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  • user 3:35 pm on September 18, 2018 Permalink | Reply
    Tags: 5f0095, , , , ,   

    How will data shape the future of banking? 

    Guest blogger Tara Brady discusses how -driven value creation can help their .

    The digital revolution and mobile have transformed the way people interact with their bank. This trend is set to continue, with new figures revealing that mobile transactions are set to rise by around 121 percent between 2017 and 2022, and average branch visits are set to drop from seven to four per year by 2022.

    Traditional providers have also been faced with the emergence of challenger banks (such as Monzo and Starling), which are striving to capture the attention of millennials with their agile, digital offerings. The territory of the high street stalwarts is being encroached on by the likes of PayPal and Apple Pay, which have disrupted the payments market, traditionally an area that banks have dominated.

    Customers or fans?

    New entrants have energised their customer base to something often more akin to a fan club, often incorporating gamification principles to encourage customers to use their digital platform, with the ultimate aim of improving their customer retention and online customer experience.

    Driving this is the principle of personalisation, and the ability to customise, which promotes a sense of ownership in the game through self-expression. Having experiences that deliver delight, preferably packaged into social media-friendly personalised snapshots, is what drives many consumers.

    As brand loyalty diversifies and consumers want more personalised experiences, these techniques become a great way to attract and retain customers. Personalisation allows businesses to understand why their customers do what they do, and that they share their values.

    Data is king

    However, what is underlying this ability to personalise and drive delight is data. Data has quickly become king. The value of the UK data market is set to hit £1.1 billion ($ 1.58 billion) in 2018, making it the second-largest data market in the world and the biggest in Europe. No longer just a by-product of transactions and interactions, customer data itself has become a valuable commodity that can be used to give insights into customers’ tastes and habits. Learning how to interpret and influence those tastes and habits is one of the keys to unlocking the power, and the value, of data. Being able to offer customised products based on the trends, demographics and insights derived from the data, as well as providing the platform to bring all these services together, is where providers like Atom and Monzo have raced ahead of the field, finding unique ways to gamify the data they collect.

    Whilst data is king, not all data is created equal. The key is deciphering how best to use it to play to your strengths.

    But it is not just these challenger banks that can harness the value of data—retail banking as a sector is uniquely placed to ride this wave of value creation. Purely in terms of reach, whilst 78 percent of UK adults use Facebook, a full 97 percent have some kind of banking product. So the opportunity is there.

    The evolving banking ecosystem

    As a result, the retail banking industry is beginning to broaden in unprecedented ways. This is partly due to multitudinous new and evolving technologies generating, among other things, completely different access to data. All this is spurring increasingly serious conversations around how the future of banking will be shaped. The key to long-term success will be a move away from the monolithic banking model, towards an evolving ecosystem that encourages competition but also supports success for all. And data represents a major monetisation opportunity in this changing environment.

    It&;s critical though that banks play to their strengths rather than forcing themselves into models within which they don’t truly fit. Established banks do not need to emulate the personalisation and game-logic of the challengers to make a success of this new marketplace. That said, without banks taking a different path and creating different offerings, the ecosystem won’t be able to function. Banks need to understand their natural fit within the future banking ecosystem to give themselves the greatest chance for success and ensure the strongest foundation upon which to build a data monetisation strategy. The potential benefits of a successful approach are ample, but starting from a shaky foundation could bring this tumbling down early on.

    What kind of bank do you want to be?

    Our new point of view, which discusses this topic and asks &;What kind of bank are you?&; and &8220;What bank do you want to be?&8221; provokes an inward look at your place within the future retail banking ecosystem. To read the report in full, please email [email protected].


    Tara Brady
    Senior Managing Director
    Financial Services, UK & Ireland




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    Accenture Banking Blog

  • user 3:36 am on September 11, 2018 Permalink | Reply
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    Beyond plastic: Payments in a connected world 

    Guest blogger Jeff Crawford, Senior Manager with extensive experience in digital and mobile , discusses how the Internet of Things and commerce introduce new payments opportunities for existing players and new entrants.

    Gone is the where a watch just keeps time and a refrigerator simply preserves food. From wearables and smart speakers to smart appliances, connected cars and , the Internet of Things (IoT) has gained the attention of consumers and businesses alike. At its most basic level, IoT is the network of “smart”, connected devices or products that enable new forms of communication and new experiences. The global IoT market is estimated to grow to $ 2.9 trillion with 20 billion connected devices by 2020.¹

    IoT devices, combined with emerging payments capabilities, facilitate a connected commerce experience, providing consumers with a convenient way to transact by incorporating shopping and payments functionality into devices. For example, Amazon has enabled its customers to make purchases via its Echo devices using Alexa voice commands. Through the Groceries by Mastercard program, consumers can purchase grocery items through their Samsung refrigerators and have them delivered by the program’s grocery delivery services partners. Ford and ExxonMobil maintain a partnership to allow consumers to make Speedpass+ fuel payments through their in-car infotainment system.

    The physical device is only one component of the infrastructure required to support IoT payments. It also must include a user interface, which is often a screen, but may also be a button, voice interaction, or geo-location. The IoT device must establish and maintain connectivity to a back-end platform that receives the data; this connectivity may be supported via Wi-Fi, Bluetooth or LTE. Payment credentials must be tokenized and maintained in a secure environment, either locally or in the cloud, and security is embedded through advanced authentication, often in the form of biometrics (such as voice command).

    IoT payments require a coordinated effort through the device manufacturers, payment providers and integration partners. Visa and Mastercard are seeking to accelerate IoT payments engagement and enablement as part of the companies’ respective digital payment readiness programs, Visa Ready and Mastercard Engage. Both efforts have focused on facilitating secure payments across the value chain and connecting IoT device manufacturers to financial institutions. Discover and American Express have also linked payment tokenization platforms and security protocols to third-party products (namely, wearables) to enable their cardholders to take advantage of IoT-based products and services.  Such market activity represents a logical progression for payment networks to push new use cases for their tokenization offerings.

    As expected with any new payments technology, IoT payments have a heavy focus on security. Large chip manufacturers (including NXP and Intel) have entered the space, providing secure elements to store payments credentials. Other entrants focus on innovative methods of enhancing payments security. MagicCube, which names Visa² and Mastercard among its partners, offers device manufacturers a trusted execution environment (TEE) security platform to provide payments security in lieu of a secure hardware element or software-based encryption.

    It was not long ago that consumers, issuers, processors and networks were responsible for maintaining and securing only a single payments device: the card. As smart phones, refrigerators, watches and cars, among other things, become payment devices, card volume should start to migrate from the physical card to digital payments via IoT devices. Issuers must focus on developing strategies to ensure their cards remain top-of-wallet for consumers who make IoT purchases. Card networks are likely to continue facilitating partnerships with device manufacturers to optimize use of the emerging technology.

    For traditional card processors, there may be an opportunity to enhance the processing of solutions with features to support device management. For example, card processors might use a data field that tracks the device (card, phone, watch, refrigerator) and authentication method used to make a payment, thereby increasing the opportunity for more insightful customer analytics. There may also be opportunities for alternative, non-card payment mechanisms (real-time payments, /distributed ledger-based, and such) to take hold. We expect IoT payments to remain a key source of value, innovation and growth for both traditional payment providers and new market entrants.

    I invite you to read more about Accenture’s capabilities and offerings in the IoT and Connected Commerce space.

    Special thanks to David Cencula, who also contributed to this blog.

    1 https://www.gartner.com/newsroom/id/3598917
    2 Visa is also an investor in MagicCube 


    Jeff Crawford, Senior Manager, Payments





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  • user 3:35 pm on September 9, 2018 Permalink | Reply
    Tags: 5f0095, Chasing, evershifting, , ,   

    Chasing ever-shifting payments fraud 

    Guest blogger Casey Merolla discusses how the shift from stolen consumer credit card data to synthetic identity is a growing problem.

    2017 was a monumental year for data breaches. Some 1,500 data breaches exposed the records of nearly 179 million Americans, affecting approximately 55 percent of the total US population.1 The increase in consumer data available to fraudsters is driving bank fraud losses higher every year, propelling the shift from counterfeit cards to identity theft and synthetic identity fraud. To combat these trends, financial institutions must look to more advanced tools and technologies to keep up with—and get ahead of—increasingly sophisticated fraud attacks.

    Until recently, fraudsters’ primary focus was on obtaining the card data needed to produce counterfeit cards.  Since the US rollout of EMV chip , however, counterfeit fraud is falling fast. In fact, credit card issuers reported a 60 percent decline in counterfeit card losses between 2014 and 2016, according to the Nilson Report’s most recent data.2 Now that the proverbial low-hanging fruit of counterfeit card fraud is effectively guarded, fraudsters are moving on to new areas. They have found a ripe opportunity in identity theft and new account fraud. They’re no longer looking just for card data to steal; they’re looking for personal information they can use to create new fake accounts.

    “Synthetic identity theft” has emerged as a major driver of fraud in the US. These are cases where criminals weave together real and fictitious information to create new, digital-only identities, and then use them to open new accounts of all types. This form of new account “theft” is attractive to fraudsters because it allows them to obtain control of the account, cultivate high credit limits and bypass account alerts—all to facilitate high-dollar transactions with low risk of detection. A recent Accenture survey indicated that losses on fraudulent credit card applications can be up to 4.0 bps of card sales volume3—and that that loss rate is increasing. On top of the identified fraud losses, synthetic identity fraud may also be hiding in a financial institution’s credit loss line item, with up to 20 percent of credit losses attributable to synthetic identity fraud, according to 2017 Auriemma research.4

    The government is taking some steps to help, enacting the Economic Growth, Regulatory Relief and Consumer Protection Act in spring 2018. The Act will allow financial institutions to validate social security numbers in near real-time with an electronic signature, rather than the current paper-based process, which can take weeks. The law also brings with it complex technical requirements, however, and has no official implementation start date or deadlines, leaving financial institutions to fend for themselves for the foreseeable future.

    Addressing synthetic identity theft will require financial institutions to develop more rigorous tools and processes for compiling and validating customer data at the time of account opening. Financial institutions should validate each data point provided by a new applicant, using both internal and external sources. These data points should include not just the traditional name, address and phone number, but also less-obvious information, such as the use of the same address, phone, email or even IP address by others. Chances are, a criminal will attempt fraud at the same bank multiple times, so capturing data through all contact channels can be highly valuable for use in identifying fraudulent applications later.

    Artificial intelligence engines and Machine Learning will likely play important roles in synthesizing the enormous pool of data, and the first step for financial institutions will be working to collect the data in a usable form. The task is daunting, but so is the future loss potential. Fraudsters continue to evolve their technologies and techniques, and if financial institutions want to keep up, then they must do the same.

    1Identity Theft Resource Center, 2017 Annual Data Breach Year-End Review
    2Nilson Report October 2017 – Issue 1118
    3Accenture Card Fraud Study, July 2017
    4Auriemma Consulting Group, Synthetic Identity Fraud Cost Lenders $ 6 Billion in 2016

    I invite you to join me at Money20/20, where I will be moderating a panel called Fraud Whack-a-Mole: Securing Payments in a Post-EMV World, Monday, October 22 from 1:00 pm – 1:40 pm.

    Casey Merolla, Senior Manager, Payments





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  • user 3:35 am on September 8, 2018 Permalink | Reply
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    Q2 2018: US credit card issuer snapshot 

    Each quarter, Paul Sammer, Manager in the Issuing offering, compiles key metrics on US consumer cards, tracking spend, receivables, loss rates and returns reported by the largest US .

    US consumers are showing an increased preference for credit cards.  Banks reported robust growth in purchase volume over the past quarter, along with solid growth in receivables and benign loss rates. Read more about the key themes and notable happenings below.

    Key themes

    • Banks reported favorable credit trends in the past quarter as purchase volume and receivables continued to grow, and loss rates remained benign.
    • Credit card purchase volume increased at a significant pace over the past year, led by Capital One, American Express and Chase.
    • Receivables also grew at a healthy rate, most notably at American Express, Capital One and Discover.
    • New products and product refreshes were prevalent in Q2. Many of these new products are offering high-value incentives to open/activate.
    • Investments in digital capabilities are evident across the industry with new all-digital products (e.g., Chase’s Finn), and full-service functionality in digital channels.
    • Bank of America and Chase reported notable declines in card originations in the past quarter (nearly 10 percent YoY).
    • Issuers pointed to rewards (and associated cost) as a basis of differentiation, but there was a general theme of rational competition in most respects.

    Notable happenings


    Citibank completed $ 1.5B acquisition of L.L. Bean credit card portfolio from Barclays; Synchrony and PayPal finalized transfer of $ 7.6B in receivables; Signet Jewelers closed last phase of credit outsourcing, selling its non-prime portfolio to CarVal Investors and Castlelake.

    New Partnerships

    Alliance Data and IKEA introduced new co-brand offering 5 percent rewards on IKEA purchases; American Express announced new partnership with Amazon to offer a small business co-brand credit card; Wells Fargo launched no-fee Wells Fargo Propel American Express card.

    Partnership Developments

    In July, Walmart announced its intent to partner with Capital One and end its Synchrony relationship; Citibank renewed its card partnership with Sears, paying $ 425 million up front in a highly customized structure; Alliance Data and Victoria’s Secret renewed their PLCC partnership.

    New Products/Features

    American Express launched its no-fee, 1.5 percent cash back Cash Magnet card; Citi and American Airlines introduced new no-fee AAdvantage MileUp card, offering 2 miles per dollar; Chase and Hyatt introduced $ 95 annual fee World of Hyatt Card; Chase and Marriott introduced $ 95 fee Marriott Rewards Premier Plus card; Chase and Southwest Airlines introduced $ 149 annual fee Southwest Airlines Priority Card; Synchrony and Belk will introduce a co-brand credit card.

    Mobile & Tech

    Chase announces a partnership with Tock, a high-end dining program.

    Stay tuned for next quarter’s report on US consumer credit card trends.

    Industry trends (based on non-retail card issuers in scorecard section)

    1 Total receivables for non-retail issuers at end of 2Q18. 2 Total purchase volume of non-retail issuers in 2Q18. 3 After-tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit-specific income. 4 YoY = Year-over-year change versus 2Q17. 5 QoQ = Quarter-over-quarter change versus 1Q18. Note: Purchase Volume is reported volume for the quarter (it is not annualized or TTM)

    Scorecard—Q2 ($ in Billions)

    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citigroup: Purchase volume includes cash advances. Citigroup data includes Citi-Branded Cards and Citi Retail Services. 3 Capital One: US card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume and net loss rates are for US consumer cards. 5 Discover: includes US domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied US Cards tax rate of ~22%. ROA denominator estimated from total loans ended figures. 6 American Express: Changed reporting method as of 2Q18. All figures except ROA are for US Consumer segment; Amex has stopped reporting net income attributable to US consumer segment. ROA is estimated based on US receivables comprising 88% of Global Consumer segment and 22% US effective tax rate. 7 US Bank: Net Income attributable to Payments Services totaled $ 361M as of 2Q18, compared to $ 282M in 2Q17; Payments Services includes revenue from consumer credit cards, as well as commercial revenue and other sources. 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.


     Paul Sammer, Manager, Payments




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  • user 3:35 pm on September 6, 2018 Permalink | Reply
    Tags: “New”, 5f0095, , collections, , Delinquent,   

    Delinquent debt collections in the “New” 

    Guest blogger Dan Kreis looks at the impact that a new generation of consumers and technologies will have on .

    Everything we know about collections is about to be challenged and reinvented. The magnitude of the shift can be observed through three key lenses: strategy, analytics and operations, as shown in Figure 1.

    Figure 1. Key collections migrations
    Source: Accenture market observation and analysis

    What is driving the change?

    Unlike prior evolutions, the new age of collections is not being ushered in by economic downturn, runaway lending or regulatory fluctuation. It is being beckoned, primarily, by two phenomena: digital revolution and Millennials.

    Digital revolution

    At present, collections managers listen in on live or recorded collections calls to assess whether agents are performing adequately and inform potential corrective action. Such manual call monitoring practices are prohibitively time-consuming at scale. In practice, this means some 90+ percent of calls go unmonitored, leaving management largely in the dark as to their customers’ experience.

    Growing ever-cheaper and faster, voice transcription could monitor and collect data from every inbound or outbound customer call, for example. Detection of certain keywords, such as “bankruptcy” or “illness”, and customer tone could drive tailored treatment strategies in real time.


    The number of Millennials in the US will soon pass that of the Baby Boomers, becoming our largest generation.  This group of young adults is dramatically different than their predecessors:

    • Few have landline telephones
    • Texting is their preferred mode of communication
    • Many will not answer calls from unknown caller IDs
    • Many have never activated or checked their voicemail

    Moreover, it is critical to understand that Millennials are not only our customers, but our collectors as well.  Having collectors who may be equally as unreceptive to conducting cold calls as customers are to answering them will require lenders to define new tactics to effectively collect in this new age.

    What do strategies look like in the &;New&;?

    Consider a hypothetical queue of delinquent customers whose accounts are two cycles past due. In the old-world order, an adaptive control strategy may have looked something like the scenario in Figure 2.

    Figure 2.  Illustrative Old-World Collections Strategy
    Source: Accenture market observation and analysis

    Note that in the old-world order, past-due customers with similar data profiles and dollars-at-risk are treated the same.

    In the “New”, the collection strategy builds upon what we have learned over the years—and augments the treatment in real-time based on sentiment, keyword recognition and additional information as shown in Figure 3.

    Figure 3:  Potential New-Age Strategy
    Source: Accenture market observation and analysis

    Under the potential new-age strategy, the treatment approach is tailored by incorporating sentiment, keywords and other alternative data. Barry, for example, is not assigned to an auto-dialing queue as his keyword indicator is “bankruptcy”, which suggests a different approach (a top reason people give for filing bankruptcy is to “stop the numerous collections calls”). Instead, Barry may be most responsive to push notifications or texting, given his activity on social media. For Jill, more traditional methods may be effective considering her concerned nature and lack of social media activity.

    The new-age approach greatly expands on the collections strategy design to include advanced machine learning beyond that of the traditional champion-challenger testing capabilities in the adaptive control decision engine. Not only will there be dramatically more treatments, but the results will be captured more rapidly using intracycle behaviors and payments. We also imagine the use of real-time sentiment and word recognition to inform the collections approach and negotiations with the delinquent customer.

    To remain competitive, debt collectors will need to understand the implications of today’s changes for their business, develop a plan to adapt and dedicate the resources required to execute successfully. Accenture is leading the industry into this exciting new era, bringing to bear our experience in advanced Machine Learning, Robotics and deep understanding of the collections and behavior sciences.

    I invite you to learn more about the data imperative and its potential.


    Dan Kreis, Industry Senior Principal, Payments




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  • user 3:35 am on June 7, 2018 Permalink | Reply
    Tags: , 5f0095, , conundrum, ,   

    Solving the delivery conundrum 

    Guest blogger Mark Welsh discusses how can successfully scale application delivery and meet customer delivery requirements against the backdrop of increasingly complex in-house systems and a worldwide-shortage of software engineering talent.


    The Banking landscape is being influenced by significant forces of change. New customer and industry demands mean financial services businesses must bring new features and technologies to market faster than ever. If they don’t, they risk falling further behind the competition, whether that’s rival companies that have transformed and broken free from legacy systems or new entrants with greenfield solutions.

    It’s a big challenge. Particularly with a worldwide shortage of software engineering talent and in-house systems that are becoming increasingly complex, as new layers are added onto legacy solutions.

    Given these constraints, how can financial institutions meet customer delivery requirements?

    How to scale delivery?

    the delivery means addressing three areas: People, and Process.


    The obvious way to scale delivery output is to increase team size and/or number of teams. But even ignoring the challenge of recruiting/retaining the right developers, you’ll quickly hit the ‘pizza boundary’: Jeff Bezos’s rule that a team should be no bigger than two pizzas can feed.

    The number of communication points increases non-linearly with each additional team member, so expanding a team’s size beyond a certain point becomes counterproductive (extra communication complexity outweighs additional capabilities/capacity).

    Figure 1: More people = more complexity

    Large teams also engender ‘social loafing’. Team members have more opportunities to hide, aren’t encouraged to drive development forward, and are generally less dedicated to team and product success. Sound familiar?

    Next question: how should teams be aligned? Product features span multiple lines of business. The same holds for technology: any feature will likely require changes/new development across various architectural layers and technologies.

    So, do you split your teams horizontally, matching stack layers and enabling team alignment around key technologies? Or align them around product features, enabling team ownership of a complete feature, but requiring either a sub-structure within the team to align with technology layers or full-stack developers (‘jacks of all trades, masters of none’) that deliver end-to-end?

    It’s probably best to mix the two: recruit and train team members to develop across layers (not all layers, there will always be specialisms) and build on a more vertically aligned solution as the feature moves up the stack (with the bottom-most layers delivered as a platform—see ‘Technology’.)

    Ultimately, smaller teams with ‘t-shirt shaped’ developers (depth in one or more technology areas/breadth across many) will be much more productive than larger teams with lots of specialists. With the right recruitment and training strategy, it’s possible to create highly productive small teams focusing on a mixture of technologies across product feature areas. That ensures end-to-end ownership within a single team.


    Where possible, splitting the system across the right boundaries will enable independent delivery that supports output scaling. After all, while an end-to-end feature is only delivered once, its constituent parts are delivered separately. However, breaking the solution up can mean the product becomes inconsistent and fragmented for end-users. Having somebody manage the system as a whole is essential.

    There’s also increased need for engineering and delivery platform support to ensure consistency and efficient use and creation of assets. These platforms should be managed through ‘Guilds’/communities of practice and, where appropriate, draw on examples like GitHub, npm and stackoverflow for inspiration.

    Technical debt is another key factor—ignoring it creates a drain on developer capacity and motivation. Of course, it’s difficult to justify technical debt stories over feature development. But understanding the direct impact on delivery timescales, productivity and production risk will help drive conversations that ensure a balance is achieved.

    A key aspect of approaches taken at Amazon, Facebook and Netflix is the automation of repetitive tasks, either by adopting an industry toolset or, where that doesn’t exist, developing it in-house. Giving developers the tools they need has a measurable delivery benefit and directly impacts developer motivation and retention. Typically, capacity investment of five to 15 percent is needed to maintain a good development architecture.


    Process and governance are key contributors to the time it takes to get from idea to live. In many banks and financial institutions, processes are put in place as a direct regulatory requirement and cannot be bypassed.

    Other, non-regulatory, processes will have often been added or modified in response to delivery issues or production problems. Frequently knee-jerk reactions, they don’t fundamentally address root causes.

    All these processes have an impact on motivation. Skilled developers do the right thing not because it’s written down and checked multiple times, but because it’s the right thing to do. But good processes remain crucial—to provide a safety net for new and bad developers (and for good developers having a bad day!)

    Achieving ‘good’ processes means continually reviewing them against the risk they’re attempting to mitigate. They must be understood—and wherever possible, automated—to eliminate the variability that’s inevitable when people perform repetitive tasks and (for regulatory processes) to increase speed/quality of compliance.

    Taking action

    To successfully scale application delivery, we recommend focusing on:

    • People: Understand developer productivity and where your key people are, use automation to enable them to focus on building stuff, get the right people in the right roles (t-shirt shaped) in small teams and give them tools to be productive, use Guilds to drive collaboration.
    • Technology: Focus on development tooling as much as production coding and continually invest in it, componentize the platform to enable decoupled development and releases, actively manage technical debt, provide managed assets to support consistency/accelerated development.
    • Process: Appropriate process and governance continually refreshed, automated where possible.

    Each of these areas will balance/constrain/support the other two (e.g. good tooling can enable process automation, which improves developer motivation/productivity). Thanks for reading.


    Mark Welsh, Technology Architect




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  • user 3:35 am on June 4, 2018 Permalink | Reply
    Tags: 5f0095, , , , , ,   

    CHANGING THE GAME: Integrated payments in acquiring 

    Guest blogger Marc Abbey discusses why addressing competitive implications of is a priority.

    The explosion of software at the point of sale (POS) is a major force of change in today. This trend is not new, but its speed and scope are. Addressing the competitive implications of integrated payments is now a priority concern for acquirers. Understandably so.

    The issue: Disruption from developers

    Software is migrating down market into smaller merchants. It performs various business functions for merchants and is replacing traditional terminals and PC-based solutions. Increasingly, these solutions are integrating payments and capturing the economics of payment acceptance.

    The merchant market is characterized by industry verticals with niche business needs and specialized accounting processes. For example, health and fitness companies can handle scheduling, e-commerce, membership collections, and on-premise payments through the business solutions available to the vertical. And not-for-profits can integrate donor management, events, fundraising campaigns, and e-commerce. Also, faith-based organizations can take recurring payments and payments through e-commerce websites and kiosks. All of this is possible because of these business solutions.

    By streamlining business operations through a single application and creating new user experiences for merchants and their customers, software developers are filling gaps that traditional acquirers are not. With payments now central to developers’ businesses, delivering payments functionality is not just a nice-to-have for them.

    In fact, software developers are realizing that payments is where the real economic value lies. In many cases, they can double their revenue as a result, according to Accenture estimates. Developers can achieve this revenue growth through different approaches. These include referring merchants to traditional acquirers or becoming ISOs or payment facilitators that are more centrally involved in payments processing. Private equity firms are often agents of change here. They are targeting developers before monetization of payments, leading them through the process, and exiting on the strength of the improved economics.

    A look at the software mergers and acquisitions (M&A) market reveals how common this approach is among private equity firms. The market has about 500 to 600 deals per quarter, many are payments focused.1 Some 30 to 40 percent of these transactions have been completed by private equity firms or their portfolio companies in recent quarters.2 In addition, more than half of companies being purchased are in dynamic acceptance verticals like healthcare, education, hospitality and real estate.3

    The impact: A catch-22 for acquirers

    These changes are creating new competitive dynamics for traditional acquirers. Software developers are emerging both as a new distribution channel for acquirers and as a new and formidable category of competitors.

    Most acquirers recognize the complexity of this friend-and-foe relationship. In response, many are investing to create integration environments hospitable to software developers to attract these new referral sources. Sometimes, this investment involves pursuing acquisitions to add capabilities. Accenture estimates that in the past three years, there has been more than $ 6 billion in acquisitions with an integrated payments business thesis.4

    The new normal: Unchartered territory for all

    To keep pace, traditional acquirers must take stock of what all this means to the future of integrated payments. Here is what the landscape will likely look like:

    Old rules getting broken

    As software developers set the new rules of acquiring, there will be more share shifts between traditional and -enabled channels. Already, growth in the independent software vendor channel (35 percent) is outpacing growth in the overall acquiring industry (8 percent), according to Accenture estimates.5

    Rise of the gatekeepers

    The road to acceptance product enablement will increasingly run through software at the POS. This results in a powerful gatekeeper role for software developers. Just like they did for near field communication and Apple Pay, acquirers must prepare to modify their solutions for the next generation of acceptance products.

    Next-gen sales and marketing

    Sales and marketing will never be the same with developers in the value chain. While acquirers have long relied on third-party sales partners, the dynamics will be different with developers in the mix. Acquirers should start to prepare for non-traditional sales partnerships with developers.

    Beating them by joining them

    Acquirers will become developers in key verticals, either through building internal software innovation capabilities or through M&A activity. Vantiv Inc.’s acquisition of Paymetric and Global Payment’s acquisition of Active Networks are among several examples of this trend.

    A critical decision

    Software developers have the ambition and ability to capture a good share of the payments acceptance business. Traditional acquirers must act to avoid disintermediation, and software developers that have yet to get involved are missing significant revenue potential.

    This is a fight-or-flight moment that calls to mind e-commerce in 1995. At the time, an emerging business model was taking off. There were a few dominant players and a handful of specialized players. But many acquirers stood still. There is every indication that integrated payments will evolve on a similar trajectory. Now is the time for acquirers to lean into the growth.

    1 Software Equity Group, “SEG Snapshot: 3Q17 SaaS M&A Update,” October 20, 2017, retrieved on April 3, 2018
    2 Ibid
    3 Ibid
    4 Accenture Payments research conducted March 2018
    5 Ibid

    Marc Abbey, Managing Director, Payments





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  • user 3:35 pm on May 18, 2018 Permalink | Reply
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    Q1 2018: U.S. credit card issuer snapshot 

    Guest blogger Paul Sammer reviews U.S. consumer use of cards to pay for transactions, fund loans, and receivables and transaction volume in Q1 .


    As purchase volume and receivables continued to rise during the recent quarter, several issuers reported material increases in returns resulting from tax reform. Read more about the key themes and notable happenings below.

    Key themes

    • Purchase volume in Q1 2018 continued to increase at a significant pace year-over-year, along with strong growth in receivables.
    • Chase, Capital One, Bank of America, and American Express reported robust purchase volume growth year-over-year, while American Express, Discover and Capital One led in terms of receivables growth.
    • cited increased consumer confidence and tax reform as drivers of strong purchase volume.
    • Loss rates continued to normalize although several banks suggested that losses may be stabilizing.
    • ROAs were bolstered by tax reform, which had a substantial impact on reported returns.

    Investment is ongoing in digital, mobile and self-service capabilities.

    Notable Happenings


    • American Express and Citi complete sale of Citi’s $ 1.2 billion Hilton portfolio to American Express.

    New Partnerships:

    • Starbucks launches a new with Chase; Synchrony announces partnership with Crate and Barrel to offer a new private label credit card and co-brand card; Alliance Data and Lucky Brand agree to introduce a new private label credit card; Synchrony becomes preferred financing partner for Mahindra Powersports.

    Partnership Developments:

    • Due to retail partner bankruptcies, Synchrony replaces qualifying Toys “R” Us credit card accounts with a 2 percent cash back Mastercard and Alliance Data closes Bon-Ton accounts; Synchrony announces that it plans to onboard the PayPal Credit portfolio in 3Q18.

    New Products/Features:

    • Amazon introduces 5 percent back at Whole Foods on Amazon Prime Rewards Visa card; Chase announces new ultra-premium Marriott Rewards Premier Plus card and Amex announces new ultra-premium SPG Amex Luxury card (with single loyalty program branding coming in 2019).

    Mobile & Tech:

    • Synchrony invests in Payfone, provider of identity authentication in digital channels; Goldman Sachs acquires credit card startup Final.

    Industry trends (based on non-retail card issuers in scorecard section)

    1 Total receivables for non-retail issuers at end of 1Q18. 2 Total purchase volume of non-retail issuers in 1Q18. 3 After-Tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit specific income. 4 YoY = Year-over-year change versus 1Q18. 5 QoQ = Quarter-over-quarter change versus 4Q17. Note: Purchase Volume is reported volume for the quarter (it is not annualized or TTM)

    Scorecard—Q1 2018 ($ in Billions)

    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citi: Purchase volume includes cash advances. Citigroup data includes Citi-Branded Cards and Citi Retail Services. 3 Capital One: U.S. card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume, and net loss rates are for U.S. consumer cards. 5 Discover: includes U.S. domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied U.S. Cards tax rate of ~22%. ROA denominator estimated from total loans ended figures.
    6 American Express: Changed reporting method as of 1Q16. Figures are for U.S. Consumer segment only and exclude small business. 7 totaled $ 343M as of 1Q18, compared to $ 309M in 4Q17 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYNCHRONY ’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.

    We are excited to share Q1 2018: Credit Card Issuer with you. Stay tuned for next quarter’s analysis.


    Paul Sammer, Manager





    The post Q1 2018: U.S. credit card issuer snapshot appeared first on Accenture Banking Blog.

    Accenture Banking Blog

  • user 3:35 pm on March 13, 2018 Permalink | Reply
    Tags: , , 5f0095, , , , , ,   

    Q4 2017: U.S. credit card issuer snapshot 

    Although issuers are benefiting from increased spend and receivables, rising loss rates and rewards costs are continuing to suppress ROAs.

    Key themes

    • Receivables and spend increased year-over-year for all
    • American Express, Discover and Capital One led in terms of year-over-year receivables growth
    • Chase and Capital One led in terms of year-over-year purchase volume growth, although all issuers reported strong growth
    • Several banks have suggested that competitive intensity has moderated slightly
    • Although loss rates are normalizing, they remain below historical averages
    • Investments are being made in machine learning, mobile and advanced analytics

    Notable happenings


    • PayPal announces an agreement to sell its $ 5.8 billion portfolio of U.S. consumer receivables to Synchrony

    Partnership Renewals:

    • Marriott signs renewal agreements with Chase and American Express

    New Partnerships:

    • Uber and Barclays introduce a new no-fee credit card
    • Alliance Data gains new partners IKEA and Adorama

    New Products/Features:

    • Hilton and American Express introduce a new high-end fee card, Aspire
    • Amazon opens its cashier-free store Amazon Go to the public
    • Chase introduces mobile payments as a bonus category on Freedom cards

    Mobile & Tech: 

    • Target introduces a proprietary wallet in its mobile app
    • Kroger and Chase Pay partner on mobile payments

    Industry trends (based on non-retail card issuers in scorecard section)

    Fig 1: Industry trends based on non-retail card issuers in scorecard section
    Click to view larger

    1 Total receivables for non-retail issuers at end of 4Q17. 2 Total purchase volume of non-retail issuers in 4Q17. 3 After-Tax ROA excludes Wells Fargo, Chase, Bank of America and US Bank, which do not report credit specific income. 4 YoY = Year-over-year change versus 4Q16. 5 QoQ = Quarter-over-quarter change versus 3Q17. Note: PV is reported PV for the quarter (it is not annualized or TTM)

    scorecard—Q4 ($ in Billions)

    Fig 2: Issuer scorecard—Q4 2017 in Billions
    Click to view larger

    1 Chase no longer discloses an ROA measure directly attributable to Card Services. 2 Citi: Purchase volume includes cash advances. 3 Capital One: U.S. card business, small business, installment loans only. Purchase volume excludes cash advances. 4 Bank of America: Receivables, purchase volume and net loss rates are for U.S. consumer cards. ROA estimate is discontinued. 5 Discover: includes U.S. domestic receivables and purchase volumes only. Restated: ROA reflective of Direct Banking segment (credit card represents ~80% of loans) and implied U.S. Cards tax rate of ~40%. ROA denominator estimated from total loans ended totals. 6 American Express: Changed reporting method as of 1Q16. Figures are for U.S. Consumer segment only and exclude small business. 7 US Bank: Net Income attributable to Payments Services totaled $ 309M as of 4Q17, compared to $ 322M in 4Q16; Payments Services includes revenue from consumer credit cards, as well as commercial revenue and other sources. 8 A/R and PV for Retail Card unit only. 9 Loss rates and ROA include all of SYF’s business lines (i.e., Retail Card, Payment Solutions, and CareCredit). Retail Card accounts for about 70% of total receivables. 10 Average Receivables.


      Paul Sammer, Management Consultant





    The post Q4 2017: U.S. credit card issuer snapshot appeared first on Accenture Banking Blog.

    Accenture Banking Blog

  • user 3:35 am on December 18, 2017 Permalink | Reply
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    Digital currencies to disrupt the payments industry 

    The US Faster Task Force received 16 proposals for faster payment solutions. Guest blogger Ginna Rodriguez takes a look at two less-traditional entries by WingCash and nanoPay. 


    The Faster Payments Task Force received 16 proposals for faster payment solutions using different approaches to increase the speed of payment in the United States. Some of the proposed solutions work similarly to traditional payment systems, while others involve significant changes to the way we think about cash and the roles that play in the payments ecosystem.

    Among the less traditional entries were proposals submitted by WingCash and nanoPay, which suggest creating that would enable consumers to conduct digital transactions without the need for a bank account or payment card.  While both involve the introduction of digital currency, one would replace the existing fiat currency for digital payments, while the other would be a digital exchange of value tied to the existing currency.


    WingCash proposes creating a digital fiat currency. Under its proposal, the Federal Reserve would own the Faster Payments Network (FPN) and issue Digital Fed Notes, similarly to its issuance of cash notes today. Each Digital Fed Note would be a unique and unchangeable URL with a single monetary value, and it would include the issuer’s URL, the current holder’s URL, a currency code and unique identifier (like a serial number). Payments would be conducted by changing the owner of the URL.

    The Faster Payments Network could be used for both in-person payments and remote payments (for example, using “digital cash” to pay for online purchases). The exchange of digital notes would occur without transfer fees, with funds immediately available, similarly to how physical notes are exchanged today.

    As with cash notes, Digital Fed Notes would not require a bank account or credit card. One of the advantages WingCash highlights in its proposal is that a digital currency solution could increase access to the electronic payments system, opening the door for users who may have been excluded from the traditional banking system. However, potential barriers to implementation include regulatory changes that would allow the Federal Reserve to issue a digital fiat currency.


    nanoPay also proposes a digital currency, but the system of value would operate outside of the Federal Reserve. nanoPay proposes a good-funds, collateralized bearer-asset transfer system in which users would exchange fiat currency (collateral) for nanoPay’s MintChip (asset). The fiat currency would be stored in a pooled account, while the equivalent MintChip amount would be stored in a Secured Asset Store (SAS). Transactions completed in the MintChip ecosystem would be a transfer of value between two SASs using Value Transfer Messages.

    In the MintChip model, an Asset Manager would protect the pooled funds of fiat currency and invest the funds in instruments where the principle is guaranteed. Depository institutions would act as brokers that pre-purchase MintChip “coins” and use APIs to provide end users access to the MintChip platform. Regulated non-bank providers and larger retailers could also participate as Brokers.

    nanoPay’s proposal does not depend on the Federal Reserve’s willingness to create new monetary policy or serve as the originator of digital currency. As a non-fiat currency, however, nanoPay could face challenges of perceived trust and security, particularly regarding the management of the pooled funds that serve as collateral for the digital currency.

    As highlighted in the two proposals, digital currency solutions could increase the speed of payments while decreasing payments system costs and expanding financial inclusion. However, WingCash and nanoPay acknowledge that their proposals could pose a threat to traditional payment card revenue streams. Despite these challenges, central banks in other countries like China, Canada and the Netherlands are exploring digital currencies, and the US may follow suit.

    Summary of faster payment solutions proposals submitted by WingCash and nanoPay

    Source: Accenture compilation of proposals submitted to the Faster Payments Task Force.

    Whether replacing fiat currencies, creating a digital exchange tied to existing currency or another idea yet unknown, payments solutions built on the faster, more efficient digital form will transform payments and banking. players need to prepare for the pending change and their role in it. To discover more about how other digital currency forms will the industry, read our report on The (R)evolution of Money.


    Ginna Rodriguez, Manager





    The post Digital currencies to disrupt the payments industry appeared first on Accenture Banking Blog.

    Accenture Banking Blog

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