1. ATM Outsourcing for Financial Institutions
Presented by:
Oscar Dal Bello, Director, Business Development

2. Presentation Outline eFunds Overview ATM Industry Trends
A New Way of Thinking
Predications for the Future

3. eFunds Overview Headquartered in Scottsdale, AZ USA
Publicly traded NYSE: EFD
5000+ associates located in the USA, UK, Australia, Canada and India
Major Lines of Business
Global Outsourcing
Expertise in back office, contact center, IT and ATM outsourcing services (manage 17,000+ ATMs)
Electronic Payments and Risk Management
CONNEX® processes over 26 billion transactions per year
DebitBureau® is the world’s largest debit database
Customer Focus
Over 8500 customers worldwide
Financial services, retail and teleco
First, I would like to tell you a little about who we are and why we are qualified to speak on this subject.

4. ATM Industry What is driving the ATM outsourcing trend?
The ATM industry is driving the trend for outsourcing (as well as Financial Institution’s low margins- etc) as the ATM industry moves into a more mature state- with lower margins and more competition.

5. 2002 Global ATM Deployments 2002 Global ATM Deployments
ATM Industry Trends
ATM deployments have surpassed one million terminals worldwide.
2002 Global ATM Deployments
2002 Global ATM Deployments
Asia/Pacific Rim
Latin America
Latin America
Asia/Pacific Rim
North America represents the greatest share of deployments, followed by the EMEA and Asia/Pacific regions.
There are so many ATMs throughout the world, that the ATM is now almost considered a commodity. In developed countries, there is barely any room for incremental growth- except in the replacement of ATMs or in newly built locations.
North America
EMEA
EMEA
North America
Worldwide Total: 1,075,399 ATMs
Source: Global ATM Directory, Dove Analysis
Source: Global ATM Directory, Dove Analysis
Worldwide Total: 1,075,399 ATMs

6. ATM Industry Trends
The number of ATMs deployed worldwide are increasing, but at a decreasing rate
Even though the number of ATMs throughout the world is increasing, the growth is increasing at a decreasing rate. This is due to market saturation.
Retail Banking Research Ltd 2001, 02
* 2003 and 2004 are projected volumes

7. ATM Industry Trends Summary
Mature
Market
Fewer Transactions per ATM
Decreased Rate of New ATM Deployment
Burgeoning POS Market
Market Consolidation
ATM Deployers
EFT Networks
EFT Processors
New
Legislation/
Investment
ADA
Triple DES
Check Truncation Act
Smart Cards
New Functionality
Check Cashing
Deposit Taking/Check Imaging
Prepaid Applications

8. Motivation for Industry Change
Profitability Cannibalization Legislation
ATM Industry
Financial Institution Market
Competitive Marketplace
Brand Focus
Cost-conscious
Customer-service oriented
Nearing Maturity
Profit Driven
Consolidation
Both the ATM industry and the financial institution market need to do something to grow additional revenue at the ATM.
A need for a win-win solution.

9. A new way of thinking

10. Scope of ATM Outsourcing
Processing
Professional Services
Training
Equipment sales and
management
Settlement and
reconciliation
Data Line Support
24X7 Multilingual
Technical Support Desk
1st and 2nd line
maintenance
Vendor Management
Installation and
relocation services
Web-based monitoring
and reporting
Cash management

11. Who is Outsourcing? Royal Bank of Canada TRM Corporation
Vendor Managing
1st/2nd line maintenance
Cash replenishment and inventory management
Status monitoring and helpdesk
Installation
RBC maintaining telecom
TRM Corporation
eFunds Managing
Cash replenishment
Telecom
Processing
Vendor Management
Outsourcing can and is occurring with both FI’s and retailers. In addition to these two deals, Citibank of India recently signed an ATM outsourcing agreement with Euronet, which includes all aspects of outsourcing. Furthermore, Euronet recently installed a switch in India.
Detailed info:
The Indian arm of Euronet Worldwide, has bagged a contract to manage the ATM services of Development Credit Bank (DCB).  Euronet also expects to soon finalize ATM management contracts with Bank of Punjab, Centurion Bank and Karnataka Bank.
DCB is the latest bank to outsource its ATM management to Euronet. Three others which have previously outsourced their complete management of their ATM programs to Euronet are IDBI Bank, Standard Chartered and Citibank.
UTI and Corporation Bank have outsourced only their shared ATM services to Euronet India under its Cashnet network. With the addition of the newest financial institutions, Cashnet now includes about 3,000 ATMs.

12. Rationale for Outsourcing
Reduce channel complexity
Focus on core competencies
Reduce staffing costs
Single point of access
Reduce upgrade costs
Deliver new products to market faster
Extend functionality without development costs
Challenges
Reduced control of the ATM program
Reputation is at risk
Goals and objectives not met
Contractual issues
Loss of in-house expertise

13. Reasons to Outsource
The majority of respondents in a recent UK survey concluded that improved customer service was one of the main reasons for outsourcing
The main reasons given for not outsourcing payment processing are
a.      risk of losing control
b.      lack of experience in managing outsourcing service providers.
There are a number of reasons that make outsourcing transaction processing attractive to respondents, but the two main drivers are
c.      better customer services
d.      cost savings
 The single most important reason for outsourcing, when the issue is probed further, is cost saving. This is particularly related to savings in people and infrastructure.
 The main criteria used to measure the success of outsourced transaction processing were identified as
e.      Improved operations and processing as a result of better efficiency and performance
f.        Availability and reliability
 This brings about cost efficiencies and more opportunities for better use of resources, which will enhance business performance and deliver better profits but, providers have to be able to demonstrate these benefits.
eFunds Commission Report: Metrica Research Limited 2003

14. What to look for in a program
Financially stable partner
Pay as you go program
Branding option
Few surcharge-free programs allow branding
Value added products and services
Industry knowledge/expertise
Commitment to outsourcing

15. eFunds Corporation & A Credit Union Network
A Case Study
A Partnership
eFunds Corporation & A Credit Union Network
eFunds managed several ATMs for a credit union network in the United States. These ATMs were located at convenience stores in Michigan. They also outsource their switch to us.

16. Case Study The Issues Credit Union Network’s Requirements
Excellent ATM uptime
Better customer service
Greater customer convenience
The credit union wanted eFunds to manage these ATMs (we did everything, but they owned the equipment) so that they wouldn’t have to hassle with the time and expense of managing the ATMs for their retail partner. In addition, they ran all of their transactions through our switch for their entire ATM base (thousands of ATMs).

17. Case Study The Solution
Credit Union Network outsources the following services to eFunds:
Processing for EFT Network Switch
Terminal Driving
Authorization Services
Management of CO-OP ATM Network at select locations

18. Case Study The Results 100% availability (processing)
20% increase in transaction volume through EFT switch in 2003
90+ ATMs Managed by eFunds
As a third party, experienced in electronic payments and ATM managed services, we proved to this financial services provider that we could out perform their own standards by offering them 100% availability at their ATMs (through processing). In addition, we increased their transaction volume through their switch and successfully managed 90 of their ATMs for their retail customer.

19. Predictions for the Future

20. Predictions for the Future
Financial Institutions (FI) will become more open to outsourcing ATM operations given the potential benefits of 3rd party partnerships
Outsourcing expected to grow as FI’s reduce non-core operational expenses
Increase in bundled offerings as one offering
Open networks with increased complexity and need for regular software and functionality updates
Formation of strategic partnerships
Outsourcing Today:
Worldwide ATM industry nearing maturity
Outsourcing provides the industry with a new opportunity
Few outsourcing relationships exist today
All markets are faced with increasing regulatory issues and other complexities related to ATM management

21. Questions
Contact Information:
Oscar Dal Bello, Director, Business Development
Ph: x 201
Toronto, Canada