk

IPSCheque Processing and Reconciliation

Cash Services

Post Payment (customer account)

Product Team

Execute CRM Activities

Perform Fraud Checks

Finance

Perform GL Updates

Perform Credit Checks

Define and maintain

accounting d management

reporting rules

Define Internal Controls

(Risk : Suspense Accounts)

Credit System Fraud System

Group ForensicInvestigate Internal

Staff fraud

Product System (customer account)

Product System

Customer Touch Point

ATM

Branch

Net Banking

Client Contact Centre

Phone Banking

Mobile Banking

Regional

Origination ServiceMaintenance

and Payments

Standard Bank – Personal and Business Banking – Payments Flow

Payment Engine

Offerings / PaymentStrategy

ChannelTouchPoints

Shared ServicesProduct Team, Credit Fraud & Risk Teams, Finance Team

Channels IT ServicesIntegrated Processing CentreCentralized & Regional IPCs

IPS

CashServices

CIB

1

3

2 4 5

6 7

8

9

17


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement

Offerings/Payment Strategy

Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store

Association Compliance& Merchant Services


Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments

Standard Bank – Personal and Business Banking – Payments Flow [Blue Print As-Is 2010]

Payment Engine

Vendor Management (Cheques)

Integrated Operations Support

Rejections

Charge-backs +Debit Card Liaisoning

Reconciliations

SettlementsLocal + International

CapturingCustomer

Data Operations

Association Compliance & Business Services

18


01 Customer Touch Points Customer Touch Points : An access mechanism by means of which a participant gains access to the use of channels in order to effect, control, manage or monitor payments

The main components within the Customer Touch Points are ATM Branch Net Banking Client Contact Centre Phone Banking Mobile Banking

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

19


Channel : Definition of Channel here.

The main components within Channels are Manage Customer Agreements - Identify Customer Authenticate Initiate Transaction Switch Account Payment Orders Setup Future Dated Payments Initiate Time Triggered Payments Issue Documents and Notifications Receive transaction Respond to / or Contact Customer

02 Channel

Channel

Identify Customer


Receive Transaction


Transaction


Manage Customer

Agreements


Set-up Future Dated

Payments


Customer

20


03 Offerings / Payment Strategy Customer Insights and Offerings : Perform Strategic planning, policy and methodology development, relationship management, performance management, and design, build and run enablement for customer offerings

The main components within Customer Insights and Offerings are Develop Offerings Strategy Manage Customer Agreements for Industry Design Offerings Feature Design Feature and Service Specification





Manage Agreements

(Industry)

21


IT Services : Definition of IT Services here.

The main components within Payment Services Hub are1. Process Payment Order -

2. Data Store3. Reporting and Analytics4. Post Payment into Customer Accounts

04 IT Services

IT Services



Data Store

Payment Engine

22


05 Integrated Processing Centre Integrated Processing Centre : The standard bank Integrated Processing Centre is based on a

structure of three strategic areas, specifically:1. Production processing or the IPC’s ( CPC + RPC)2. Service management – responsible for facilitating the

relationship between the IPC’s & the SBSA business units3. Continuous improvement and implementation focusing

on improving IPC processes and implementing organizational initiatives

The main components within Centralized IPCs with payment focus are: Perform Transaction Reconciliation Prepare for Settlement Monitor and Report on Performance Investigate Irreconcilable Transactions Create Corrective Payment Instructions SLA / OLA Management Source Transaction Data

The main components within Regional IPCs with payment focus are: Origination Service Maintenance and Payments

Regional


and Payments

Association Compliance & Business Services

23


06 Shared Services Shared Services : Definition of Shared Services here.

The main components within Product Team with payment focus are: Execute CRM Activities Product Systems

The main components within Fraud, Credit, Risk and the Group Forensic Team are Investigate internal staff fraud Defining Internal Controls Perform Credit Checks Perform Fraud Checks

The main components within Finance Team are Perform GL Updates Define and Maintain Accounting and Management Rules

Product Team



Product System








Staff fraud

Finance

Perform GL Updates

Define and maintain

accounting and management reporting rules

24


Other Entities – This involves entities external to PBB:

The main components within this Group are IPS – Cheque Processing and Reconciliation Cash Services CIB – Perform Inter-bank Settlement

07 IPS

08 Cash Services

09 CIB


Cash Services


Settlement

25

Payment Processing Flow

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework

Design and Buildthe Business

Maintain theBusiness

Manage Business Performance

Payments Strategy Development

Industry Strategy & Relationship Management

Design Offering Features (payment capabilities)

End-of-Period ProcessingReconciliationException Handling

Activate service functionality

Fulfil TransactionProvide Business Intelligence Data to Business Performance Management

26

Payment Processing Flow - Plan the Business

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework










Develop Long-Term PBB Strategy

Perform Planning and

Budgeting

Define the business objectives of P&BB, Customer and Product and translate them into measurable elements of strategy execution

Develop budgets for P&BB business areas and roll up into a consolidated budget. Develop plans to achieve targets and objectives and allocate P&BB resources accordingly

27

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework










Createofferings

This process involves conducting a segmentation study to understand customer needs and wants, in order to develop offerings supported by an appropriate marketing mix strategy.

Promote offerings

This process involves creating demand in the market for new and existing financial solutions.

Paym

ent

Com

pone

nt

Payment Processing Flow - Bring Offerings to Market

28

Create Offerings Definition: involves conducting a segmentation study to understand customer needs and wants, in order to develop offerings supported by an appropriate marketing mix strategy.

Payment component: The Involvement of Payments strategic team to understand the impact of the New product launch and its subsequent servicing at the Payment processing centre based on the rules defined by the Offerings( Draft version)

Payment Processing Flow - Bring Offerings to Market

29

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Customer offerings Strategy & Planning

Customer offerings policies and

Methodologies

Customer offerings

Relationships and Management

Customer offerings Performance management

Customer Offerings people Management

Customer Offerings design, build and run

enablement

Customer Offerings Strategy and Planning: Define the strategy for the performance of the capabilities within the functional area incl. Pricing, targets, volumes, features & services inclusive of Payment functionalities

Customer Offerings Strategy & Planning

Inputs: Key objectives Business Model Offering Strategy Features and Services Strategy including Payment mechanismsOutputs: Offering Strategy

Payment Processing Flow - Bring Offerings to Market - A. Create Offerings

30

Customer offerings Strategy & Planning

Customer offerings policies and

Methodologies

Customer offerings

Relationships and Management

Customer offerings Performance management

Customer Offerings people Management

Customer Offerings design, build and run

enablement

Customer Offerings design, build and run enablement: Participate in end to end solution design, build and implementation by providing requirements, determining viability of outputs, conducting user acceptance testing, providing post implementation specialist expertise and sustaining change in the customer offerings

Customer Offerings Strategy & Planning

Inputs: Customer offerings plan Customer offering build and run time ideas Functional area solution requirements Newly built solutionOutputs: Customer offerings solution requirements Articulated business case for customer offerings Assessed feasibility of design Sign-offs on Customer offering solution Customer offerings system advisory support

Payment Processing Flow - Bring Offerings to Market - A. Create Offerings

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

31

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework










Originate Offerings

Activate Offerings

Originate Customers

Setting up of a verified customer record that will allow the customer to apply for any of the Bank's offerings

Initiation and completion of the offering application with the customer and induction of the customer into the bank and its processes

Providing the customer with enablers and enabling the account. Excludes onboarding as this is a service process

Paym

ent

Com

pone

nt

Payment Processing Flow - Sell Offerings

32

Activate Offerings Definition : Providing the customer with enablers and enabling the account. Excludes on-boarding as this is a service process

Payment Component: This section involves activation of new accounts for 1. Transactional products2. VAF accounts – includes Payouts3. Home loan accounts - includes payouts4. CARDS – Issue of Credit

( Draft version)

Payment Processing Flow - Sell Offerings

33

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Sell Create the customer Complete offering application Enable Account

Enable Account : Once approved, co-ordination of account enablement and provision of enablers to the customer to make the account transactable. Setting up of initial customer authentication and provision of account access enablers to the customer

Access Channel

Inputs: Customer acceptance of product / service Customer authentication details Customer acceptance of product / service Outputs: Customer authentication records Account enablers in possessionIn case of VAF and HL, Payouts are effected into the customer’s account and dealer settlements are carried out

Payment Processing Flow - Sell Offerings - A. Activate Offerings

34

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework










Fulfill Transaction

Resolve Complaints

Fulfil Transaction: Execution of all customer and bank initiated value transactions (e.g., deposit,

transfers, withdrawal, standing orders etc)

Fulfil Service: Completion of all customer initiated service activities (e.g. query, general assistance etc)

Completion of all activities required to resolve one and done and escalated

complaints

Fulfill Service

Manage Accounts

Management of bank initiated account maintenance activities

(e.g. collateral maintenance, collateral valuation etc)

Paym

ent

Com

pone

nt

Payment Processing Flow - Service Offerings

35

Fulfil Transaction Definition : Execution of all customer and bank initiated value transactions (e.g., deposit, transfers, withdrawal, standing orders etc)

Payment Component: All transactions processed through the Payment engine ( Real time and Bulk), reconciled through the reconciliation engine and prepared for settlement and Posting. ( Draft version)

Fulfil Service Definition : Completion of all customer initiated service activities (e.g. query, general assistance etc)

Payment component: All escalated queries from channel relating to (Saswitch) transactions and escalated queries from IPC ( especially refunds) would be handled at the Payment processing centre. ( Draft version)

Resolve Complaints Definition : Completion of all activities required to resolve one and done and escalated complaints

Manage Accounts Definition : Management of bank initiated account maintenance activities (e.g. collateral maintenance, collateral valuation etc)

Payment Processing Flow - Service Offerings

36

Access Channel/

Identify CustomerAuthenticate Initiate Process Payment

Order Issue Official Docs Post Payment

Access Channel / Identify Customer : Identification of an SBSA customer or prospect via identification mechanisms. Certify that the mechanism used to initiate the transaction is a valid mechanism

Access Channel

Channel : ATMInstruction Flow : Us on UsEnabler : Card + Chip

Input : Identification mechanism like name; card number etc Contacted customer / prospect

Output : Identified customer / Prospect Validated identification mechanism

Scenario 1 : Cheque Deposit at an ATM

Payment Processing Flow – Service Offerings - A. Fulfil Transactions

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

37

Access Channel/



Authenticate : Mechanism to accurately confirm the identity of the SBSA customer / prospect. Authentication mechanisms are channel specific. Examples include Identity document; passport; signature; security question etc

Authenticate

Channel : ATMInstruction Flow : Us on UsEnabler : Card + ChipAuthenticate:

Pin / Password Card

Input : Identified customer / prospect Authentication mechanism e.g. password; PINOutput : Authenticated customer / prospect Unauthenticated customer / Prospect



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

38

Access Channel/



Initiate : Initiation and channel fulfilment of a value transaction by a customer or prospect. Customer initiated value transactions include deposits ( Cash or Cheque), Withdrawals ( Cash or Cheque), transfers ( Inter and Intra bank) and change transactions

Initiate


Channel : ATMInstruction Flow : Us on UsEnabler : Card + ChipAuthenticate:

Pin / Password Card

Input : Identified customer / prospect Authenticated customer or prospect Transaction requestOutput : Initiated transaction Transaction record Request for transaction authorization


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

39

Access Channel/


order Issue Official Docs Post Payment

Process Payment Order: Validate : Fulfill activities required to ensure that the content of the value transaction is “ technically” in order and complies to the SLA’s and customer agreements. Confirming the existence and validity of the destination account

Process Payment order

Channel : ATMInstruction Flow : Us on UsEnabler : Card + ChipAuthenticate :

Pin / Password Card

Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Authorized transactionOutput : Validated Transaction



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

40

Access Channel/



Process Payment Order: Enrich : Provide Payment services / information added to a transaction in response to customer / prospect / bank requirements as a service or as a basic processing requirement


Channel : ATMInstruction Flow : Us on UsEnabler : Card + ChipAuthenticate :

Pin / Password Card

Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Authorized transaction Validated Transaction Customer agreementOutput : Enriched Transaction ( as per customer / prospect / bank requirements)



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

41

Access Channel/



Issue Official Docs : Issue physical documents ( e.g. ATM Slips ) and notifications ( e.g. Sms confirmations) associated with value transactions and service activities

Issue official docs

Channel : ATM

Instruction Flow : Us on Us

Enabler : Card + Chip

Authenticate : Pin / Password Card

Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Identified customer / prospect Authenticated customer / prospect Authorized transaction Request for official docsOutput : Issued official documents Issued notifications



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

42

Access Channel/



Post Payment: Post the transaction at a customer account level (i.e. Sub-ledger). Apply financial conditions associated with the package i.e. Calculate fees and commission, increment transaction counter etc

Post payment

Channel : ATM


Enabler : Card + Chip

Authenticate : Pin / Password Card

Validate : SBSA CustomerAuthorize : SBSA CustomerPost : AccountInput : Accounting rules Calculated fees Calculated commissionOutput : Account(s) updated



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

43

Access Channel/



Access Channel / Identify Customer : Identification of an SBSA customer or prospect via identification mechanisms. Certify that the mechanism used to initiate the transaction is a valid mechanism

Access Channel

Channel : Cash centre / BranchInstruction Flow : Us on UsEnabler : paper Input : Identification mechanism like name; username, card etc Contacted customer / prospect


Scenario 2 : Cheque encashment at Branch – SBSA ( Local currency cheque)


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

44

Access Channel/




AuthenticateChannel : Cash Centre / BranchInstruction Flow : Us on UsEnabler : PaperAuthenticate:

Identity doc Signature

Input : Identified customer / prospect Authentication mechanism e.g. Identity document; password; PIN; SignatureOutput : Authenticated customer / prospect Unauthenticated customer / Prospect



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

45

Access Channel/



Initiate : Initiation and channel fulfilment of a value transaction by a customer or prospect. Customer initiated value transactions include deposits ( Cash or Cheque), Withdrawals ( Cash or Cheque), transfers ( Inter and Intra bank) and change transactions

InitiateChannel : Cash centre / BranchInstruction Flow : Us on UsEnabler : PaperAuthenticate:


Input : Identified customer / prospect Authenticated customer or prospect Transaction requestOutput : Initiated transaction Transaction record Request for transaction authorization

CVZ

CVZ



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

46

Access Channel/



Process Payment Order: Validate : Fulfill activities required to ensure that the content of the value transaction is “ technically” in order and complies to the SLA’s and customer agreements. Confirming the existence and validity of the destination account


Channel : Cash Centre / BranchInstruction Flow : Us on UsEnabler : PaperAuthenticate :


Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Authorized transactionOutput : Validated Transaction

CVZ



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

47

Access Channel/



Process Payment Order: Enrich : Provide Payment services / information added to a transaction in response to customer / prospect / bank requirements as a service or as a basic processing requirement


Channel : Cash centre / BranchInstruction Flow : Us on UsEnabler : PaperAuthenticate :

Identify doc Signature

Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Authorized transaction Validated Transaction Customer agreementOutput : Enriched Transaction ( as per customer / prospect / bank requirements)



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

48

Access Channel/



Issue Official Docs : Issue physical documents ( e.g. ATM Slips ) and notifications ( e.g. Sms confirmations) associated with value transactions and service activities

Issue official docs

Channel : Cash centre / Branch


Enabler : Paper

Authenticate : Identity document Signature

Validate : SBSA CustomerAuthorize : SBSA CustomerInput : Identified customer / prospect Authenticated customer / prospect Authorized transaction Request for official docsOutput : Issued official documents Issued notifications



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

49

Access Channel/



Post Payment: Post the transaction at a customer account level (i.e. Sub-ledger). Apply financial conditions associated with the package i.e. Calculate fees and commission, increment transaction counter etc

Post payment

Channel : Cash centre / Branch


Enabler : Paper

Authenticate : Identity document Signature

Validate : SBSA CustomerAuthorize : SBSA CustomerPost : AccountInput : Accounting rules Calculated fees Calculated commissionOutput : Account(s) updated



Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

50

Identify Customer : Identification of SBSA customer or prospect via identification mechanisms. Identification mechanisms include customer / prospect name, username, card etc.

Identify Customer

Channel : CCC, CRC, Branch, Electronic mail

Input : Identification mechanism like name; username, card etc Contacted customer / prospect


Access Channel/

Identify CustomerAuthenticate Manage Queries Qualify complaint Resolve complaint Resolve escalated

complaint

Payment Processing Flow – Service Offerings - B. Fulfil Service

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

51


Authenticate

Channel : CCC, CRC, Branch, Electronic mailAuthenticate:

Pin / Password/ I.D Card

Input : Identified customer / prospect Authentication mechanism e.g. Identity document; password; PIN; SignatureOutput : Authenticated customer Unauthenticated customer

Access Channel/


complaint


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

52

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Access Channel/


complaint

Manage Queries : Receipt of Queries and handling. Where necessary, query redirected to the appropriate resolution parties and complex queries escalated.

Manage Queries


Pin / Password / I.D Card

Input : Authenticated customer Account information request Query ( Including information, assistance or status request)Output : Communicated account information Resolved customer query Customer complaint Recorded (and escalated query) General information , assistance or status provided


53

Qualify complaint : Receive and qualify complaints logged by customers. Gather all details pertaining to the complaint. Direct complaints to the specialist area in instances where channel does not have the capability to resolve the complaint

Qualify complaint

Channel : CCC, CRC Branch, Electronic mailAuthenticate:


Input : Authenticated customer or prospect Customer complaint Complaint management guidelinesOutput : Complaint record Qualified complaint Directed complaint

Access Channel/


complaint


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

54

Resolve complaint : Analysis of customer complaint that have been identified as channel specific. Investigate and resolution of channel specific complaint

Resolve Complaint

Access Channel/


complaint


Pin / Password / I.D Card

Input : unresolved complaint Complaint management guidelinesOutput : Resolved complaint


Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

55

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Resolve escalated queries : Complaints escalated via the banking channels ( complaints are escalated when channel does not have the capability to resolve the complaint or when customers are dissatisfied with the resolution of the complaint

Resolve escalated complaint

Access Channel/


complaint



Input : Directed complaint Escalated complaint Complaint management guidelinesOutput : Resolved escalated complaint Unresolved escalated complaint


56

Initiate Document management Collateral Management Debt review and collections

Initiate: Identify all the periodic triggers on an account and initiate( specific to an operational environment); examples include payment instruments requiring renewal, fees and interest accruals to be posted, future dated payments to be executed

Initiate

Payment Processing Flow – Service Offerings - C. Manage Accounts

Channel : Customer / Bank initiated

Input : Customer account information

Output : Event triggers actioned in the customers account

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

57

Initiate Document management Collateral Management Debt review and Collections

Document Management: Prepare, generate and supply paper correspondence including account statements for all accounts. This includes conformance to specifications and SLA’s as agreed

Document Management


Channel : Customer / Bank initiated

Input : Specification for documents Information required on documents

Output : Documents produced / Not produced

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

58

Initiate Document management Collateral Management Debt review and Collections

Collateral Management: This process refers to obtaining suretyships and collateral items pledged, ceded or bonded to the bank as security to the loan, valuation and re-evaluation of collateral market values, realization and release of surety ships and supporting collateral

Collateral Management


Channel : Customer/ Bank initiated

Input : Credit policy, Credit procedure Trigger for periodic re-evaluationOutput : Obtained collateral Valued and Re-valued collateral Released collateral Realized collateral

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

59

Initiate Document management Collateral Management Debt review and collections

Debt review and collections : Involves contacting customer in response to a collection prompt, voluntary reviewing and respreading of customer and ensuring the collateral types defined by Basel II are used and weighted accordingly. Also, involves the activities required to manage accounts in collections that are post write - off

Respond to customer


Channel : Customer/ Bank initiated

Input : Credit collection prompt Customer interaction and collection strategy Account ageing Written off accountsOutput : Collection feedback Re-structured accounts Outstanding payments collected Maximized recoveries Minimized losses Optimized costs

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

60

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework







Prepare for SettlementReconciliationException Handling



Design the P&BB business environment (i.e. people, process and technology)

Build the P&BB business environment (i.e. people, process and technology)

Establish mutually beneficial agreements with suppliers to enable demand fulfilment and

continuously reduce the Total Cost of Ownership (TCO)

Build the Business

Perform Strategic Sourcing

Design the Business

Payment Processing Flow - Design and Build Business

61

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework







Prepare for SettlementReconciliationException Handling



Fulfil repetitive purchases of consumables, assets and services at the best total cost of ownership for P&BB

Maintain physical infrastructure to ensure P&BB’s continued business capability (i.e. buildings, facilities

etc)

Maintain IT infrastructure to ensure P&BB’s continued business capability (i.e. systems etc)

Perform Procurement

Maintain Physical Infrastructure

Maintain IT Infrastructure

Manage DataManage enterprise data strategy, data quality and

data governance for P&BB

Ensure P&BB has the correct staff, with the correct skills and knowledge, who are

continually aligned with the P&BB strategy

Systematic matching of Settlement obligation instructions from merchants; agent banks,

clearing houses , reserve bank and Card associations

Manage errors during and after the execution and processing of a payment

Manage Workforce

Reconciliation

Exception Handling

Settlement

To Be Defined

Paym

ent C

ompo

nent

Payment Processing Flow - Maintain the Business

62

Prepare for Settlement : Systematic matching of settlement obligation instructions from Merchants; Agent banks; Reserve bank; Clearing house and Card associations

Exception Handling Definition : Manage errors during and after the execution and processing of a payment In process exception Post process exception

Payment Processing Flow - Maintain the Business

63

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Perform Procurement

Maintain Physical

Infrastructure

Maintain IT Infrastructure Manage Data Manage

Workforce Reconciliation Exception handling


Reconciliation :

Reconciliation


Input : Processed transaction Files sent from clearing house and internal systems

Output : Reconciled / un reconciled transaction

Payment Processing Flow - Maintain the Business - A. Reconciliation

64

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Perform Procurement

Maintain Physical

Infrastructure




• Exception Handling : The process to manage to manage errors during and after the execution and processing of a payment.There are two types of exception handling

• In-process• Post-process

• Raise; Clear & Confirm / Monitor Exceptions

Exception Handling


Input : transaction for processing Rejected transaction

Output : Transaction identified / un identified in the Rejections and captured for processing

Payment Processing Flow - Maintain the Business - B. Exception Handling

65

Perform Procurement

Maintain Physical

Infrastructure




Prepare for Settlement : The process of sending and receiving settlement obligation instructions at a domestic and / or international level and the matching of these to settlement obligation instructions



Input : transaction for processing Rejected transaction

Output : Transaction captured for settlement

Payment Processing Flow - Maintain the Business - C. Prepare for Settlement

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

66

SellOfferings

Plan the Business

BringOfferings to

Market

ServiceOfferings

Process Framework










Measure and Monitor Service Providers

Measure and Report PerformanceMeasure and report the performance of P&BB across multiple dimensions (i.e. Offerings, Operations, Channel, IT, Credit, HR,

Finance, Risk & Compliance and Business Architecture)

Measure, monitor and review operational and service level agreements with internal and

external partners

Paym

ent

Com

pone

nt

Payment Processing Flow - Manage Business Performance

67

Measure and Report Performance Definition : Measure and report the performance of P&BB across multiple dimensions (i.e. Offerings, Operations, Channel, IT, Credit, HR, Finance, Risk & Compliance and Business Architecture)

Payments Component: Measurement and reporting of performance on the Payment Processing centre No. of Exceptions ( Identified and cleared) No. of Escalated queries handled within SLA % of Un reconciled transactions ( Volume and Value) Settlement obligations as per defined SLA

( Draft version)

Payment Processing Flow - Manage Business Performance

68

Shared Services



Centralized

IT ServicesChannel

Identify Customer


Receive Transaction


Transaction




Settlement


Manage Customer

Agreements




Set-up Future Dated

Payments


Customer


Manage Agreements

(Industry)


Data Store



Cash Services

Product Team



Finance

Perform GL Updates


Define and maintain


reporting rules





Staff fraud


Product System

Channel Touch Point

ATM

Branch

Net Banking


Phone Banking

Mobile Banking

Regional


and Payments


Payment Engine



Rejections


Reconciliations


CapturingCustomer

Data Operations

Manage Business performance: Gather performance data related to service level agreement / OLA defined and distribute to relevant stakeholders

Report on Performance

Channel : AllInstruction Flow : Us on UsThem on usUs on them

Input : Performance management measures for functional management of business partners and suppliers

Output : Performance reports Performance problems and areas of concern identified and communicated to business partners

Payment Processing Flow - Manage Business Performance - A. Report Performance

VARIOUS REGULATIONS• LEGAL FRAMEWORK FOR PAYMENT & SETTLEMENT SYSTEMS OF INDIA• The Negotiable Instruments Act, 1881 (N.I. Act) :- legal base for all cheque-

based (instrument-based) payment systems in India• Amendment to the Information Technology Act, 2000: make it applicable to

N.I. Acthas accorded legal status to the usage of electronic payment systems in Indian banking.

• Under the PSS Act, 2007, two Regulations have been made by the Reserve Bank of India,

• The Board for Regulation and Supervision of Payment and Settlement Systems Regulation, 2008 :- deals with the constitution of the Board for Regulation and Supervision of Payment and Settlement System (BPSS),The BPSS exercises the powers on behalf of the Reserve Bank, for regulation and supervision of the payment and settlement systems under the PSS Act, 2007.

• The Payment and Settlement Systems Regulations, 2008:- matters like form of application for authorization for commencing/ carrying on a payment system and grant of authorization, payment instructions and determination of standards of payment systems, furnishing of returns/documents/other information, furnishing of accounts and balance sheets by system provider etc

payment and settlement systems(swift,neft and securities cycle)

Education