NCR Corporation, an international company with Canadian software operations based in Waterloo, Ontario, has a well-established global reputation for excellence with its hardware products, including computer terminals, credit card processors and Point-of-Sale systems. With its multibillion-dollar software division, NCR is taking the lead by improving omni-channel technology to develop faster payment rails for the financial services sector.

Consumer expectations fueling fintech revolution

The demand for 24/7/365 access to faster financial transactions is generating the need for more customer-centric fintech solutions. Canada is one of approximately 29 countries currently exploring faster payment rails with real time gross settlements (RTGS), a system where the transfer of money takes place from one bank to another on a "real time" basis without netting debits with credits. NCR's payments software division in Waterloo is building applications and technology that are helping develop real time payment processing networks and speeding up global commerce. According to Andrew Short, NCR's Business Development Manager, New Product Initiatives, the company is well positioned to lead the development of this technology.

Here are some real-world examples of fintech innovation in action:

Scenario 1: A teller posts a cheque deposit for a new client's account. He immediately receives a warning that the cheque is fraudulent. The client is detained pending further research on the cheque before he can leave the bank.

Scenario 2: A merchant processes a credit card payment for a big-ticket item. In seconds, she receives confirmation that the funds have cleared.

Scenario 3: An international student needs funds for the new semester's tuition. Her parents transfer the funds from their overseas bank to their daughter's bank in Waterloo. Daughter and parents receive simultaneous confirmation that the transaction has been processed and cleared and the daughter is able to pay her tuition the same day.

Faster payment rails in the financial services sector

Both consumers and the financial services sector are looking for omni-commerce processes. "The technology needs to be robust and scalable. It needs to be safe, encrypted and secure. In addition, every country in the world has strict compliance and regulatory controls that need to be built to comply with both national and international banking standards," said Short. International money laundering regulations require detailed record keeping to track funds from start to finish, and to provide a history when required. The financial services community was at first reticent to adopt some aspects of payment digitization, but is now driving the demand for better technology.

RTGS currently exists, but only for transactions completed between accounts in the same bank, or for interbank wire transfers that tend to be high value, low volume because the fees can be prohibitive for consumers. Third party payment intermediaries, such as PayPal, can fill a void in the low value, high volume transaction realm. However, fees can be costly. RTGS between banks would meet both consumer and merchant needs.

"NCR is working on a real time payment settlement infrastructure that will eliminate the need to place a hold on a cheque, and allow for faster fraud detection. We are developing a full portfolio of payment products including a real time fraud portfolio. The speed of banking is picking up, and it's providing opportunities for NCR. In this space, we compete against smaller companies that focus on one aspect of the solution. We have global trust and reputation and we can provide a comprehensive solution for our global clients," said Short.

Leveraging Ontario talent to think in new ways

Neil Boyd, Vice President of Software Engineering for Financial Services at NCR said the company is well positioned to address changes in the financial services industry, and their proximity to the University of Waterloo and the Communitech hub has allowed the company to leverage innovative theory. Computer Science, Mathematics and Engineering faculties are involved in the research and in testing the limits of technology.

"We are looking at new applications for existing technology, as well as creating synergies across platforms. NCR has a long established relationship with intern and co-op opportunities which provide us with access to a pool of students, academics and entrepreneurs for thinking in a different way. Start-ups at Communitech are developing applications and providing opportunities to enter into strategic partnerships with NCR. Students are fueling innovation and fine tuning the user experience while cutting-edge theory and research is being developed at University of Waterloo."

Outdoor University of Waterloo sign with students walking in the background.

An international mindset

Back-end processes in the international banking system are relatively consistent, but technology must be customized to meet each country's particular regulatory requirements. "NCR already deals in most countries; we understand international business requirements. We have the expertise to be able to scale the technology to meet international specifications," said Boyd.

Currently, a transaction that is posted must be examined and confirmed or rejected. That can take three to five days in Canada, and up to 30 days internationally. The ability to process payments more efficiently can reduce costs, speed up global commerce and lower the risk of fraudulent transactions.

New opportunities for financial institutions

"Digitization is driving omni-channel consumer expectations and can streamline routine banking transactions," said Boyd. Currently, opening a new account or performing an investment purchase or redemption requires a great deal of paperwork and multiple in-person meetings. Historically, bank transactions tended to operate in isolation. A teller transaction and an investment transaction required multiple appointments with different bank representatives. "Sending routine paperwork to a client in advance can streamline the process. Finalizing the transaction may still require an in-person meeting, but signing the documents will take mere moments, leaving the rest of the appointment free for more specialized financial planning and advice. It's a win-win opportunity for both consumers and financial institutions," said Boyd.

While older Canadians may be wary of sharing personal information, millennials are willing to share data with trusted sources. This is providing opportunities to form strategic partnerships that use integrated predictive data to create a better consumer experience. "The ability to immediately analyze spending patterns based on predictive data leads to not only quicker fraud detection," said Short, "but also the ability to customize consumer purchasing and marketing. A couple who begin to purchase diapers with a bank credit card could receive information about starting an RESP. Loyalty points can trigger coupon offers that are personalized to spending habits. There are opportunities for the financial services industry to create strategic alliances for mutual benefit."

"Financial services are embracing digitization. We are working on technology that will allow a consumer to begin a transaction on their smartphone, and then complete it with a bar code or PIN at the ATM of their choice, no bank card required. Consumers want immediate financial access and are challenging the traditional banking notion of siloed transactions requiring multiple trips to the bank because a teller cannot also set up an investment account. Streamlining routine transactions provides a significant ROI for the financial services community, and builds goodwill with the consumer base. Banks who offer these kinds of services will attract customers and NCR is leading the innovation behind it," said Boyd.

"There will always be a need for face-to-face banking," said Boyd. "The idea is to use those opportunities as value-adds for consumers.

The strategic advantage of Ontario's Technology Triangle

"[Consumers] want quicker access to funds, and constant accessibility to pay bills and complete transactions. They are driving innovation in the financial services community. Faster payment rails and real time gross settlement provide a bigger ROI for financial institutions, lower financial risk because fraud detection is quicker, and can streamline routine processes to meet consumer demand. With our location in the heart of the Ontario Technology Triangle, we can build strategic alliances with entrepreneurs while using the latest technology and research coming out of the local universities. NCR has already established a global reputation for excellence through our hardware division, and now our $2-billion software division is making its own name. We are uniquely positioned for success," concluded Short.

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