Payments – Reloaded! Spending Priorities & Innovation in Payments

1. Payments – Reloaded! Spending Priorities & Innovation in Payments

2. Payments - Reloaded!

3. Agenda Payments Business – Strategic Relevance • CXO Discussion Highlights • Financial Insights WW Spending Guide (Payments) Innovation in Payments • “Disruptive” Innovation • Innovation in Payments

4. Payments Business – Strategic Relevance CXO Discussion Highlights

5. How are IT Budgets beingDeployed ? Overall IT Budget Australia Administration & Reporting5% US$4 Billion N=162 CXOs Singapore (regional) EnterpriseData Management14% US$6 Billion India Channels & Distribution28% US$4 Billion China Enterprise Payments13% US$3 Billion Malaysia, Indonesia, and Thailand are all in excess of Business Process Re-engineering12% Core Refresh 28% US$1 Billion

6. Payments remains a Major Operational Challenge Prioritization & Management of IT projects (CIO/CFO) 17% N=162 CXOs Cards, Payments & Lending (CIO/CFO/COO) 29% Human Capital Management (COO) 15% Business Process Improvements (CIO) 7% Cost & Performance Management (CFO/COO) 12% Innovation & Market Responsiveness 10% (CIO/COO) Regulation & Compliance (CRO) 10%

7. How is Payments Spend being Allocated, Functionally?

8. What is the Fastest Growing Area of Payments Spend?

9. What are the Key Drivers for Payments Spend?

10. Appetite for Payments Outsourcing?

11. What are the Drivers of Payments Outsourcing?

12. Payments Business – Strategic Relevance Financial Insights WW Spending Guide (Payments)

13. Payments Spend (Overall) +8% +8% +12% +12% +9% +4%

14. Payments Spend (by Solution Element) +8% +8% +12% +12% +9% +4%

15. Payments Spend (by Region) +8% +8% +12% +12% +9% +4%

16. Payments Spend (North America) +6% +5% +9% +9% +7% +0%

17. Payments Spend (Europe) +9% +9% +16% +13% +11% +7%

18. Payments Spend (Asia/Pacific) +10% +9% +12% +12% +9% +10%

19. Payments Spend (Transactions) +7% +6% +10% +10% +8% +3%

20. Innovation in Payments

21. “Disruptive” Innovation?

22. Innovation in Payments requires: Innovation-friendly legal and regulatory environment Harmonization of the payments ecosystem Market maturity and social acceptance Successful integration into existing value chain E-micropayments? International remittances? P2P payments?

23. Innovation in Payment (Products / Services) Users select payment instruments depending on Place, Timing, & Amount – the key is CHOICE! E-Money & Stored Value products • Various form factors • Prepaid – targeted acceptance Cards 2.0 – driven by: • Security – Authentication at the point-of-sale • Service – Payment choice at the point-of-sale Merchant offerings • Cost-efficient & integrated offerings • “Mobilized” merchant acceptance & social mobile payments Free-form, contactless payment devices • Locational intelligence; proximity; real-time decisioning • Mobile retail marketing tools

24. Innovation in Payments (Delivery Channels) Channel innovation based on Convenience, Interaction, (low) Cost, and Security “Mobilizing” Payments • Mobile has become a key component in any medium-term payments roadmap • Mobile payments gaining traction across emerging markets; evident in initial acceptance rates, scale, and ambition • New fund transfer mechanisms targeting demand for convenience and privacy • Mobile technologies driving merchant acceptance • Governments also initiating mobile payments innovation

25. Predicting the Future of Payments? • Explosion of debit and prepaid card products • E-micropayments will gain traction, driven by mobile, prepaid, contactless, biometrics technologies • Growing prominence of non-bank PSPs will threaten disintermediation of the payments value chain • Mobile devices become established money transfer instruments • Increasing challenge of balancing regulations with new market dynamics • New forms of risks – “closed” settlements; interoperability creating interdependency, emerging security risks

26. Shawn Yip Asia/Pacific Analyst IDC Financial Insights Email: syip@idc.com Tel: +65 6829 7523