Strategies for Growth in aPost SEPA World
Brendan ReillyHead of Northern Europe Country Product Management
Brendan Reilly · 3 July 2008 · page 2
Deutsche Bank’s Approach22223333
1111 The Environment
4444 Questions
Case Studies
Brendan Reilly · 3 July 2008 · page 3
" If you are planning for one year, grow rice. If you are planning for 20 years grow trees. "
- Chinese Proverb
Brendan Reilly · 3 July 2008 · page 4
Economic challenges – Transaction Banking
Expenses Revenues
• High fixed costs• Legacy technology• Labour intensive operations• Operational risk• Inflexible product
• Commoditised products• Increasing competition• Pricing compression• SEPA – changing landscape• Seeking value-add products
Brendan Reilly · 3 July 2008 · page 5
Costlevel
High
LowLow HighTransaction Volumes
Sharing
Cost ReductionOutsourcing
Insourcing
Banks have a few real optionsMarket trends put pressure on strategic positioning
Brendan Reilly · 3 July 2008 · page 6
…resulting in New Business ModelsSplit between Distribution and Transaction Banks
Client interaction and relationship can be intactwithout ownership of full value chain
Customer Sales/Service Product Mgmt Processing Clearing
Customer Sales/ServiceDistributionBank
TransactionBank
Brendan Reilly · 3 July 2008 · page 7
Market Trends
• Equens wins contract to provide outsourced payments transaction services to OP Bank Group
• Barclays forms strategic partnership with Deutsche Bank
• HBoS selects Fortis as its prime Euro Partner Bank
• ING and Atos Origin launch a joint offering of end- to-end services
• What isn’t being seen ?
Brendan Reilly · 3 July 2008 · page 8
Wholesale Solutions Partner Banking, White-label & In-Sourcing Business
White Labelled Channels (db-di)
Partner BankingInfrastructure
Solutions
� Business Initiative established in 2004
� Established customer base, business relationship with close to 25 international banks
� Considerable track record with Implementing White-label and Partner Banking Solutions
� Global reach with offices in Frankfurt, London, Singapore and New York
� A Product Suite designed to meet requirements of clients from different segments:
Brendan Reilly · 3 July 2008 · page 9
Customer MessagingProcessing
Cheque Processing
Funds Transfer
Investigations
Messaging Customer
GMA MTNA CINQPRISMA
� 5 year vision & investment program� Systems designed & built to include 3rd party partners� White-labelled electronic banking solutions� Scalable operations across the globe� Business Continuity Plans & Systems� Market leading customer service model � Future-proofing payments environment
SEPA
db-Infrastructure SolutionsLeveraging DB’s significant Investments in Cash Management / Payments Technology
Brendan Reilly · 3 July 2008 · page 10
Case Study #1: European Bank - SEPA Direct Debits
� High volume
� 11 Software Vendors & 1 Bank
� Integration Layer being built
� Talks already started with another bank for same solution
� Natural extension in to SEPA Credit Transfer Processing
Brendan Reilly · 3 July 2008 · page 11
SEPA EngineInitiated
db direct Internet
Attended
PRISMA
Local back end
SystemLocal back end
SystemLocal back end
SystemLocal
Back-end Systems of Client
Deutsche Bank’s
SEPA Engine (Client’s instance)
EBA STEP 2
Recurrent DD
Access Channels
SEPA Direct Debit – European Bank
db direct Connect
Unattended
Customer DD Files
SEPA DD Integration
Layer
Pain008, Paymul
Pre-Authorization CheckAdvance MT103
Authorization CheckBooking MT103
Pre-Authorization CheckResponse
Authorization CheckResponse
Optional:Fees and BillingCustomer NotificationsStatus Fee Deutsche BankackTransaction DownloadCentral Bank ReportingDaily Operational Reports
Sanctions Checking
Non-funds Authorization
Cashflow/Liquidity
Notifications
Business Activity Monitor
Sanctions Checking
Non-funds Authorization
Funds Authorization
Cashflow/Liquidity
Business Activity Monitor
Pre-Authorization
Authorization
Country Specific EB Access (SAML) Creditors Direct A ccess
Conversion & Routing
SSO via SAML
Brendan Reilly · 3 July 2008 · page 12
Case Study #2 : Pan-European Payments Outsourcing
� Multi € million contract over 5 years
� High volume of high value transactions
� Client is challenged by a legacy of ageing technology & employees
� Technology & Operational play – leveraging India & other low cost locations
� Transformational deal
Brendan Reilly · 3 July 2008 · page 13
Transaction SourcesStatic Data Sources
Client Data Bank DataBilateral
AgreementsInternet Banking
File-based system
Internal Applications
SEPA Instruments
SWIFTInsourced
Clients
Bank Repository(CAAA)
Integration Layer
File Transfer(db-direct connect / SWIFTNet FileAct)
SWIFT(GMA)
Middleware(PRISMA)
High Value & SEPA Payment Processing Platforms (MTNA & SEPA Engine)
Dedicated line
Transactions
Static Data
European Bank - Payment Outsourcing