The Evolution of the Payment Systems Romanian Banking Forum 2002 Bucharest, 19 November 2002 The Evolution of the Payment Systems Gianfranco Guidolin, International Business Development

European Financial Scenario Main Drivers New forces are driving the evolution of the European Financial Market: Financial market infrastructure consolidation Introduction of the Euro Economic integration Harmonisation of existing domestic infrastructures

European Financial Scenario Economic Integration and Introduction of the Euro Euro means: thanks to price transparency transaction cost reduction common rules and legislation use of standards (IBAN, BIC) Competition Integration

European Financial Scenario Financial market infrastructure consolidation Consolidation means: harmonisation facilitation of cross border transactions clearing and settlement cost reduction trading as a commodity greater competition efficiency less fragmentation clearing and settlement integration standards

European Financial Scenario SEPA (Single Euro Payment Area) Domestic Payment Systems Local Organisational Solutions National Communication Standards Need for Payment System Harmonisation Integration of domestic and cross-border payment infrastructures Same costs for both domestic and pan-European transactions Reduction of clearing and settlement cycle time Fair and open access

Security in the Financial World Security is a common thread throughout the financial world Strategic approach to security: integrated global solutions instead of single product/service solutions Co-ordination between physical and IT security From IT security to business security Non repudiation ever increasing importance as market dimensions grow SECURITY Financial Services Interbanking Companies Banks Users SECURITY IS A STRATEGIC ISSUE

The key framework to support the evolutionary process FINANCIAL MARKET INNOVATION INTEGRATION Up-to-date, competitive enabling infrastructures: the foundation on which the re-engineering process must be built ensuring efficiency, effectiveness and security

Infrastructure Services SIA: 25 years of expertise A competitive offering based on innovative, secure and integrated technology Data Base Networking Infrastructure Services Application Services Front End Security Since 1977 SIA is the main service provider for Italian financial Institutions, Banks and financial Operators Value and innovation for the financial market

The SIA Network The central infrastructure for all financial services with the highest levels of security and reliability: Düsseldorf New York London Frankfurt Paris Amsterdam Madrid Basel Tokyo Lisbon Athens RUPA SIAnet SIAnet delivers all the financial transactions to national and international members of the financial community Satellite infrastructure to deliver information to financial markets Open multi-protocol architecture in optical fibre (wide-band MPLS) Over 3,600 billion bytes transported with SLA higher than 99,999% in 2001

SIA: Security Excellence First Italian company certified BS7799, Vision 2000 Charter member of the Global Trust Authority First Certification Authority recognised by AIPA SIA designs, develops and manages critical services with a help desk for 24x7x365 guaranteeing high service availability levels Our commitment SIA Group: Strategic Partnership: A complete and competitive offering for all security needs

Payment systems Payment Value Chain SIA manages the Italian payment system services: Retail Payment Clearing Subsystem & Wholesale Payment System Exchange Procedures Payment Value Chain Payment Initiation Payment Management Clearing & Settlement Pre-settlement Data collection Guarantees Payment System Validation Tickler Pre-settlement Claering & Settlement Security

A recent international success SEPA - EBA (Euro Banking Association) EBA STEP2 is a pan-European answer to banks needs for retail payments: EURO1 TARGET A n B Settling Direct Bank Indirect 2 1 EBA STEP2 Step2 is aimed at processing high volumes of commercial and retail payments sent to the system through a secure network

Markets and Access to Trading Information and Access Markets Trading On Line Order Collection & routing Info collection & distribution Market access Trading Mngt Matching engine Data dissemination Webtrade Italian Stock Exchange Equities, Derivatives, Treasury and Corporate Bonds MTS, EuroMTS, MTS Japan, MID TradeImpact - A T S Global order routing SWIFT ETC Service Provider Financial Info Monitor Trading on-line Trading technology SIA is the leading IT provider for the entire value-chain of the financial markets processes

IT outsourcing services An attractive option SIA’s outsourcing offers a reliable approach to addressing the challenges ahead. SIA has already created a Win-Win Relationship with: Monte Titoli TLX eMID Borsa Italiana Euroyard CCG Banca d’Italia Banca Profilo MTS

SIA: your reliable partner SIA provides competitive, innovative and secure IT solutions thanks to the right combination of technical expertise, vertical know-how and cost efficiency Figures in 2001 Most recent success Revenues: € 200 million (+10 %) Net Profit: € 6,4 million (+22 %) Italian clients: over 1000 International Clients: over 300 (+ 20%) Infrastructure investments: € 47 million SIA chosen by the EBA as the technology partner to build and operate the new pan-European Automated Clearing House for mass payments in Euro ABE EBA www.sia.it

The leading IT provider for the financial world