By Andrew Deichler, reporting for the Association for Financial Professionals (AFP) and bobsguide
Thousands of payments professionals gathered in Baltimore, US, on Monday 30 April for the start of the NACHA Payments 2012 three-day conference. The three main themes of this year's gathering, which attracted in excess of 2,500 attendees, were innovation, collaboration and education.
The innovation theme was picked up by Janet Estep, president and chief executive officer (CEO) of NACHA, who welcomed the crowd at the start of the opening general session by referencing the rise of the mobile channel. Estep briefly ran through a number of significant developments that the current payments ecosystem is seeing, including the adoption of automated clearing house (ACH) and mobile payments, changes in healthcare payments in the US, the single euro payments area (SEPA) and many more. She noted that while there are more than 150 educational sessions at the NACHA Payments 2012 show, that still only represents about a third of the presentations that were submitted to NACHA. “As you can all see, change is happening, and the future is arriving fast,” said Estep.
For the main portion of the morning session, entitled 'Innovation, Flexibility and Vigilance in the Changing Payments Environment', David Stewart, a senior consultant at McKinley & Co, interviewed Steve Streit, the founder and CEO of prepaid card giant, Green Dot. They discussed Green Dot’s growth from a small start-up to the 3,000-person, publicly traded company it is today.
Streit and Stewart delved heavily into how the prepaid card industry, and thus Green Dot itself, has changed over the past decade with innovation, risk and regulation coming to the forefront of the discussion. Streit explained that Green Dot recently hit a major milestone of its own when bought a bank in November. “It was a four-year endeavour,” he said. “About two years [were spent] in the regulatory review process alone, in order to acquire the bank. So that decision was very exciting for us and changed the company again.”
Streit believes that prepaid cards will continue to become more prominent in the payments sector. He explained that many consumers turn to prepaid not because of issues with their banks, but because of fees and other problems associated with credit cards. “There are times I believe that the credit crisis probably created more [prepaid card] sales than any particular dislike for banks in general,” said Streit.
Two series of concurrent sessions followed the conference opener. In the panel discussion, 'We May Share a Border, But Not Our Banking Systems – Canada Versus the US', representatives of TD Bank Group and Enbridge weighed in on the key differences between Canadian and US banking.
TD Bank’s David Jamison, a certified treasury professional (CTP) and vice president of corporate cash management; Dennis Parker, associate vice president (AVP) of cash management services; and Eric Schwab, managing director of corporate cash management; plus Enbridge’s Joan Verleih, a certified management accountant (CMA) and CTP, and senior advisor on cash management and banking, all looked at particular banking terms in each country, legal aspects of the American versus Canadian systems, payment processes and common practices on both sides of the border.
The panel also provided a look into the recent final report by the Canadian Task Force for the Payments System Review. The report advocated an overhaul of virtually the entire payments system in Canada, which the Task Force believes is running the risk of falling behind the rest of the world, due to a lack of modern digital payments and a reliance on antiquated payment methods, particularly cheques.
In an interview after the session, Parker said that he thinks the Task Force is right in the sense that they are acknowledging payments are evolving, but they are likely too focused on consumers. “They tend to put a lens on consumer transactions and say, ‘consumers want to have mobile and consumers want to have electronic payments by email’. And that’s largely because we are consumers too. But the reality is, my bank will never let me pay all the bills that I need to pay for my organisation from my BlackBerry. I mean, that’s just not proper segregation of duties, it’s not proper sign-off, and it’s not proper controls. As consumers we don’t think about controls, but as bankers, and as business people, we think about controls.”
In the session entitled 'Government or European Business? Get Ready for E-invoicing', Mike Burnum, director of the agency enterprise solutions division at the Financial Management Service (FMS) at the US Department of the Treasury, and Christopher Conn, a senior business manager with SWIFT, explained how companies that conduct business with the US government, and corporates doing business in Europe, must adjust to electronic invoicing (e-invoicing).
Burnum explained that the US Treasury Department, in support of President Obama’s ‘Campaign to Cut Waste’, mandated that all treasury bureaus implement the Treasury’s Internet Payment Platform (IPP) by the end of fiscal 2012. The Treasury commissioned a study to see just how much adopting IPP across the federal government would reduce the cost of entering invoices and responding to enquiries. “Conservative estimates would be about $450m annually for all of the federal government,” said Burnum. “We also adopted this as a high performance goal; it’s one of the Treasury's key initiatives this year and next.”
The session entitled 'Technology Trends in Corporate Cash Management' focused on how corporate treasurers continue to invest in enterprise resource planning (ERP) systems to enhance their multiple banking relationships. Michael Balk, director, regional head solutions, Standard Chartered Bank, explained how organisations are using a plethora of new technology to improve visibility of their global cash positions and cut costs related to payments.
Conversely, Steve Perry, CTP, a certified public accountant (CPA) and global treasury manager with Catholic Relief Services, discussed his organisation’s work in primarily unbanked countries, where ordinary mobile phones are often the primary device to store money and make payments. Kenya being a prime example of this innovation.
Afternoon General Session
Most of the 2,500 conference attendees gathered for the special industry agenda session in the afternoon entitled 'Microsoft and the Financial Industry: Working Together to Turn the Table on Cybercrime'. This session featured an in-depth look at the recent collaboration of Microsoft and other organisations to crack down on the Zeus family of botnets.
The discussion featured representatives from four of the key players in the anti-Zeus botnet initiative: NACHA CEO, Janet Estep; Richard Boscovich, a senior attorney with Microsoft; William Nelson, president and CEO of the Financial Services Information Sharing and Analysis Center (FS-ISAC); and Greg Garcia, an internet security advisor and former Department of Homeland Security (DHS) assistant secretary for cyber security and communications.
According to Boscovich, the group, “decided to move up the chain of the criminal enterprise and focus on the mechanism by which they actually leverage compromised computers, to see how we could address the problem at that level.”
In addition to detailing the Zeus bust, the panel was also able to reveal the impact it has had. NACHA itself had been affected directly by this botnet, as it had been sending out malicious emails to people and saying they were from NACHA. Estep said these emails peaked in August 2011. “Over the past couple of months though, starting at the beginning of 2012 until the time right before the attack, we were averaging about 11.5 million emails per week that were pretending to be NACHA,“ she said. “After the [bust], those phishing emails dropped by 90%.”
Nelson joked that “you don’t mess with NACHA”. On a more serious noted, he added that the government has a 99% success rate in tracking down bank robbers, but a 1% rate of catching cyber criminals. But by using this new approach, the infected computers have been taken over by Microsoft and, “26% of all Zeus is now under Microsoft auspices and they are controlling it,” he said.
The panel also weighed in on the Cyber Intelligence Sharing and Protection Act (CISPA) and other cyber security bills being passed around the US capital in Washington. They all appeared to agree that information sharing between the private sector and the government is the best method to fight fraud.
“There’s a lot of information out there that has no business being top secret,” said Garcia. “There’s information that is critical to the protection of critical infrastructure, and that needs to get into the hands of those who are owning and operating that infrastructure. There is a culture in the government that needs to change, away from ‘need to know’ to a culture of ‘need to share’.”