AFP OTTAWA
Technology Trends in Treasury...2020 and Beyond
Tom DurkinGlobal Head of Digital Channels, Global Transaction Services
February 12, 2020
The treasurer’s ecosystem is changing
Data, innovative capabilities and digital experience are reshaping how we interact with our clients
Frictionlessdigitaljourney
Globalization
Fintech partnerships
Customer experience
Regulation and governance
Strategic function
AI/machine learning
Big data
Real-time access
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Emerging Solutions - Illustrative
Size of the circle indicates level of complexity
Real-timepayments
Early Big Data –Cash
forecasting
Alternative payment channels
Blockchain & DLT
Early AI –Intelligent
Receivables
Advanced Big data
& AI
Early API
AdvancedAPI
Virtual Accounts
Receivables/ e-CommerceSWIFT gpi
Maturity
Uses
FutureTomorrow (2-5 years)Today (0-2 years)
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Globalization is driven by digital commerce
30%cross-border
50%+mobilefueled by
$4T+
$2.3T in 2017
$6.7T+
$4.7T in 2017
Alibaba and Accenture: http://www.alizila.com/cross-border-e-commerce-to-reach-1-trillion-in-2020/eMarketer 2016: https://www.emarketer.com/Article/Worldwide-Retail-Digital Commerce-Sales-Will-Reach-1915-Trillion-This-Year/1014369
https://www.emarketer.com/Article/B2B-Ecommerce-Market-Still-Maturing/1014311
$7Tin 2017
$10.7Tin 2020
Global B2C digital commerce:>75% growth by 2020
Global B2B digital commerce:>40% growth by 2020
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• Manual processes• Disparate data sources• Timing/availability
• Data lakes, dictionaries and lineage • Visualisation tools• Data science tools/platform
• Digital assistant technology• Seamless API infrastructure• Natural Language (NLP, NLG &
NLU)
• Analysts• Data visualisation builders• Data engineers• Data scientists
• Non-traditional product management
• Agile solution development• Fintech & “Datatech"
partnerships
Infrastructure
Resource needs
Businessinsights
Autonomous systems
Fragmented legacy
reporting
Aggregatedunified
platform
Embeddeddata
science
Data as a service
System output Spreadsheets
Interactiveanalytics
Predictive models
Analytics at scale
“Smarter Products” Cognitive
experiences
ProactiveIntuitiveReactive
Data as a driver of innovationThe evolutionary curve of data
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Amplify insights with diverse data assets Data as a service
Relationships
Drives higher value insights for clients
• Operational optimisation• Increased fraud security• Comparative market positioning• Working capital improvements• Strategic market trends
Breadth and depth of data assets
Corporate culture drives a commitment to responsible use of data
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Embedded data scienceA reengineered data platform transforms traditional products and services
Real-time adviceand guidance
API-enabled to be always-on
Solutions inherently tailored to clients
Pre-emptivealerts
Optimisedliquidity
Predictiveinsights
Intelligentpayments
Improvedcyber-security
Digitalassistants
API layerData science tools
Data lake
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Artificial intelligence: What to expect
Improved processing of information – for example in credit decisions, business
contracts and customer interactions – may create a more efficient financial system.
As emerging technology providers bring capabilities to market, their role within large organizations becomes critical and may give rise to more dependency on third parties.
Testing and training of new AI technologies based on unbiased data and feedback
mechanisms may help ensure applications do what they are intended to do.
Evaluating the uses of AI and machine learning is important to identify risks,
including adherence to rules on data privacy, conduct risks and cybersecurity.
AI is reinventing the client experience for nearly all industries, especially financial services. By 2025, as many as 95% of all customer interactions with banks will be through
channels supported by AI technology. This rapid shift requires financial institutions to refine business practices to deliver a successful client experience.
More efficiency Dependence on third parties
New auditing methods New risk models
Source: Servion Global Solutions 20178Bank of America Proprietary
APIs and Open Banking
Industry forums, such as Afinis and SWIFT, are working to standardize API design and strategy across the industry which will enable Open Banking
Published separate APIs for credit transfers and direct debit collections supporting US ACH only. “Request for Payment” API standards which will incorporate The Clearing House (TCH) guidelines is a priority for 2020.
Open banking work group prioritized three API standards for 2020 which are account balance information, instant payment initiation, and request for pay.
CashPro API offers account balance and instant payment initiation APIs preceding SWIFT standards. Request for Pay is a priority for 2020 roadmap.
Developed APIs that comply with the European Payments Service Directive 2 (PSD2) and other regulations prescribing access to banking data and payments capabilities.
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Overview – What is ISO 20022?
Benefits
Standardized file format for
all parties
Straight-Through Processing
(STP)
Industry advancements and strategy
Standardized processing,
communications & formats
Conduct banking business more
efficiently
Maintenance process: built on strict business justifications and review process -leading to new ‘versions’ of the messages
More than 20 submitting organizations, besides SWIFT
ISO 20022 is a methodology for defining financial messages
18 Business Areas – 3 examples:
Published on www.iso20022.org
PAIN PACSSESE
Payment Initiation (corp-to-bank)Payment Clearing and SettlementSecurities settlement
Diverse representation:Corporations, Banks, Vendors, Market Infrastructures
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A global shift to ISO 20022
LIVE
By 2022
By 2023+
2025 SWIFT
By 2020
MORE
• Robust payment data• Remittance detail• Adoption of payments
into new countries• Clear identification of
multiple levels of Payer/Beneficiary
LESS
• End-to-end data translation and truncation issues
• Customization –allows for ability to use ERP and AP “out of the box” payment file capabilities
ISO XML 20022 has emerged as the global
Payments standard, enabling global
consistency across payment origination, status updates, and
information reporting.
“80% of global high value payments volumes will adopt ISO 20022 by 2025”, SWIFT
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SWIFT gpi for Corporates (g4C) – Pay and Traceg4C is available to SWIFT-connected Corporates subscribed to the gpi for Corporates service
SWIFT gpi Tracker
Bank of America Intermediary Bank Beneficiary Bank
1
MT 103
Pay and Trace enables SWIFT-connected corporates to initiate and track SWIFT gpi payments through their ERP or TMS system, increasing the transparency and end-to-end visibility of cross-border payments.
SWIFT sends BofA a gpi confirmation
Client transmits a payment initiation message (MT101) with a Client-generated UETR
Benefits:
BofA transmits a real-time status update with the Client-generated UETR.Status updates include:• Debit confirmation• Credit confirmation• Transaction rejection notice
Status update is sent to Tracker
How Pay and Trace Works 2 3
MT 103
Cross-Border Wire Payment Flow
Status update is sent to Tracker
Easily reconcile payments with gpi status updates using a proprietary reference
Track outgoing payment flows, including FX rates and lifting fees
Reduce manual investigation queries Gain settlement transparency – including timing, credited amount and banks in payment chain
Corporate
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Cybercrime is today’s biggest threat to Digital Transformation.
1 https://www.securitymagazine.com/articles/89866-percent-of-us-businesses-expect-a-critical-breach-in-20192 https://www.irishtimes.com/business/technology/majority-of-businesses-across-the-world-unprepared-for-cyberattacks-1.37564633 https://www.securitymagazine.com/articles/87787-hackers-attack-every-39-seconds4 2018 Data Breach Quick View Report, RiskBased Security5 https://www.businesswire.com/news/home/20181115005665/en/Opus-Ponemon-Institute-Announce-Results-2018-Third-Party6 https://securityintelligence.com/news/report-banking-trojans-accounted-for-more-than-half-of-all-malicious-payloads-in-q4-2018/7 https://cybersecurityventures.com/cybersecurity-ceo-the-world-will-need-to-cyber-protect-100x-more-cloud-data-by-2021/
Personal records exposed in 2018 due to cyber security
breaches4, costing corporations an average of
$154/record
Threats released by cyber criminals
every minute3
Percentage of U.S. businesses that expect a critical breach or successful cyber attack
in the coming year1
Percentage of global companies that feel prepared for a cyber attack
today2
Percentage ofcompanies that have
experienced a data breach caused by a vendor or third
party5
Percentage of malicious email that contained a banking
Trojan, making it the most popular type of malicious
payload today6
How much more data will
be stored in the cloudby 20217
48080% 5 Billion39%
59% 56% 100x
Cybercrime: Trends & Threat Landscape
Cybercrime: Business email compromise
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Business email compromise emails are customized by industry
Industry Top Schemes Top Targets
Energy & Utilities Vendor email spoofing Website impersonation Utility payment scams Consumer data harvesting Emergency relief programs
Accounts payable Consumer billing
Manufacturing
Vendor email compromise Ransomware “Deep Fake” CEO voice Payroll account change Benefits available scams Payment processing jobs Tax & payment refund
Politically exposed persons Attorneys Tax service fee payers
Healthcare Vendor email spoofing Data breaches Credential compromise Ransomware
Human resources Professional employees
Public Sector Vendor email compromise Login harvesting “Deep Fake” CEO voice Ransomware
Accounts payable Professional employees
Professional Services
Vendor email compromise Website impersonation Employment opportunities New business opportunities
Sales and client teams Attorneys Accounts payable
Universities Benefits enrollment scam Payroll account change Credential compromise Alumni donation
Alumni Students: grants & tuition University administration
CommonSchemes
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Cybercrime: Internet of things (IoT)
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IoT connects machines and devices to each other. IoT and the associated risks are growing exponentially. By 2020 there may be as many as 50
billion IoT devices1
Addressing IoT Risks
Network Segmentation
Change manufacturer default settings (as defaults are often published on Internet)
Turn off Internet-enabled features when not in use
Check privacy settings
Avoid storing sensitive information on IoT devices
Update software/firmware
Be aware of sensitive business or personal conversations near smart assistant devices
1 CRN Interview with Marc Goodman - https://www.crn.com/news/security/300078161/security-expert-cybercrime-dangers-multiplying-with-rise-of-iot-automation.htm
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Data visualization
Trade
Security• Fraud alerts and actions• Behavioral capabilities
Payments• QR codes for quick
payments• Status monitoring
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Markets features• Money market• Commercial paper• Research
Personalization
Education materials• Podcasts• Guided videos and
demonstrations• Best practices
Smart device and virtual assistants
Merchant services
Credit• Credit Advances• Pay-downs• Approvals
Check issuance
Convenience• Contact my banker button• In-app Help Desk messaging• Find nearest branch
Other?
Session history log
Commercial cards
• Access• Administration
Bill-pay
The future of mobile for treasury
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Q&A
Disclaimer
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