NEW PAYMENTS PLATFORM

DISRUPTING THE PAYMENTS MODEL

AGENDA

How payments are changing in Australia

PAGE 1

How the NPP will impact payments

How Cuscal can position you for the NPP

HOW PAYMENTS ARE CHANGING IN AUSTRALIA

EXPLORING THE FOUR TRENDS

PAGE 2

Innovative new offers

by competitors

Increase revenues from innovative

new offers and business models

Margin compression

Increased revenues from new products,

distinctive digital sales and

using data to cross-sell

Lower operational costs from

automation/digitalization

and transaction migration

Increased

operational risk

TOTAL TOTAL

Source: McKinsey analysis PAGE 3

TREND #1 Digital transformation in banking

Potential threats Potential opportunities

+5

+10

+30

+45

-13

-16

-6

-35

Digital innovation in retail banking offers potential threats and opportunities.

Up to 35% of net profit eroded for digital laggards. Over 40% of net profit upside for winners.

TREND #2 Increasing volume of non-cash transactions

Growth in debit cards shows

positive use of bank account

balance for digital purchases.

Source: RBA’s 2014 report ‘The Changing Way We Pay’. PAGE 4

When their bank account can

be accessed conveniently,

customers are happy to use

their own funds.

Non-cash transactions per capita in Australia

TREND #3 Disruption from fintech startups

Up-and-coming fintech

companies are playing a key

role in reshaping payments

Global Fintech financing has

grown from less than $930

million for the whole of 2008 to

over $1.04 billion in the month

of October 2014 alone.

Source: KPMG PAGE 5

Future Earnings

Fintech financing activity

Fin tech startups are building

niche products that meet the

needs of specific segments

more effectively than the

incumbents

Agile development enables

banks to test and learn from

their target markets

They can respond quickly

to changes in requirements

It reduces the risk of launching

products that don’t meet the needs

of their target market

PAGE 6

TREND #4 Major banks are using customer-centric approaches

HOW THE NPP WILL IMPACT PAYMENTS

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THE IMPACT

During these times of change the launch of the NPP in 2017

will support the banking industry.

PAGE 8

PAGE 9

THE IMPACT

Each transaction settled individually,

in real-time, between participating

financial institutions

Will support additional transactional data

Easily extended to enhance user

experiences for consumers and businesses

Australia’s NPP will raise the bar:

PAGE 10

NEW PAYMENTS PLATFORM

By the end of 2017 the NPP will offer: 24/7 payments, faster payments, an

addressing service and the first overlay service (the Initial Convenience Service)

FASTER

PAYMENTS

MORE

INFORMATION

ADDRESSING

SERVICES

OVERLAY

SERVICES

Payments in real-time, with close to immediate funds

availability, 24 hours a day seven days a week

Greatly increased amounts of data (up to

100kb/message) can be sent with payment information

Payments can be initiated using mobile phone numbers,

email addresses, or Australian Business Number

(ABN) as opposed to BSB and Account Number

Market driven tailored payment solutions

Open

24/7

Low value

payments

Rich data

messages

Addressing

Service

Real time

settlement

Individual

transaction

settlement

Irrevocable

funds

Reconciliation

Data

NPP

Direct

Entry

RTGS

Cards

BPay

PAGE 11

THE NPP DISRUPTS EXISTING PAYMENTS PRODUCTS

A SPECTRUM OF BENEFITS FOR THE

CUSTOMER, BUSINESS AND BANKS

PAGE 12

INTRODUCING ‘PAYMENT REQUESTS’ A GAME CHANGING PAYMENT TYPE

Sarah splits a

restaurant bill

with her friends

Sarah requests

payment from

each friend

Sarah confirms her friends’

identities in real time,

requests an amount from

each, and by when

Friends receive request

with amount, due date,

and deposit details

After a couple of

clicks from each

friend

Sarah receives the

payments immediately

HOW CUSCAL CAN POSITION YOU FOR THE NPP

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The founding Participants which

have invested in building the NPP

PAGE 14

OUR ROLE

Cuscal will connect

directly to the NPP –

some participants will

connect via agency

arrangement.

PAGE 15

OUR ROLE

Craig Kennedy,

Cuscal CEO, is on

the board of NPP

Australia Ltd.

Cuscal has

senior executive

representation on

all 5 NPP Working

Groups.

Our dedicated technical,

product and marketing

experts will ensure

clients are able to offer

their customers

immediate, convenient

and assured payments

around the clock.

NPP Australia Ltd

sets the rules, runs

the NPP, owned by

the 12 founding

members including

Cuscal

PAGE 16

NPP STRUCTURE

Participant is a

shareholder and

contributes to the design:

Full Participant (Cuscal)

connects directly

Other Participants will

connect via Full Participants

Account Servicer –

needs Participant to

connect them to the NPP

and may offer additional

services to customers.

Customer – procures

services from

Participants, Users and

Overlay Providers as

either a payer or payee.

Overlay Provider leverages the real

time and data capabilities of NPP and

establish standardised customer

experiences for transaction processing

Reserve Bank

6

Other NPP Participant

or their client

PAGE 17

WE CONNECT

1 Payer from Cuscal’s

client sends payment

2 Address Lookup

3 Clearing Request

4 Clearing Response

5 Settlement Request

6 Settlement Notification

Cuscal’s Client

Other NPP Participant

3

4

6

1

NPP Basic

Infrastructure and Addressing

Service

2

5

PAGE 18

WE CONNECT

Other NPP Participants

Core Banking System

Basic Infrastructure ?

Web Service

Proprietary

Trust Model Swift Trust Model

ISO 20022

THANK YOU. PAGE 19

REQUEST FOR MORE INFORMATION

If you have any questions about

Cuscal’s NPP Services, please email:

npp@cuscal.com.au