Prair ie Payments Init iat ive 101N e x t g e n e r a t i o n p a y m e n t t e c h n o l o g y

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Purpose of presentation

This presentation is an informational guide for credit unions across the network. It can be used by credit unions for communicating with employees.

This informational package has been approved by the Prairie Payments Joint Venture Initiative and can be used by individual credit unions for communication purposes to employees.

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For the latest updates from the Prairie Payments Initiative visit our website here. If you have any questions, comments, or concerns, you may contact the Program via email at ppi@albertacentral.com.

Prairie Payments Initiative (PPI)

In Canada, there are substantial payments changes ahead. The financial industry continues to evolve, with member institutions, fintech firms and technology advancements driving change in financial and payments services. In pursuit of our legislated public policy objectives and in support of emerging regulations, Payments Canada is highly engaged with its members, stakeholders and regulators.

Work has been underway between the three prairie centrals (Alberta Central, Credit Union Central of Manitoba (CUCM), SaskCentral) in step with the seven largest credit unions in the prairie provinces (P7) to develop a strategy on the appropriate credit union response to the evolving payments environment.

The working team completed a comprehensive analysis of available options to modernize payments for credit unions. This culminated in a specific strategy recommendation which was endorsed by the committee and led to a structured request for information (“RFI”) process to identify credible solution providers from around the world. In-depth information on technical solutions, processes and pricing were provided. The committee elected to proceed to commercial negotiations with the IBM Payments Center Canada (IPCC).

The findings and conclusions from this analysis were consolidated into a business case, which was approved by the boards of directors for Alberta Central, SaskCentral and Credit Union Central of Manitoba in late December 2019.

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B a c k g r o u n d :

What is the PPI vision and objectives?

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Vision

Objectives

The PPI vision is to ensure prairie credit unions are competitive in payments by providing access to the most efficient, cost-effective, and modernized payments processing infrastructure through IBMs Payment as a Service (PaaS) offering.

PPI has three objectives. 1) Work in partnership with IBM to understand all platform requirements. 2) Prepare credit unions across the network to onboard onto the IBM Payments Centre Canada (IPCC), providing access to innovative payment technologies that maximize efficiencies and effectiveness. 3) Create sustainable operations for the new payments platform for the network to certify processes are in place for sustainability.

What are the benefits of IBM’s platform for Payment as a Service (PaaS)?

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P a a S p r o v i d e s p r a i r i e c r e d i t u n i o n s w i t h :

Autonomy over the payment types they use in their core banking systems

Access to a cloud-based payments platform for AFT, EDI/bill payments, wires, cheques, Interac, and real-time payments (future)

Updated user interfaces (UI) for self-serve payments origination, status and reporting

Compliance with ISO20022 (industry standard) API/file interface for back-end systems integration

Exchange payments through clearing and settlement partners

Regulatory requirements

Enabling choice

Technology innovation

Improved experience

Settlements

The IBM Safer Payments solution is a complete step-change for fraud management, monitoring and prevention capabilities

Providing security

How do credit unions use the IBM Payments Centre Canada?

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C r e d i t u n i o n s w i l l i n t e g r a t e w i t h I P C C d e p e n d i n g o n t h e i r c o n t r a c t s w i t h C e l e r o o r o t h e r p a r t n e r s f o r t h e i r d i g i t a l p l a t f o r m , c o r e b a n k i n g a n d i n t e g r a t i o n s e r v i c e s .

DDA

IPCC PaaS Externalpartners

CUPS / CUCM3 CUPS/CUCM IS

backend integration with PaaS

PaaS integration with external partners External partners

GCJV (via Celero)

Wires (LVTS/Lynx)Biller DB

Payments Canada (via Celero)

FIF DatabaseOFI via CSN

Interac (via Celero)

Interac

IPCC APIs

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Digital platform

Core banking

Celero Xpress

IPCC white

label UI

Other digital

platforms

Integration layer

DNA core banking system Other core banking system

Fiserv DNA Other core banking

Celero Xchange Other PPI Integration patterns

Forge

Integration with PaaS APIs & files

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Note: This is a representative example only

How do credit unions use the IBM Payments Centre Canada?

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OFI= Other Financial Institution

IPCC PaaSCredit union

Settlement files

Servus RBC

Interac OFIAPI

Core banking platform

CU customer

(payer)

OFI customer(payee)

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A r e p r e s e n t a t i v e e x a m p l e o f h o w I P C C w o r k s w i t h I n t e r a c :

Note: This is a representative example only

1 Customer of a credit union (CU) makes a payment request (i.e. Interac transfer) by logging into their CU’s core banking platform and providing details required to make the transfer (i.e. from, to, amount, etc.).

2 Payment details are sent to IPCC’s payments platform via an application program interface (API) that integrates the CU’s online banking system with IPCC.

3 IPCC PaaS conducts processing procedures before posting to the CU’s core banking platform (i.e. transfer money to and from accounts).

4 Money is transferred out of the CU account and sent to Interac – who uses their database of e-mails and phone numbers associated with a banking account to distribute the payment to the payee.

5 Credit appears in payee’s account and a debit in the payer’s account; however, the payer’s and payees' financial institutions have not yet settled.

6 Settlement between CU and other financial institutions occurs – IPCC provides settlement files to each financial institution at the end of each day to reconcile the amount owing between each other, in this case Servus and RBC.

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Expected timelines for the PPI program

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Jan 6 2020

Project kickoff: Onboarding, planning , and alignment with IBM project team and key consulting resources

Feb 24 2020

May 25 2020

Jul 27 2020

Sep 28 2020

Milestone one:Availability of service provider’s implementation plan

Milestone two:Onboarding planning complete

Milestone three: Service provider’s platform readiness

Milestone four: Production pilot

Milestone five: Production go-live #1

Mar 22 2021

Milestone six: Production go-live #2

Jan 9 2022

Milestone seven:Production go-live #3

Aug 31 2027

Contract end

Work continues over 5.5+ years

#1

#2

#3

#4

#5

#6

#7

Dec 27 2020

Dates may be subject to change

E x e c u t i n g P P I

Some key messages to share

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In the prairies, credit unions are working hard to align with Payments Canada’s modernization initiatives but also with more robust payments systems.

Prairie credit unions needed to turn a critical eye on the payments capabilities needed now and in the future. Our work on a payments alternative was the direct result of prairie credit unions asking the centrals to explore developments in the payments environment and provide an options analysis and a strategic path forward.

For the prairie centrals, our main goal is to provide the tools that allow credit unions to best manage future costs of payments services and deliver scale efficiencies from growth on a global platform.

The goals of the PPI are to have a modernized ISO standards infrastructure in place, compelling thought leadership in payments, and future-focused payments that deliver excellent member experience. The time is now.

Moving to the PaaS model with IBM will ensure credit unions have a future-ready solution that drives innovation and mitigates the technology and regulatory risk that will characterize our future. Our existing systems, skills and capabilities have served credit unions well for many years; however, they don’t provide a strong foundation for our future.

Where to go for additional information?

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H o w c a n I s t a y i n t o u c h w i t h t h e P r a i r i e P a y m e n t s I n i t i a t i v e ?

Prairie Payments Initiative website allows you to access the most up to date information:• Updates on the latest program communications – updated twice monthly or as required

• Events list payment and banking related engagements the PPI program will be present at in attendance

• Tools to help you and your organizations understand PPI (i.e. FAQs, videos, timelines, infographics, presentations and webinars)

• Good Reads of whitepapers, trends, benchmarks and best practices related to payments, fraud prevention and banking technology

• Business Readiness listing PPIs business readiness framework and related information as we prepare for our pilot and broad deployment

Contact us:• Email us at ppi@albertacentral.com

• Reminder, submit questions or request for information the Friday before the session – we will do our best to answer all questions

Please use email to communicate with PPI, so that we can quickly prioritize a response to your organization.

A d d i t i o n a l i n f o r m a t i o n

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Appendix

What is the IBM Payments Centre Canada?

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C o g n i t i v e p a y m e n t s p l a t f o r m b u i l t o n t h e I B M C l o u d , u s e d b y m a n y m a j o r C a n a d i a n a n d U S b a n k s , t h e I P C C c o m b i n e s t h e i n f r a s t r u c t u r e , s o f t w a r e , a p p l i c a t i o n a n d b u s i n e s s o p e r a t i o n s s u p p o r t u n d e r o n e m u l t i - t e n a n t e d c o s t - e f f e c t i v e a n d e f f i c i e n t p l a t f o r m .

Benefits of the IPCC

Access to all payment types, by working together Canadian financial institutions have access to leading modern payments products and services

Cost-effective, hosting multiple financial institutions on one platform (IBM Cloud) drives down the payment processing costs of hosting multiple platforms and supporting multiple processes

Payments Canada ISO20022 modernization

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P a y m e n t s C a n a d a – w i t h t h e h e l p o f t h e i n d u s t r y – h a s l a u n c h e d a m u l t i - y e a r i n i t i a t i v e t o m o d e r n i z e t h e C a n a d i a n p a y m e n t s s y s t e m , w i t h I S O 2 0 0 2 2 a t i t s f o u n d a t i o n f o r p a y m e n t m e s s a g i n g .

Source: https://www.payments.ca/resources/iso-20022-resource-centre/faqs

Enhanced remittance data: ISO 20022 addresses the current need in Canada for more remittance information to support automated reconciliation and straight-through processing. That means more information – such as information from multiple invoices – can be sent with a single electronic payment, reducing the need for manual intervention and re-keying of data, making business processes more efficient.

Canada is joining numerous countries around the world in adopting ISO 20022 to facilitate cross-border payments, which will also support global competitiveness for Canadian businesses.

ISO 20022 allows the financial services industry in Canada to consolidate the current LVTS, AFT and EDI payment standards into a single, global standard. This will reduce the cost and effort associated with supporting multiple standards, support innovation, and enable third-party service providers and payments system users to receive and generate both payment and remittance data in a single message.

ISO 20022 will provide Canadians with attractive electronic payment options that reduce costs (think fewer and fewer cheques or drafts) reduce inefficiencies over paper-based alternatives.

Support for global inter-operatibility:

Efficiencies in managing/supporting multiple payments standards:

Reduction in use of paper based payments:

By adopting ISO 20022, Canadian payments system users will benefit from:

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The extended Prairie Payments Initiative delivery team

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P r a i r i e P a y m e n t s J o i n t V e n t u r e I n i t i a t i v e ( P P J V ) m a n a g e s t h e P r a i r i e P a y m e n t s I n i t i a t i v e ( P P I ) w h i c h d e l i v e r s t h e P a a S P l a t f o r m I m p l e m e n t a t i o n a n d C U O n b o a r d i n g w o r k s t r e a m s t o c r e d i t u n i o n s .

PaaS Governance

IBM Resource

Part time

PaaS Transition Management Board

IPCC Councils SOW Committees

Operations Committees

3-Way Prairie Central Joint Venture

Future Digital Transform. Office

PaaS Implementation Program Management Office

Program Executive(Michael Devlin)

Program Executive, Existing Operations

(Wilson Griffiths)

Governance & PaaS Strategy(Robin Auld)

Program Integration Manager(Madeline Swalm)

Operations Lead(Mike Boyd)

Products Lead(Scott Lapstra)

Transition Shared Services

Communications(Alex Frison)

Human Resources

Finance & Controls

Legal (Torys)

CU Onboarding PaaS Platform Implementation Team

Lead Payments Experience(Future State)

CU Relations Project Executive (Athavan Thulakanathan)

PM CU Workstream(Reena Pilgrim)

PM Celero Workstream (TBC)

PM Partner & CUPS IS (TBC)

PM Bus. Readiness(Blake Hanna)

CU Relations PM Lead(Amandine Dhennin)

IBM Project Exec Sponsor

(Matt Angelstad)

IPCC / QA Partner(Jeff Mulholland / Mark

Dymond)

IBM Engagement Lead(Namit Agrawal)

IPCC Lead Architect

IPCC Ops Delivery Exec

IBM IPCC Project Exec

(Graham Steele)

Technical & PM

CUPS IS & CUCM Payments

PaaS Complex PM(Margaret Winmill)

Project Controls Officer(Michael Nolan)

CUCM Lead(Kim Robinson)

CUPS Lead(Sean Lesy)

Ian Burns Garth Manness Eric Dillon Caroline Ziober Kevin Sitka

Ian Burns Garth Manness Keith Nixon

BR/Com. Consultant(Daniel Kilgallon)

Employee

Consultant