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Why you need to get ready for the NPP now

Posted on by Uberbrand

Multiple lines going in different directions and payment icons

With Australia’s New Payments Platform (NPP) still around two years from starting it would be easy to assume that financial institutions still have plenty of time to get ready, but the reality is that time is rapidly running out. Financial institutions that get ready now will receive clear economic benefits – those that don’t will miss out.

Why real time payments in Australia will boom
Unlike in some other countries, all of the right functionality will be in place for consumers to embrace the NPP immediately. From day one, the NPP will feature:

  • A centralised addressing service, allowing banking customers to use their mobile number or email address as an alias for their bank account details.
  • The first overlay service will have a common brand and broad industry-funded promotion. This will give all participating financial institutions a way to readily fulfil the promise of real-time payments for their customers.
  • Transaction by transaction settlement, which means that the NPP will be a true real-time payment system capable of offering nearly instantaneous payment processing and settlement.

Of course, for a faster payments system to take off quickly, the conditions also have to be right. For example, there needs to be a critical mass of early adopters who embrace new technology.

Australians fit the bill perfectly.

Not only do we have one of the highest levels of smartphone penetration in the world and the second highest in Asia, we’re also the leader when it comes to adopting mobile banking. Between 2013 and 2014 alone, for example, the use of mobile banking in Australia spiked by more than 70 percent. Today an estimated 38 percent of banking transactions are conducted via smart phones or tablets, a figure that’s only going to continue to grow in the coming years.
Plus, we like embracing new technology. Just look at how contactless payments have exploded here over the last couple of years. It’s proof that when a new payment mechanism is both convenient and broadly accepted, Australians will rapidly adopt it.

It’s time to get ready for the NPP, here’s how
Given that the NPP is likely to take off quickly after its launch in 2017, the time to start planning for it financially, resourcing it appropriately, and getting everything ready for implementation is now. Make no mistake, it’s going to be a lot of work. To be ready, you’ll need to:

  • Talk to your core and channel banking system providers and budget for implementation activity in 2016 and 2017
  • Update your core banking systems so they can integrate with NPP transactions
  • Update your mobile and Internet banking channels to accommodate the additional information that comes with NPP transactions and new transaction types like payment requests and payments with a linked document
  • Think about change management within your internal operations teams, training them along with sales and customer service teams
  • Talk to your legal department to update terms and conditions
  • Communicate with your customers so that they’re ready to use NPP style transactions within the Cuscal network in early 2017
  • Plan a robust marketing launch that leverages industry activity
  • Get your customers ready to use the NPP for real-time payments between their account and accounts at most Australian banks by late 2017

No one can deny this is a lot of work. For financial institutions with long planning cycles, it’s going to take at least 18 months, meaning that you need to start now to be ready in time.  But despite the effort it will take, there are clear economic benefits for early adopters, while stragglers will miss out.

  1. Positive brand boost
    The reality is that failing to embrace and get ready for the NPP just isn’t an option. For banking customers in today’s digital world, it’s almost like telling them the only way they can contact you is by fax. Any financial institution that doesn’t quickly adopt the NPP will be viewed as behind the times, not focused on their customers, and ultimately irrelevant. Just look at all the negative press Barclays garnered for not adopting the UK’s faster payments scheme at the same time as its competitors. Early adopters, on the other hand, will be viewed as modern, forward-looking financial institutions by their customers and competitors.
  2. Catch up to, or overtake, your competition
    The Big Four Banks currently have an advantage because of their large customer bases. So when they introduce innovations like payments to mobiles, or real-time payments to anyone that has an account with them, it’s much more useful than when a smaller financial institution offers the same service.However, if you link to the NPP your customers will be able to make real-time payments, straight to mobile, to anyone with an NPP-linked account at any NPP-ready financial institution. This will give you the chance to both level the playing field with the big banks while also leapfrogging any of your competitors that are slower to adapt.
  3. Claim your share of a major new payment stream
    What makes things particularly urgent is that when the NPP starts, customers’ mobile phone numbers will only ever be able to be registered as an NPP alias with one financial institution at a time. This means that if your customers don’t register their mobile number with you as an NPP alias they may never use you for instantaneous payments. So if you’re not ready for the NPP when it launches, you may miss out on the majority of income from this payment stream for a long time to come.

The bottom line is that the NPP is rapidly approaching and its adoption by Australian consumers is likely to be quick and widespread. As a financial institution, getting ready for the NPP is a significant piece of work that can’t be accomplished overnight.

With only two years to go, the time to start preparing for the NPP is now. Those who do will reap the benefits. Those who sit back, planning to be ‘fast followers’, will discover they’ve made a serious mistake.

RFi interview: Adrian Lovney on the NPP

Posted on by Rachael Shupe

Adrian Lovney, General Manager, Product and Service, Cuscal

Rapid innovation has made it an exciting time in the Australian banking industry. At the centre of that excitement is the forthcoming New Payments Platform (NPP), an important initiative that promises to not only position Australia as a global leader in real-time payments, but also help the banking industry address some of its greatest challenges. In the process, it will bring numerous benefits to financial institutions and other organisations, as well as to the customers they serve.

RFi Group recently met with Cuscal’s General Manager of Product & Service, Adrian Lovney who echoed the exciting times ahead for Australian market participants and consumers alike.

Cuscal recently released a white paper on this very subject and we thought it an opportune moment to meet with Adrian and hear all about it from the horse’s mouth.

Speaking on the whitepaper and key messages Cuscal have for market participants, Adrian was quite frank.

“There are obviously a group of banks in Australia who are intimately familiar with the NPP development and organisations like ours (Cuscal), have been involved since day one. What this whitepaper explores are specific opportunities to increase the level of knowledge in the banking sector for not only what the NPP does but how it will go about changing the relationships between banks and their customers.”

Adrian explains that Cuscal’s aim with this particular whitepaper and other forthcoming material, is to close some of those information gaps.

“Obviously agency banking and agency payments is the core of Cuscal’s business, it’s what we do, connecting financial institutions to the payments infrastructure. This paper is about what the NPP is, how we see it helping financial institutions address challenges in the banking sectors.”

He mentions the shift to mobile, the shift away from cash and, particularly relevant the rapid rise of Fintech.“We really just want to help FIs focus their attention on the things they need to do now, to be ready for 2017.”

For Cuscal, some of the insights they feel will be most interesting to the financial services industry start with looking at the New Payments Platform from a customer experience perspective, looking at channels but not forgetting the back office. Adrian stresses it is particularly this thinking about CX and back office processes, in parallel. “It is about looking at the detail and real value in a single national addressing service. How this will inherently shift from BSBs and account numbers, to aliases and mobile phone numbers.”

In the paper Cuscal notes that unlike in other countries, where uptake of the NPP was initially slow, in Australia they expect it will be rapid because of the advanced features the NPP will have from day one.

A few key features Cuscal identifies as setting it apart from its international counterpart platforms include: addressing service availability from its inception and the work banks are doing to coordinate a set of simple, easy to understand messages about the services in a coordinated way. The convenience services launching on the very first day again represents the collaboration of banks working together to roll out what will be good user experiences and products.

It’s also important to note that Adrian’s (and Cuscal’s) perceptions have changed over time in regards to the expected ‘product category’ of the Australian NPP. Three years ago, he would not have hesitated in saying that they thought the NPP would be positioned as a “premium product”, but the same cannot be said for today. “At least in the retail sense, I no longer think this is the case. I see this as a product that is suitable for everyone and absolutely for the everyday banking space. Obviously organisations will make up their own minds regarding pricing, but consumers will categorically expect at a retail level that this will be available from day one, as part of their everyday banking proposition.”

The report goes on to note that, for the New Payments Platform to work quickly, the conditions ‘need to be right’. Cuscal identify, as do many, that Australians have clearly demonstrated that they are prepared to try new things, and quickly. “We love contactless, we love our mobile phones, we are quick to adopt and all of these characteristics showcase the NPP as being surely desired in our marketplace.”

Adrian continues, “Features such as line-by-line settlements mean that the product will be suitable for large value transactions from day one, which may not have been the case under a deferred net settlement model. We are fast to take up, our adoption, our willingness to try new things and a clear shift back to the bank account, shows the market is ripe for New Payments Platform implementation. The work the Australian banking sector has done around mobile banking and digital banking and the role of the mobile phone as a tool, will really mean that the platform will take off quickly. As a caveat here, I do think cards have a lot of life left in them, they are still very much the central part of the relationship, but I think there will be a pivot towards the bank account and I think there will continue to be a demise of cash.”

As far as this insatiable desire for technology and the use of new systems, Cuscal mentions a few noteworthy developments in customer behaviour and expectations, as they adopt new technologies.
“I think the bar is continually being lifted as far as what consumers expect. They don’t want clunky experiences, they don’t want solutions that take effort and time and they certainly don’t expect to read instruction manuals. They are used to ‘Spotify-like’ or ‘Uber-like’ experiences and we are also seeing that they are prepared to sign up for a free service, then, when impressed, willing to pay for added value or experience.”

And finally, what tangible economic benefits will the New Payments Platform provide – “I think it will create more opportunities to attract customers and their money, it will increase ability to cross-sell other products and I think it will bring the transaction account back into the frame and make those accounts more important to customers’ lives. Other clear opportunities are on the cost side, addressing service to reduce mistakes in payments, reducing manual back-office processing and delivering self-service for digital channels.”

It’s certainly picking up pace and we are excited to see Cuscal’s next move.

This article first appeared in the October 2015 edition of RFi Group’s Australian Retail Banker.

Why ATMs need to evolve to avoid extinction

Posted on by Uberbrand

male withdrawing cash

When Charles Darwin developed his theories on evolution and natural selection, he probably didn’t imagine that they would one day be applied to aspects of life outside the natural world. Yet the reality is that just like living creatures, man-made devices often need to evolve to survive. That’s certainly true of Australia’s ATMs. Although our nation’s cash-dispensing machines have remained largely the same throughout their history, in today’s increasingly competitive environment they need to change to stay relevant. In fact, unless they evolve into more sophisticated and useful devices, their survival could be at stake.

Back in 1977 when the first ATM was installed in Australia at the Queensland Teachers’ Credit Union in Brisbane, its purpose was as straightforward as it was singular. Just like the tens of thousands of machines that would eventually follow it, it was designed to dispense cash, thus giving customers an alternative to visiting their bank’s local branch to withdraw funds. In the years since, the number of ATMs across Australia has steadily risen, and today there are more than 31,500 terminals across the country.

Yet despite their proliferation, in recent years new “predators” have arrived on the scene that have rendered traditional ATMs less useful and thus threatened their existence. These days, for example, thanks to the rise of contactless transactions it’s easier than ever to make purchases without cash. And, when you do need or want cash, you no longer have to rely on ATMs or in-person visits to your bank to get it. Instead, you can now readily get cash back as part of your transactions at your regular grocery store or service station.

Not surprisingly, conveniences like these have led to a decline in the use of traditional ATMs. In fact, withdrawals from ATMs are currently at their lowest level in a decade, with less than 60 million transactions per month.  At the same time, however, the costs associated with running ATM networks continue to rise. Plus, the revenue streams they create are now just a fraction of what they were prior to the 2009 legislation that introduced direct charging.

Faced with challenges like these, it would be easy to conclude that ATMs are on the verge of going extinct. The reality, however, is that much like cash, Australia’s ATMs aren’t going away any time soon because they remain a critical part of our banking system. That said, however, you can and should expect to see traditional ATMs giving way to a new generation of machines with the increased security and functionality they need to stay relevant in today’s rapidly evolving banking environment.

The future of ATMs
For ATMs to continue to play an important role in banking, they need to be capable of more than just the withdrawals they handle today. In fact, they need to offer a new array of functionality that helps to ensure that they’re not only compliant and secure, but that they are also far more useful and convenient for customers. For example, the next generation of ATMs needs to offer functionality such as:

  • Intelligent deposits that allow customers to make cash and cheque deposits that are otherwise only possible by visiting a teller.
  • Favorites that keep track of customers’ preferred transactions (e.g. withdraw $100 from savings, print a receipt) and make them available as default services that can be accessed at the click of a button.
  • Nearest ATM capabilities that show customers where the next closest ATM is located if their normal ATM breaks down.
  • Contactless and cardless transactions that create a more efficient, hassle-free customer experience and are aligned with the growth of mobile banking.
  • The ability to have receipts e-mailed to you rather than having them printed out.
  • Foreign language capabilities so that customers can interact with the ATM in their native language.

As a financial institution, the bottom line is that for your ATMs to survive and remain a source of revenue, they need to evolve from traditional cash-dispensing machines into multi-functional, self-service portals that customers can use to meet a much wider array of their banking needs.

Sharing the load
As ATM usage continues to decline and the cost of providing an evolved, fully-featured ATM increases margins will grow ever tighter and more and more financial institutions will question the financial viability of running their own ATM networks. This is likely to result in financial institutions being more willing to ‘share’ their ATM networks with each other. These shared networks will make ‘hard branding’ of physical ATMs (colour schemes and logos) more difficult but they will be able to overcome this with ‘softer branding’ through personalised digital experiences when customers identify themselves. Networks like the rediATM scheme were created to fill this need.

An evolutionary advantage
For today’s financial institutions, there’s an economic benefit to be gained by installing smarter ATMs. By reducing the frequency at which customers need to visit tellers for basic transactions, for example, these institutions can reduce staff. Alternatively, they can ensure that their staff spend more of their time engaged in higher value transactions, including cross-selling other products.

While foot traffic will always remain important to some financial institutions, allowing staff to dedicate more time adding value to their customers’ banking experience is a goal that every financial institution has in common. Embracing the evolution of ATMs into smarter and more helpful devices can be an important step towards making that happen.

RFi interview: integrity, innovation & inspiration

Posted on by Rachael Shupe

RFi-Group-Interview---Integrity,-Innovation-and-InspirationThis month RFi Group sat down with the experienced and personable Craig Kennedy, Managing Director of Cuscal, to discuss the payments landscape in Australia, the shift towards ‘mobile first’ and the three themes that will drive growth for Cuscal in the coming year.

Craig cites the great people he works with, both internally and externally, as the aspect that he enjoys most about his role.  “There is a great team here at Cuscal. We’ve got interesting and engaged clients and a bunch of supportive and aligned shareholders with a great board of directors – that’s a pretty inspiring combination.”

Craig references two stand out factors at Cuscal that incite his pride in the brand. “We function with integrity. I think anyone that has engaged with Cuscal or worked with us will say that we go about our business with a high degree of integrity. We also have a can-do approach. I’m pretty proud – there are things we have done that other organisations couldn’t get done in the time allotted. We’ve been able to do that for our clients without compromising the end result. For me it’s a combination of the can-do attitude and integrity.”

“We now manufacture almost all of our own products. Because we don’t have legacy platforms and are not competing with other clients for priority… our time and cost to market has significantly improved in the last five years.”

Over the last five years, Cuscal has grown and evolved significantly. Craig explains that Cuscal now has control over its key products and processes. “We now manufacture almost all of our own products. We have processing capabilities and the payments links necessary to perform key payment functions in Australia. When you’ve got those functions sitting out with a third party, the reality is that you have to compete with other clients to get priority, which is generally given to the largest paying client. Because we don’t have legacy platforms and are not competing with other clients for priority, our time and cost to market has significantly improved in the last five years.”

Craig mentions that the diversity at Cuscal, in relation to both staff and clients, has experienced dramatic change in recent years. “A lot of people perceive us to be associated with credit unions or the mutual industry. While that’s still the case, the reality is we now have a very diverse shareholding and our client base is growing significantly, especially outside the mutual sector. We have major retailers, national banks, regional banks, international banks ¿ we are a very different organisation today. If you walked through the floor here you would see people from all different nationalities and cultures. We’ve got a pretty good gender balance too: 30% of our senior leaders are female and that’s growing. We are in the process of putting in more structure and setting some objectives and targets across all of those attributes.”

“I expect that in a couple of years from now when we look back at the 12 months that we are about to embark on, it will be the year that payments via mobile phones move from the fringe to the main stream. There have been a lot of barriers and friction points, but they are breaking down at such a rate that I expect the tipping point will occur in the next 12 months.”

Craig gave us some insight into his predictions for the payments market in Australia over the next 12 months and what he believes will be essential to winning in this market. “I expect that in a couple of years from now when we look back on the 12 months we are about to embark on, it will be the year that payments via mobile phones move from the fringe to the main stream. There have been a lot of barriers and friction points, but they are breaking down at such a rate that I expect that in a couple of years from now when we look back at the 12 months that we are about to embark on, it will be the year that payments via mobile phones move from the fringe to the main stream. There have been a lot of barriers and friction points, but they are breaking down at such a rate that I expect the tipping point will occur in the next 12 months. I think that will drive mobile banking and payment activity closer together and as a result, increase the level of customer engagement with banks via mobile.”

“The key elements to win in this market will be to keep things simple and convenient, to use well integrated applications and to execute regular and relevant functional updates. I don’t think it’s difficult to stand up an interesting application, but to keep it contemporary and top of the pile – that’s a constant challenge. It’s much more dynamic today than historic ways of engaging with a customer.”

Craig believes that as Cuscal’s profile is raised due to the products it is building, combined with the acquisition of SPS (Strategic Payments Services), one of its main challenges will be to keep current and prospective clients abreast of its core capabilities.

“There is more demand for our products and services than ever before, but ironically we are still finding that some long standing clients aren’t aware of all the things we can do. One of our challenges is keeping the market up to date with what our capabilities are. With all of the opportunities for Cuscal, I think managing our capacity and our priorities will be our biggest challenge in the next 12 months.”

When it comes to innovation, Craig provides some insights from alternative and offshore markets. “I think Uber is a really innovative concept and a cool experience. That to me, when you combine functionality with utility and remove the friction, that’s when it gets interesting. I also think the New Payments Platform provides a really interesting piece of infrastructure for people to innovate and apply. I’m expecting in time there will be lots of innovation around overlay services.”

“I was in the States about a year ago and did the Silicon Valley tour and what struck me over there is that the more dysfunctional and the more legacy you’ve got to deal with and the less cooperation there is at the centre, by necessity it drives innovation. There is such a great source of innovation there because there are so many disconnected parts and people are building applications to bring them together.”

Craig elaborates on the three points of focus for Cuscal over the coming year. “There are three themes that we are looking to build more product and investment around; mobility, real time and data/analytics. We are building out more mobile banking and transactional applications – that will continue to be a focus. The second focus for us as an organisation is real time and NPP. From our point of view, the concept that you could ask for information or get confirmation over night or the next business day has long since passed and people are looking for instant gratification. If you combine that with mobility it’s a pretty powerful combination. Finally, the third theme is the relevance of data and the analytics around data. Whether that is to give more protection around fraudulent transactions, to be able to make you the right offer at the right time or simply to understand you better. If we were looking to build new products, buy more capability into the organisation or acquire another business, it would fit into one of those categories and we would want it to bring some of those capabilities and an attached client base with it.”

“We are looking for further acquisitions at the moment. We find that there’s either someone who has got a legacy business that has peaked and they are looking to exit before they get stuck with it or you’ve got two teenagers who have set up an application in their parents’ garage and they think it is the next google.” Craig laughs, “I’m looking for something in between those two extremes.”

Before the interview concludes, we ask Craig about his success and where he draws his inspiration from. He allows us a rare look into his personal life. “Different people have very different definitions of success and I’m not sure that I have found a definition that I really want to adopt as my own yet. The person that has inspired me the most in my life would be my father. There are two main qualities that make him stand out; he was incredibly determined and persistent, which allowed him to overcome a lot of adversity and, right up until the day he died he had a huge thirst to learn. I’ve got teenage children and now that I see what they are going through, I don’t know how dad dealt with us – I don’t know how he had the energy or the desire. And I was the youngest of seven! As someone who used to start work at 4am he would come home and help us with our homework and if there were subjects he didn’t know, he would learn them so he could help us. To be really honest, I’m far more calculated with what I try to absorb and learn – he seemed to just soak it all up.” “I remember someone saying when they were 19, they couldn’t believe how out of touch and stupid their parents were and by the time they were 21, they were amazed by how much they had learnt. As you get older, you realise that there would have been a bit of advice you would have benefited from along the way. So I’m enjoying all of those clashes now with my boys!”

This article first appeared in the July 2015 edition of RFI Group‘s Australian Retail Banker

Explaining the New Payments Platform

Posted on by Marketing Team

NPP animation
Recent research conducted by Roy Morgan Research found that only 5% of Australian organisations are aware of the New Payments Platform (NPP) and very few have any idea of the impact it will have to Australia’s payments industry.

To help combat this gap in knowledge we have recently produced:

Our senior executives have also been at a number of industry conferences explaining how the NPP will work and the impact it will have on Australia’s payments industry.

Cuscal is one of the lead participants, alongside the RBA and major banks, working to design and build Australia’s NPP.

  • Brian Parker (CIO) was a guest speaker at Data Action’s CXO conference introducing the NPP to C-Suite members of 7 Credit Unions in Adelaide.
  • Adrian Lovney debated whether incumbent banks or digital disruptors would be more successful in developing NPP Overlay Services at RFI’s Australian Payments Innovation Forum in Sydney.
  • Adrian Lovney was on the panel discussion “Payments Modernisation and New Payments Platform (NPP)” at the Cards and Payments Conference in Melbourne.
  • Colin Sultana spoke about mobile, digital and the NPP at the Customer Owned Banking Association (COBA) Colloquium in combination with Filene Research.
  • Nathan Churchward spoke at the VIC/TAS COBA Insight Seminar in Ballarat.

For more information about the NPP or the services we will offer, please email npp@cuscal.com.au

Cuscal set for early adoption of Apple Pay solution

Posted on by Uberbrand

group meeting

Cuscal is excited about the announcement from Apple today that it will support payments in its new iPhone 6, together with iOS8 and has called it Apple Pay.

Adrian Lovney, General Manager, Products and Services believes that Cuscal is in a prime position for early adoption to the new Apple Pay solution.

“With Cuscal’s work to date regarding tokenisation we can leverage the ongoing development of our HCE app, previously only available for Android devices,” said Adrian.

“This ensures that we are in a key industry position for early adoption to the new Apple Pay solution. As you might expect, Apple’s announcement positions themselves as the gatekeeper to the Apple ecosystem (unlike the Android HCE approach which is more open).”

Apple has announced that as part of iPhone 6 they will be launching their NFC enabled mobile payments service (Apple Pay) in partnership with the key schemes, specifically Mastercard, Visa and Amex as well as initially the top six issuers in the USA, covering 83% of cardholders. This includes tokenisation through the schemes and a secure element embedded in the phone itself. Substantial hardware upgrades of existing iPhones to the iPhone 6 will be required before Apple Pay is widespread, however with the launch of Apple Watch also incorporating NFC capabilities in 2015 we understand that this will bring NFC capability to the current iPhone 5 and iPhone 5c.

The device will have preloaded applets for each of the schemes, which Apple will provision secure credentials directly into the embedded element from iTunes or add new by taking a photo from the iSight camera.

Adrian continued that “While Apple has clearly indicated their intent to launch this in the USA in the first instance we anticipate that Australia will be a focus as a fast follower to this initial roll-out. As Australia has one of the highest rates of contactless availability Cuscal is excited to welcome the new Apple capability and provide our clients with a quick-to-market solution ready for the Australian Apple launch.”

“When we can we will incorporate this functionality within Cuscal’s payment platform, as well as within Cuscal’s mobile banking and payment suite.

“As a major Australian issuer we intend to be on the frontline of this exciting new development by Apple, allowing our clients to continue to be at the forefront of mobile payments.

“We believe that a combination of Apple’s NFC based solution and Cuscal’s HCE offering will finally bring an end to the Secure Element (SE) wars and allow consumers to access NFC payments on the device of their choice at an affordable price point,” he concluded.