FUJ00075730 - ICL Presentation on ‘The Horizon Service’ to Frank Field MP - Minister for Welfare Reform

Evidence on official site

Presentation/Demonstratio {CL
n

to
Rt. Hon. Frank Field, MP

Minister for Welfare Reform
Thursday 16th July 1998

FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Agenda

¢ Introduction

¢ The Horizon service
— Requirements / Solution
— Demonstrations
— Banking services at the Post Office

— Payment card
= Fraud savings

= Family budgetting
¢ Summary and close

FEET ON THE GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Requirement

Ss

y,
¢ Automation to: (CL
— enable re-engineering
— improve competitiveness
— kill encashment fraud
— reduce administration
costs

FEET ON THE GROUND ICL Pathway 1998

FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

The Services

° Benefits Agency: ,
— 20+ benefits, £80bn, 900m payments (CL
— Payment Management Service
— Card Management Service
— Fraud prevention and detection
¢ Government Clients: DVLA, National Savings
e Licencing: television, driver, vehicle, fishing

¢ Bill payments: gas, water, electricity, telephone,
cable, LAs

¢ Over 170 services for over 300 clients handling
£125bn pa

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Design Aims
- No technical knowledge ICL

Intuitive, event driven

Allows user to concentrate on quality
Customer Service

Very high security

Fast and resilient

Smart card enabled from Day 1

FEET ON THE GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Solution
eles

az
gale POCL POCL

BA CAPS Clients ; y,
Card / I
Management — Lf

J
“ f Transaction
1 - Inventory Cc i
Information entral Services
CMS PAS. oBCS Help External Processing Management
Desk Links I Layer
I Backbone Network
~ ~ Correspondence TMS Layer
; =I Servers
a ~~ (federated for resilience)

Systems Management. I I

aa ~— _— ——
< “(Branch ISDN Network » 3
~ » — iy

Post Office
Layer

GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Demonstrations

® Release 1C Demonstration

y,
— Live in NE & SW iCL
— 204 Post Offices

— Paying Benefit to Customers
NOW!

® Release 2 Demonstration - National Rollout
— BES

— OBCS

— EPOSS

— APS

FEET ON THE GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Banking Services at the
Post Office

BoB Gre ON ne GROUND
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Product Definition

Withdrawals

Deposits (CL

— Savings, utility payments, pension contributions
Account balances
Opening new accounts
Investment information

Card based services
— Magnetic stripe cards

~ Smart cards
Pin pad authorisation

BoB Gre ON ne GROUND
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

POCL’s Position

- Strengths ‘CL

— 45 million transactions p.a.

— National Savings, Girobank,
Lloyds/TSB, Co-op

— Face to face personal service
— Reach in community

— Secure and Trusted

— 28m customers per week

FEET ON THE GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

The Banks

¢ Banking trends that support POCL iCL
— Closing branch networks
— Reduced reach in community
— Poor access to rural customers
— Additional choice for customers

— Avoid non-profitable counter
transactions

— Move to sales offices

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

POCL’s Position

e Key Challenges ‘CL

—~ £1.1bn cost base : current transactions
are expensive

— Market VERY competitive. Requires:
- Low price to client
- No charge to customer
- Well funded, aggressive marketing

~ Access to ATM networks (e.g. LINK)
- Additional transaction charges
- Requires agreement from the Banks

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

The Banks

e Key issues for the Banks iCL

~ Access to ATM networks for POCL
- Existing revenues from ATM transactions
- Competing ATM networks

— Risk of customers being poached
at the Post Office

— Charge from POCL - will only pay a low
fee

— Transaction charges to customers
— Channel of last resort

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

The Business Proposition

¢ Natural core business for POCL

¢ Supports ‘social banking’ ICL
¢ Market exists - potential growth area
BUT:

¢ Uncertain volumes
— Customer incentivised to other channels
— Charges to Banks / Charges to customers

* Requires POCL to price competitively
¢ Incremental investment
¢ Requires ‘permission’ of the Banks

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Progress to Banking - The Way

Forward
e Issues for moving to ACT

y,
@ Requires banking in national Post Office (CL
network to provide access

@ Replace BA revenue - remove dependency
e Control timing of move to ACT

e Support POCL in re-engineering the network

e Re-engineering will take time
(5-10 years)

e CARD or PAPER?

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

Benefits of Payment Card over
Paper

e Reduced paper processing costs (CL
e Retain flexibility for customer

e Fraud savings

Delivers Good Value

FORCE EON: THER GR OUND ICL Pathway 1998

FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Retain Flexibility for Customer

Payments at ‘foreign’ offices

RPOI - Restricted to nominated Post Office ‘CL
Temporary tokens

Emergency payments

Temporary agents

Carded casual agents

Standing / permanent agents

Alternative payee - Child benefit

Milk tokens

Contingency payments - BA system failure
Appointee - court appointed

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Fraud Savings

e Positive authorisation of all payments iCL
e Counterfeit/lost/stolen cards

e Cardholder verification
— Pick Up Notices (PUNs)
— Extended Verification Procedure (EVP)
— Signature and card detail checks

e Fraud Risk Management Service
— Monitoring, trend analysis
— Investigation support

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Fraud Management - ICL
Vision
(CL

e £7bn - fraud & overpayment
— Low value, high volume (majority)

~— High value, low volume (landlords/org crime)

e Big target - but to reduce by 75%:
— Very high cost/ long timescales

e Low investment / quick wins
— Use automation for low value, high volume

~ Support fraud teams for high value, low
volume

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The BUT Re

eClaim Support G
eFraud Investigation - profiling, sampling, evidence © Government

eClaim Verification - sampling of batch updates Services
Y)
(CL
e System
Services
(ICL)
eNotify change of circumstances
eClaim inspection e Customer
eHB Payments Ss .
eBA Payments ervices
eDebt Recovery

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Benefits of Payment Card

e Up-front fraud savings
e Starts to create data matching information , CL

e Consistent with, & 1st step towards, long term
anti-fraud vision

e Helps address issues on quality of BA data
e Visible sign of govt. use of cards to attack fraud

e Use card as basis of other anti-fraud services
at Post Offices
—~ Claims
— Change of circumstances
—~ Housing benefit payments
— Debt recovery

e Reconciliation of payments

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Benefits of Payment Card

e Long term solution for ‘tail’ ‘CL
e Gets people used to cards for benefits

e Puts in place card for cross govt. single
citizen card

e Enhances modernity of Post Office
—~ Demonstrate modernity to clients and banks
—~ Demonstrate modernity to POCL’s customers

e Delivers quick win in ‘social banking’
— Family budgeting service

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Social Banking

e Definition - includes:
y,

~ Provide more than just money ICL
~ Provide tools to help manage finances
~ Banking for the unbanked/cash minded

e Key issues in short term:

—~ No direct government funding

~ Target market traditionally unprofitable for
banks

— Prohibitive costs of statementing and
a/c management

~ Nocross-selling or related business

ONDDOT a
PERCE FON: THE GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Olruvion Tor tne Or

Term

e Provide Family Budgeting Service
— Target customers - card based benefit recipients ‘CL
— Target clients - utility companies
— Register with utility for family budgeting payment
— Swipe of benefit card prompts bill payments

FEET ON THE GROUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Olruvion Tor tne Or

Term

e Provide Family Budgeting Service
— Target customers - card based benefit recipients ‘CL
— Target clients - utility companies
— Register with utility for family budgeting payment
— Swipe of benefit card prompts bill payments

e Key wins:

~ Cost of statementing and a/c mgmt borne by utilities

— Providing more than just money - tool to help manage
finances

~ Govt. delivers 1st phase of social banking at no cost

— Govt. (POCL), Industry (A&L), and Utilities working
together to deliver government initiative

— Utilities reduce debt management problems

FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Summary
e For BA e For Customers iCL
— reduced administration - easy transformation
costs to full banking
— reduction in fraud — help with family budgeting
— data cleansing — helps social inclusion
e For Post Office e For HMG
— drive into Financial — route to delivery of
Services automated services
— a modern automated — attack on fraud
service

— preserved network

FORCE EON: THER GR OUND ICL Pathway 1998
I PASICMS
HELP DESK Y
De La Rue

Ey. eS

Belfast

FUJ00075730
FUJ00075730

The BUT Re

Lytham Systems
Management,

BOOTLE DATA

Card Production

*

CENTRE
\ HELP DESK
) ; we
(\ Energis ey Nae
/ / Command

Centre

ICL Pathway 1998
FUJ00075730
FUJ00075730

Benefits of Card over

Paper

Reduced paper processing costs } Delivers ICL
Fraud savings while still flexible } Good Value
Starts to create data matching information

Consistent with, & 1st step towards, long term
anti-fraud vision

FEET ON THE GROUND ICL Pathway 1998

FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Fraud Management - ICL

Vision a

e Long term approach e Quick Win Approach

— 1 é

7 pig target (£7Bn) e Data Matching (CL

g ,’ — detection
— long timescales — deterrence
- BUT — prevention

e Short Term Wins e Inputs

— tackle high risk areas — claims details

— use automation on high ~ change of

volume but low value circumstances

fraud —
— support for fraud teams ° Investigation support
for low volume, high - profiling

value fraud - sampling

— © UCT]
FORCE EON: THER GR OUND ICL Pathway 1998
FUJ00075730
FUJ00075730

Ey. eS ON The FOUTS RE

Fraud Management - ICL

Vision a

e Long term approach e Quick Win Approach

— 1 é

7 pig target (£7Bn) e Data Matching (CL

g ,’ — detection
— long timescales — deterrence
- BUT — prevention

e Short Term Wins e Inputs

— tackle high risk areas — claims details

— use automation on high ~ change of

volume but low value circumstances

fraud —
— support for fraud teams ° Investigation support
for low volume, high - profiling

value fraud - sampling

— © UCT]
FORCE EON: THER GR OUND ICL Pathway 1998