The global payments innovation initiative

The global payments innovation initiative May, 2016

The global payments innovation initiative - May 2016 2

Correspondent banking model is under pressure Customers and End customers increasingly demanding regulators push for better payments service Domestic payments going real-time Banks rationalize their Regulatory intensity and increasing costs correspondent banking networks Network rationalization Digital innovators offer Disintermediation new disruptive solutions Enhanced value proposition The global payments innovation initiative - May 2016 3

Objective: deliver a better customer payment experience “Before” “After” Traditional correspondent banking The global payments innovation initiative 1. Slow, can take multiple days 1. Fast(er) (start with “same day”) 2. Expensive, multiple deducts 2. Higher efficiency & less intermediaries 3. Secure and compliant 3. Secure and compliant 4. No transparency and predictability on cost and 4. Transparent and predictable, with payments time tracking 5. Convenient and ubiquitous 5. Convenient and ubiquitous 6. Open and inclusive (global reach) 6. Open and inclusive (global reach) The objective is to first fix these key pain points Note regarding prices: it will be at the discretion of each gpii member to decide the pricing strategy vis-à-vis its customers, including other financial institutions The global payments innovation initiative - May 2016 4

The global payments innovation initiative Delivering a new standard in cross-border payments ̶ Proactively respond to evolving customer needs for more speed, transparency and predictability of time and cost in cross-border payments ̶ New multilateral rulebook, initially focused on business-to-business payments ̶ Building on the foundation that banks provide in security, resiliency and compliance ̶ Delivering real-world innovation: building on existing platform, embrace new technologies along a strategic roadmap ̶ Global reach, collaborative industry-wide initiative, organised by SWIFT ̶ Open model, participation based on operational quality  Fast  Secure  Real-world innovation  Transparent  Resilient  Global reach  Predictable  Compliant  Open model The global payments innovation initiative - May 2016 5

The global payments innovation initiative (gpii) Open model Operational quality Global payments innovation initiative (gpii) Global reach provided by banks connected to domestic payments systems SLA rulebook Bank access channels with customer at centre Bank access channels of value proposition SWIFT for corporates SWIFT for corporates Smart collaboration (e.g. enhanced compliance practices, optimised intraday liquidity flows) Bank access channels Embrace innovation Bank access channels Domestic payment systems (e.g. peer-to-peer messaging, Domestic payment systems SWIFT real time settlement mechanism) SWIFT Accessible by Reach any bank any bank Differentiate vs Still reach non-gpii banks Existing SWIFT messaging non-gpii banks The global payments innovation initiative - May 2016 6

A gpii payments tracker “in the cloud” 101 > 103 > 103 > 103 > 910> Originator Bankhaus Deutsche Bank Wells Fargo Taipei commercial Beneficiary Anton bank MT199/API MT199/API MT199/API MT199/API Transparency of total fees and time “One-glance” status overview Unique, end-end tracking number Track path, in real time Central payments database, hosted at SWIFT Details of banks Updated via MT199 or API along the chain Data consumption via GUI, via MT199 (push) or via API (pull) The global payments innovation initiative - May 2016 7

Value proposition for corporates The core principles of gpii Benefits for a corporate Payments with same day use of funds Grow international business Transparency and predictability of fees Enhance supplier relationships End-to-end tracking of payments Transfer of rich payment information Increase treasury efficiencies The global payments innovation initiative - May 2016 8

Value proposition for banks Grow volumes Reduce cost Lead innovation • Offer distinctive payments service • Lower network management cost, • Reputational benefit • Retain and attract new customers avoid proprietary connections in • Leader in global payments • Protect and grow transaction non-strategic countries, access innovation volumes global quality network • Comply with regulation • Enhanced compliance practices (Dodd-Frank, PSD2, …) • Optimised intraday liquidity flows • Sell payments services to third • Increased straight through parties processing The global payments innovation initiative - May 2016 9

Initiative banks 1. ABN AMRO 17. Caixa Bank 33. Investec 49. Royal Bank of Scotland 2. Alfa bank 18. Citibank* 34. JPMorgan Chase* 50. Sberbank 3. Australia and New Zealand 19. Commerzbank 35. Kasikornbank 51. Scotiabank Banking Group* 20. Credit Suisse 36. KBC Bank 52. SEB 4. Banco Bilbao Vizcaya Argentaria 21. CTBC Bank 37. KEB Hana Bank 53. Société Générale 5. Bangkok Bank 22. Danske Bank* 38. Lloyds Banking Group 54. Standard Bank 6. Bank of America Merrill Lynch* 23. DBS* 39. Mashreq Bank 55. Standard Chartered Bank* 7. Bank of China* 24. Deutsche Bank 40. Maybank 56. Sumitomo Mitsui Banking Corporation* 8. Bank of New York Mellon* 25. Ecobank 41. Mizuho Bank* 57. Swedbank 9. Bank of the Philippine Islands (BPI) 26. Fifth Third Bank 42. National Australia Bank 58. Tadhamon International Islamic Bank 10. Bank of Tokyo-Mitsubishi UFJ* 27. FirstRand Bank 43. Natixis 59. TD Bank 11. Banco Itaù 28. HSBC 44. Nordea* 60. UBS 12. Banco Santander 29. ICICI Bank 45. Oversea-Chinese Banking 61. U.S. Bank 13. Banco de Crédito del Peru 30. Industrial and Commercial Corporation 62. UniCredit* 14. Banco do Brasil Bank of China* 46. Raiffeisen Bank International 63. United Overseas Bank 15. Barclays* 31. ING* 47. Royal Bank of Canada* 64. Wells Fargo* 16. BNP Paribas* 32. Intesa Sanpaolo* 48. Resona Bank The global payments innovation initiative - May 2016 (*) Pilot bank 10

Organisational set-up  Promote gpii Broad Initiative Group  Provide feedback into collaborative design participation,  Leader in global payments innovation drive promotion  Pilot gpii Pilot/User Group  Participate in iterative design and testing Controlled  Be early adopter participation, Entry Exit keep practical criteria criteria Vision Group  Craft long term vision correspondent banking Broad input  Develop strategic roadmap whilst focused Entry Exit decision-making criteria criteria Entry Exit criteria criteria The global payments innovation initiative - May 2016 11

Timeline 2015 2016 Promote ▪ Show early results ▪ Identify drivers at Sibos ▪ Define principles Pilot ▪ Prepare for ▪ Announce initiative go live Define strategic roadmap The global payments innovation initiative - May 2016 12

Interested? Contact us [email protected] The global payments innovation initiative - May 2016 13