The Evolution of the Payment Systems

Gianfranco Guidolin, International Business Development

Romanian Banking Forum 2002Bucharest, 19 November 2002

European Financial ScenarioMain Drivers

New forces are driving the evolution of the European Financial Market:

Economic integration

Introduction of the Euro

Harmonisation of existing domestic infrastructures

Financial market infrastructure consolidation

Euro means:

thanks to• price transparency • transaction cost reduction• common rules and legislation• use of standards (IBAN, BIC)

European Financial ScenarioEconomic Integration and Introduction of the Euro

IntegrationCompetition

European Financial ScenarioFinancial market infrastructure consolidation

Consolidation means:•harmonisation•facilitation of cross border transactions•clearing and settlement cost reduction•trading as a commodity•greater competition•efficiency

– less fragmentation– clearing and settlement integration– standards

DomesticPaymentSystems

NationalCommunicatio

nStandards

LocalOrganisational

Solutions

Need for Payment System Harmonisation

•Integration of domestic and cross-border payment infrastructures

•Same costs for both domestic and pan-European transactions

•Reduction of clearing and settlement cycle time•Fair and open access

European Financial ScenarioSEPA (Single Euro Payment Area)

Security in the Financial World

Security is a common threadthroughout the financial world

FinancialServices

InterbankingCompanies

Banks

Users

SECURITY

• Strategic approach to security:

integrated global solutions

instead of single product/service

solutions

• Co-ordination between physical

and IT security

• From IT security to business

security

• Non repudiation ever increasing

importance as market

dimensions grow

SECURITY IS A STRATEGIC ISSUE

The key framework to support the evolutionary process

Up-to-date, competitive enabling infrastructures: the foundation on which the re-

engineering process must be built ensuring efficiency, effectiveness and security

INNOVATION INTEGRATION

FINANCIALMARKET

SecuritySecurity

Since 1977 SIA is the main service provider for

Italian financial Institutions, Banks and

financial Operators

A competitive offering based on innovative, secure and integrated technology

Data Base NetworkingInfrastructure

ServicesApplication

ServicesFront End

SIA: 25 years of expertise

Value and innovation for the financial

market

Düsseldorf

New York

London

Frankfurt

Paris

Amsterdam

Madrid

BaselTokyo

Lisbon

Athens

RUPA

SIAnet

The SIA Network

The central infrastructure for all financial services with the highest levels of security and reliability:

• SIAnet delivers all the financial transactions to national and international members of the financial community

• Satellite infrastructure to deliver information to financial markets• Open multi-protocol architecture in optical fibre (wide-band MPLS)• Over 3,600 billion bytes transported with SLA higher than 99,999% in 2001

• First Italian company certified BS7799, Vision 2000

• Charter member of the Global Trust Authority

• First Certification Authority recognised by AIPA

• SIA designs, develops and manages critical services with a help desk for 24x7x365 guaranteeing high service availability levels

A complete and competitive offering for all security needs

Our commitment

• SIA Group:

• Strategic Partnership:

SIA: Security Excellence

Security

Payment systems

SIA manages the Italian payment system services:

Retail Payment Clearing Subsystem

&

Wholesale Payment System Exchange Procedures

Clearing & SettlementPre-settlement

Payment Management

PaymentInitiation

Pre-settlementPaymentSystem

TicklerGuaranteesValidation

Datacollection

Payment Value Chain

Claering &Settlement

Step2 is aimed at processing high volumes of commercial and retail payments sent to the system through a secure

network

EBA STEP2 is a pan-European answer to banks needs for retail payments:

A recent international successSEPA - EBA (Euro Banking Association)

EURO1

TARGET

A nB

Settling DirectBank B

IndirectBank 2

IndirectBank 1

Settling DirectBank A

EBASTEP2

SIA is the leading IT providerfor the entire value-chain of the financial markets processes

Info collection& distribution

OrderCollection &routing

Marketaccess

Matchingengine

Data dissemination

Italian Stock Exchange

Equities, Derivatives, Treasury and Corporate Bonds

MTS, EuroMTS, MTS Japan, MID

TradeImpact - A T S

Information andAccess MarketsMarkets

TradingOnLine

Trading Mngt

Financial Info

Monitor

Global order routingSWIFT ETC

Service Provider

WebtradeWebtrade

Trading on-line

Markets and Access to Trading

Trading technology

IT outsourcing servicesAn attractive option

SIA’s outsourcing offers a reliable approach to addressing the challenges ahead.

SIA has already created a Win-Win Relationship with:

Monte TitoliTLX

eMID

CCG

BorsaItalian

a

Banca Profilo

Banca d’Itali

a

Euroyard

MTS

SIA: your reliable partner

Revenues: € 200 million (+10 %)

Net Profit: € 6,4 million (+22 %)

Italian clients: over 1000

International Clients: over 300 (+ 20%)

Infrastructure investments: € 47 million

Figures in 2001

SIA chosen by the EBA as the technology partner to build and operate the new pan-European Automated Clearing House for mass payments in Euro

Most recent success

www.sia.it ABE EBA

SIA provides competitive, innovative and secure IT solutions thanks to the right combination of technical

expertise, vertical know-how and cost efficiency

The leading IT provider for the financial world