Worldwide Enterprise Payments 2005

Vendor Profiles: Part One

Payments Advisory Service

MARKET PLAYERS #FIN202197

www.financial-insights.com

Aaron McPherson

FINANCIAL INSIGHTS OPINION

The enterprise payments market is complex and rapidly evolving, with
a wide variety of vendors approaching it from many different angles.
F.508.988.6761

The market has not been growing as fast as it might because vendors
have had difficulty positioning their products in a way that provides
banks with a clear and compelling ROI. Financial Insights finds that:

● Vendors are grappling with bank customers that still tend to view
P.508.620.5533

their payment challenges from the perspective of the payment silos

(e.g., card, check, automated clearinghouse [ACH], and wire), and
thus have difficulty understanding the value of a solution that
works across silos.
Global Headquarters: 5 Speen Street Framingham, MA 01701 USA

● Vendors themselves tend to view the market from the perspective

of their existing customers, overlooking emerging opportunities,
particularly in the areas of corporate cards and check image
exchange. This point of view limits their ability to present a
compelling ROI to multiple customers within an institution.

● Financial institutions need to give their payment councils real

technology budgets so they can make investments in the common
infrastructure that will be necessary to take advantage of new
opportunities in financial supply chain management as well as
drive out cost and inefficiency from existing systems.

● Financial institutions should take another look at the offerings of

the vendors profiled in this report. The industry has come a long
way in the past two years, and solutions that were immature at first
glance have now matured. Although it is unlikely to find a
complete solution, the financial institution can nonetheless save
time, reduce costs, and minimize risks by using prebuilt
components from outside vendors in assembling its enterprise
payments system.

July 2006, Financial Insights #FIN202197

Financial Insights: Payments Advisory Service: Market Players
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TABLE OF CONTENTS

In This Report 1
Brief Description of the Solution ............................................................................................................... 1

S i t u a t i o n O ve r v i e w 3
The Competitive Landscape ..................................................................................................................... 4
Segmenting the Market............................................................................................................................. 4

T h e M a r k e t P l a ye r s 5
Solution Gap Analysis............................................................................................................................... 5
Compare and Contrast ............................................................................................................................. 5

Future Outlook 11
Market Trends .......................................................................................................................................... 11

Essential Guidance 12
Actions for Financial Institutions ............................................................................................................... 13
Actions for Vendors .................................................................................................................................. 13

Learn More 14
Related Research ..................................................................................................................................... 14
Methodology ............................................................................................................................................. 15
Appendix: Provider Profiles ...................................................................................................................... 16

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LIST OF TABLES

P
1 Enterprise Payments Market Segmentation................................................................................. 5
2 Vendor Positioning in the Enterprise Payments Software Market: Capability to Execute............. 6
3 Vendor Positioning in the Enterprise Payments Software Market: Product Competitiveness
— Enterprise Payments Functionality .......................................................................................... 7
4 Vendor Positioning in the Enterprise Payments Software Market: Product Competitiveness
— Payment Methods Supported .................................................................................................. 9
5 Weights for Feature/Function Attributes....................................................................................... 15
6 Weights for Capability to Execute Attributes ................................................................................ 16

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LIST OF FIGURES

P
1 Enterprise Payments Concept Diagram ....................................................................................... 2
2 Comparison of Enterprise Payments Vendors ............................................................................. 10
3 ACI Worldwide at a Glance .......................................................................................................... 17
4 Bottomline Technologies at a Glance........................................................................................... 20
5 Clear2Pay at a Glance ................................................................................................................. 22
6 Dovetail Systems at a Glance ...................................................................................................... 26
7 Fundtech at a Glance................................................................................................................... 29
8 TietoEnator at a Glance ............................................................................................................... 31
9 Wall Street Systems at a Glance.................................................................................................. 33

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IN THIS REPORT
This report provides a brief overview of the most significant vendors
offering solutions in the enterprise payments space. Due to the large
number of companies involved, we have opted to focus in this
document on the major software vendors; a future Market Players
report will cover the services side.

Brief Description of the Solution

The concept of enterprise payments arises from the observation that all
payment methods share a common set of data elements and functions.
Although a check and a credit card may seem very different on the
surface, they are actually quite similar. Both have a source of funds, a
security model, and a clearing and settlement network. In addition, all
payment methods require certain services, such as risk and fraud
management. However, in most banks, the payment systems exist in
silos, closely tied to particular retail and wholesale product lines. This
setup is convenient for purposes of product development and
marketing, but it increases costs through duplication and complex
integration requirements.

An enterprise payments solution would ideally be a single processing

platform consisting of the key elements shown in Figure 1. These
elements are as follows:

● Payments hub. This intelligent messaging hub includes business

rules for processing multiple types of payments. It is a middleware
platform that serves as an integration hub to other components of
the system. It has the capability to convert payment transactions
from one payment type to another, thus enabling the bank and its
customers to take advantage of the most advantageous combination
of price, risk, and timeliness from different payment networks.

● Payments database. The payments database records the

transaction history for all payment types and feeds additional
databases for reporting and analytics, which consist of databases
and reporting systems optimized for the following purposes:
transaction monitoring and alerts, liquidity management,
management reporting and analysis, and customer inquiry.

● Fee management. This ensures consistent and optimal pricing for

all transactions based on a wide range of factors, such as settlement
time, settlement risk, transaction size, external network fees,
premium services, and customer relationship (e.g., monthly
volume of payments and total assets managed).

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● Security. This verifies the identity of users, authenticates the
source of each transaction, and manages access to data.

● Risk and fraud management. This uses a combination of internal

and external data, including statistical models and databases, to
evaluate the probability that a transaction is fraudulent or violates
money laundering statutes.

● Third-party services. These may include risk scores, databases of

stolen cards or bad checking accounts, or entire components that
are being handled through outsourcing or Web services.

● Access touch points. Access is provided to the system through

various channels, including the Web, telephone VRU, computer
connected to a dedicated line, and kiosks. The same data and
functions should be available through all channels.

● Imaging and data transformation. This converts paper and

electronic transactions into a common messaging format used by
the payment hub.

In practice, as we shall see, an enterprise payments system comprises

many separate units of technology, from servers to databases, some
legacy systems and some newly built. Figure 1 is meant to be a logical
framework.

FIGURE 1

Enterprise Payments Concept Diagram

Fee Security Risk and Third-Party

Payment Types Management Services Access
Fraud
Access Touch Points
Management Risk Scores
Check Clearinghouse Control
ACH Clearinghouse Anti–Money Negative Teller
Fedwire/CHIPS Authentication Laundering Databases
SWIFT Advisor
Card Networks User Risk and Fraud Outsourcing/
Billing
EFT-POS Management Modeling Web Services
Call Center
Data Transformation

ATM
PayPal IVR
Imaging and

Mobile/Wireless
Payments Hub
Eurogiro ATM
STEP1 Least-Cost
Messaging Business Logic Interfaces
STEP2 Routing
Kiosk
EURO1
TARGET
RTGS Internet
CLS Reporting and Analytics
Personal Finance
SIC
Software
EuroSIC Monitoring Management
Cash Payments and Alerts Reporting PDA
Database
Liquidity Customer Mobile/WAP
Management Inquiry

Source: Financial Insights, 2006

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SITUATION OVERVIEW
Driven by the realization that between 33% and 40% of their revenue
is derived from payments, financial institutions are searching for ways
to better utilize their existing payments infrastructure. Key objectives
include:

● Combining transaction data from multiple systems into a single

logical view

● Simplifying interfaces through a common messaging framework

● Centralizing transaction monitoring and exception management to

eliminate redundant operations and improve performance

● Increasing the straight-through processing (STP) rate by reducing

exception rates and automating more of the exception management
process

● Improving fraud detection by building cross-payment system

predictive models

● Reducing the cost of compliance by simplifying and normalizing

payment processes, as well as automating the reporting as much as
possible

● Eliminating redundant functions and leveraging best practices

across the various payment systems

● Reducing reliance on proprietary technology and increasing use of

open, standards-based technology such as Java 2 Enterprise
Edition (J2EE)

● Providing greater transparency and reliability to corporate and

retail customers

● Reducing the time and cost involved in introducing new payment

products by facilitating the integration of new technology with the
existing infrastructure

● Complying with government mandates such as the single euro

payment area (SEPA) in Europe by combining domestic and cross-
border payment systems

This is a big list, and financial institutions are not going to be able to
tackle it all at once. Vendors face the challenge of helping financial
institutions identify quick wins that can produce immediate savings to
finance subsequent investments. Most commonly, we find financial
institutions starting with a single payments database or a payments

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hub. Implementation of a payments hub is usually done initially on the
front end to provide corporate clients with a more efficient way of
initiating and monitoring payments. Later, the back-end systems will
be connected to produce real operational efficiencies. See How to Get
to the Promised Land: Alternative Pathways to Enterprise Payments
(Financial Insights #FIN1626, July 2005) for more discussion of
implementation strategies.

The Competitive Landscape

Enterprise payments software vendors usually have come from another

market segment, either cash management, electronic invoicing and
payment, SWIFT integration, or financial messaging. As a result, they
tend to have strengths that reflect their origins.

Segmenting the Market

We segment the market along two dimensions:

● Where the solution is targeted:

○ Front office (payment acquisition)

○ Middle office (payment hub)

○ Back office (payment processing)

● Payment focus (i.e., retail, wholesale, or both)

There are no exclusively retail payments-oriented vendors in this

report because to date most enterprise payments activity has been
focused on the wholesale side. We examine the reasons for this, and
why it might change, in the Future Outlook section. Instead, we have a
variety of wholesale-focused players, such as Fundtech, Wall Street
Systems, and so on, and a few vendors that cover both sides of the
bank, such as ACI Worldwide and Clear2Pay.

Table 1 shows how the vendors in this report are segmented along the
two dimensions discussed here. Where a vendor plays in more than
one space, it is listed multiple times.

As Table 1 shows, most of the vendors are concentrated in the

wholesale middle-office segment. This is where most of the deals are
today as banks attempt to reinforce their corporate banking
relationships. ACI Worldwide is the only vendor with a presence in all
six segments, although it does not play in all of these segments in
every geography.

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 T ABLE 1

Enterprise Payments Market Segmentation

Front Office Middle Office Back Office

Wholesale • ACI Worldwide • ACI Worldwide • ACI Worldwide
• Bottomline Technologies • Bottomline Technologies • Dovetail Systems
• Clear2Play • Clear2Play • Fundtech
• Dovetail Systems • Dovetail Systems • TietoEnator
• Fundtech • Fundtech • Wall Street Systems
• TietoEnator
• Wall Street Systems
Retail • ACI Worldwide • ACI Worldwide • ACI Worldwide
• Bottomline Technologies • TietoEnator
• TietoEnator

Source: Financial Insights, 2006

As the enterprise payments market develops, we believe that retail

payments will become increasingly important. Already we are seeing
payment methods that were traditionally wholesale oriented, such as
the ACH, being used more and more for retail payments. In the
opposite direction, credit and debit cards, which heretofore have been
almost entirely retail oriented, are experiencing rapid growth in the
wholesale area (particularly in the United States). As the importance of
cards in wholesale payments grows, vendors such as ACI Worldwide
and eFunds (not covered in this report) will have a head start over
those that have concentrated on the current opportunity.

THE MARKET PLAYERS

Solution Gap Analysis

The framework shown in Figure 1 is an "ideal" enterprise payments

system; in reality, no vendor provides all of the components shown for
all payment types over all channels in all geographies. In the following
section, we compare and contrast the vendors on the basis of how well
they fulfill the ideal laid out in Figure 1.

Compare and Contrast

In this section, we compare the vendors along two axes:

● Capability to execute: The ability of the vendor to meet the

requirements of banks implementing enterprise payments projects
(This includes features, functionality, scalability, integration
capability, and so on. See Table 2.)

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● Enterprise payments functionality: The range of functions from
the enterprise payments concept diagram shown in Figure 1 that is
supported, as well as the range of payment methods supported (In
this case, we have divided the ratings into two tables, one for
functional areas and one for payment methods. See Tables 3 and 4.)

Each table rates the vendors on a simple three-point scale: An open

circle represents minimal or no support for the feature listed; a half
circle indicates average support, although there may be significant
gaps; and a full circle indicates superior support. The ratings for each
attribute are averaged to create the bubble chart shown in Figure 2.

To account for the fact that some capabilities are more valuable in the
current market environment than others, we have applied weights to
the values in Tables 3 and 4 to come up with the feature/function
attribute in Table 2. A list of weights, as well as their rationale, is
given in the Methodology section at the end of the report.

T ABLE 2

Vendor Positioning in the Enterprise Payments Software Market:

Capability to Execute

Feature/ Integration Platform Market Geographic

Function Scalability Capability Support Architecture Coverage Penetration
ACI Worldwide ! ! # ! # ! !
Bottomline Tech. # ! # # # # #
Clear2Pay ! # ! ! ! $ #
Dovetail Systems # ! ! ! ! # #
Fundtech # ! ! # # # $
TietoEnator # ! # # # # $
Wall Street Sys. # ! ! # # $ #
Legend: $ Low, # Medium, ! High
Source: Financial Insights, 2006

The attributes in Table 2 were evaluated as follows:

● Feature/function: As explained before, this is simply a weighted

average of Tables 3 and 4 and encapsulates the vendor's ability to
provide a complete solution according to the vision depicted in
Figure 1. Most vendors did not provide a complete solution, and
even ACI Worldwide and Clear2Pay had some gaps.

● Scalability: Scalability reflects the ability of the vendor's software

to accommodate the transaction volumes of a tier 1 bank. Past
experience with tier 1 banks was required to be assigned a full
circle.

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● Integration capability: Integration capability is the extent to
which a vendor's solution can integrate with a wide variety of
software platforms. Reliance on mainframe technology, even if the
company had developed a next-generation version of its product,
would reduce this score.

● Platform support: Platform support reflects the number of

different platforms supported. Here, support for mainframe
systems is an asset, offsetting the deduction in integration
capability. Support for both .NET and J2EE is a plus here. (Most
vendors supported J2EE.)

● Architecture: Architecture measures the modernity of the solution

architecture, with the ideal being a completely component-driven
service oriented architecture (SOA).

● Market coverage: The market coverage score reflects the breadth

of market coverage over the segments defined in Table 1. Multiple
segment coverage gets a better score.

● Geographic penetration: The geographic penetration score

reflects the extent to which a vendor has operations and/or
customers in multiple regions around the world.

T ABLE 3

Vendor Positioning in the Enterprise Payments Software Market: Product

Competitiveness — Enterprise Payments Functionality

Fraud/Risk
Payments Acquisition Payments Hub Payments Database Management
ACI Worldwide ! # # !
Bottomline Tech. ! # # #
Clear2Pay ! ! ! $
Dovetail Systems # ! ! $
Fundtech # ! # #
TietoEnator $ ! ! #
Wall Street Sys. $ ! $ !
Legend: $ Low, # Medium, ! High
Source: Financial Insights, 2006

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The attributes in Table 3 map to the components shown in Figure 1 as
follows:

● Payments acquisition: Payments acquisition is the customer

interface and customer service functions, shown on the right-hand
side of Figure 1 in the box marked "access touch points."
Bottomline Technologies is particularly strong in this area because
its primary market focus is the initiation of corporate payments.
Vendors that are more focused on the back office, such as
Fundtech or Wall Street Systems, have less to offer in this area.

● Payments hub: Payments hub is the central box in Figure 1, and

the rating corresponds to the level of support provided for payment
messaging, rules, least-cost routing, and interfaces. All of the
vendors provide good support for this critical component, which is
why they appear in this report; ACI Worldwide and Bottomline
Technologies are more focused on the payment acquisition side,
which is why their hubs are a little less full featured than those of
vendors such as Clear2Pay, which are primarily focused on this
area.

● Payments database: Payments database is not usually provided

directly by the vendor; instead, the vendor will supply an interface
and a series of data definitions, and the bank can select any of the
leading databases (e.g., DB2, Oracle, Microsoft SQL Server, and
so on) for the actual construction of the database. All of the
vendors do provide databases and reporting functions for the
features provided by their software, but we do not consider these to
be payment databases because they do not include all payment
types, only those that are directly integrated into the software. A
bank will likely have to construct separate interfaces for those
payment types that it chooses to operate independently of the
enterprise payments hub.

● Fraud/risk management: Fraud/risk management is another area

that is usually provided primarily by a third-party specialty vendor,
such as Fair Isaac. One exception is ACI Worldwide, whose
Proactive Risk Manager product is specifically designed to manage
card fraud, coming out of its legacy as a provider of EFT card
processing systems. Wall Street Systems also supplies its own
fraud and risk manager. The other vendors may provide some basic
features, such as duplicate checking, a rules engine, or message
validation, without any of the dynamic risk score modeling that we
would expect of a full-featured fraud/risk management system.

Table 4 simply shows whether or not a particular vendor supports one

of the four major payment categories. All of the vendors provide
strong support for wire transfers and real-time gross settlement
(RTGS) systems.

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 T ABLE 4

Vendor Positioning in the Enterprise Payments Software Market: Product

Competitiveness — Payment Methods Supported

Cards Check ACH Wire/RTGS

ACI Worldwide ! # # !
Bottomline Tech. $ # ! !
Clear2Pay # # ! !
Dovetail Systems $ $ # !
Fundtech $ # # !
TietoEnator ! $ # !
Wall Street Sys. $ # $ !
Legend: $ Low, # Medium, ! High
Source: Financial Insights, 2006

This reflects the centrality of corporate and wholesale payments in

most of the enterprise payments deals we are seeing today. ACH
support is likewise fairly universal, although some vendors do not
support both debits and credits because credit transfers are much more
common with corporate payments. Check support is often present in
some capacity, but given the decline of checks worldwide, none of the
vendors is putting too much effort into it. Check image exchange is
something a bank would need to obtain separately. Card support is
rare, with the exception of ACI Worldwide, which has a strong
presence in the debit card processing market. Clear2Pay also has some
support dating from its start as a provider of chargeback software,
although its enterprise payments products are not focused on cards.
TietoEnator also has a strong base in debit card processing in its home
geography. Cards are not often part of enterprise payments projects
today, although they will become more important as their use for
corporate payments grows.

Figure 2 aggregates all of these ratings into a single chart. Each vendor
i4exs represented by a bubble, the size of which is a measure of total
enterprise payments revenue. Note that the vendor in question may
have total revenue greatly exceeding this number; however, for the
purposes of this comparison, we are counting only those revenues that
Financial Insights was able to confidently ascribe to enterprise
payments projects at banks. Therefore, although Bottomline
Technologies had $95.6 million in revenue for 2005, most of this was
for payment systems for businesses, or for financial institutions in their
capacity as businesses that need to pay suppliers.

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FIGURE 2

Comparison of Enterprise Payments Vendors

3.0
Product competitiveness

C
B
2.5 A
E
F
D
G
2.0

1.5
1.5 2.0 2.5 3.0
Capability to execute

A ACI Worldwide
B Bottomline Technologies
C Clear2Pay
D Dovetail Systems
E Fundtech
F TietoEnator
G Wall Street Systems

Notes:
Bubble size is based on FY05 enterprise payments revenue.
Please see the Methodology section for a description of positioning of vendors on the axes.
Source: Financial Insights, 2006

Figure 2 shows ACI Worldwide in the strongest position overall,

having both the largest revenue and a broad base of features. Niche
players such as Clear2Pay or Dovetail may be stronger in specific
areas or more responsive, but they do not have the financial resources
of ACI. TietoEnator is the second-largest vendor covered in the study,
but it will have to work hard to extend itself into the larger enterprise
payments market. Fundtech occupies a middle ground, strong in the
areas where it has chosen to focus (e.g., corporate and wholesale
payments) but with room to grow in other areas (e.g., cards and retail
payments).

In the vendor profiles (see the Appendix), we discuss the particular

strengths and weaknesses of each vendor.

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FUTURE OUTLOOK
In this section, we discuss the ways in which the enterprise payments
market is evolving, and how this will affect the fortunes of the various
companies covered in this report.

Market Trends

Today, enterprise payments activity is centered mostly in Europe,

driven by the SEPA initiative, which requires banks to charge the same
price for cross-border transactions as they do for domestic
transactions. As a result, banks are being pressured to increase the
efficiency of their cross-border payment systems. Other aspects of
SEPA include the development of pan-European payment networks
such as the TARGET system, which is connecting the 15 central bank
RTGS systems in the eurozone, and a planned direct debit system.
European banks are faced with a moving target as domestic payment
processors and banks begin to poach each other's territory and connect
to the new payment networks. In such an environment, building a
versatile enterprise payments system can be a way of hedging one's
bets so that no matter what the European payments environment looks
like in 2010, the bank will be able to handle it. For more information
on the European situation, see Will SEPA Pave the Way Toward
Enterprise Payments? (Financial Insights #FIN1708, December 2005).

U.S. banks are experiencing pressure primarily from corporate

customers that would like to consolidate their multiple corporate
banking interfaces into one, and that generally want greater visibility
and reliability from their banks. However, the corporations lack the
power of a government mandate, so banks are moving at different
paces according to their view of how critical the problem is. Most of
the focus right now is on checks and cards as consumer payments shift
from the former to the latter. Some banks are building enterprise
payments databases, but in general, U.S. banks are far behind their
European counterparts. As a result, most of the vendors we spoke to
for this report are shifting their focus to Europe, where the
opportunities are greater.

However, the future enterprise payments market will look quite

different from the current one. Cards are becoming a more important
component of corporate payments, increasing at a 22.5% compound
annual growth rate (CAGR) from 2005 to 2009. Although today cards
are considered primarily a retail product, banks will be looking to
leverage their card processing systems into the corporate market to
offset slow growth in the retail market. At that point, being able to
support card transactions within an enterprise payments solution will
be critical.

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Although checks are seeing their use declining, they will be a major
form of payments, particularly corporate payments, for the foreseeable
future. Checks are also shifting from paper to electronic form with the
advent of check conversion and check image exchange, making them
more compatible with a payment hub that relies on electronic
messaging. It is striking that the enterprise payments vendors have
largely left the check field to specialists such as Carreker and
Metavante, perhaps seeing it as a shrinking opportunity.

However, there is growing debate within the banking community

about the proper strategy for check clearing, whether it be through the
ACH or image exchange networks. Slow acceptance of check images
has led to the printing of a growing number of substitute checks, which
can be more expensive to process than the original paper checks. As a
result, some top banks, such as Bank of America, are pushing an
initiative called "best clearing," which would move the industry to an
"image on demand" model. Instead of all checks being converted to
images and pushed through image exchange networks, best clearing
would allow them to be converted to ACH transactions, with the
images available on demand through one or more central image
archives. The advantage of this system is that it would allow the
collecting bank (where the check was originally deposited) to avoid
paying for substitute checks; if a paying bank refused to accept
images, the collecting bank could simply convert the check to an ACH
and send it that way.

Best clearing is still quite controversial, and actually increases the

uncertainties in the check market, because it is no longer clear that
check image exchange will become the dominant method of check
clearing. To avoid the risk of adopting the wrong strategy, many banks
will want to hold back and see which model wins out. An enterprise
payments solution that supported both check conversion and check
image exchange could be an attractive option for these banks, allowing
them to take advantage of both alternatives without being overly
committed to either. In this way, we believe that enterprise payments
will be more relevant to the U.S. market in the near future.

ESSENTIAL GUIDANCE
The enterprise payments market is evolving quickly, and in five years
the business case for enterprise payments will be very different from
what it is today. For this reason, it is important for both banks and
vendors to take the long view, and plan strategy under the assumption
that cards, retail payments, and checks will be a critical part of future
enterprise payments deals.

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Actions for Financial Institutions

For financial institutions in the United States, this long view means
greater attention to enterprise payments technology as a shared
resource for both the retail and wholesale sides of the bank. Already,
payments councils are bringing together executives from all areas of
the bank to coordinate strategy; the next step is to go from strategy to
execution, which will require enterprise payments technology in the
form of a payments hub and/or payments database. Unless they can
actually bring together their payments infrastructure in a coordinated
way, banks will have difficulty executing enterprise payments strategy.
Key challenges such as best clearing will require a collaborative effort
from the ACH and check processing teams, and a common
infrastructure that can adapt to changing market conditions.

For all banks, retaining corporate banking business will require

rethinking the terms of competition. Locking customers into
proprietary interfaces and front-end systems will no longer be viable as
banks seek to move beyond simple payment processing into helping
businesses integrate their financial supply chains. Instead, open
interfaces, common standards, and flexible processing systems will be
necessary to allow the banks to work with all of the different
companies with which a corporate customer trades. Legacy processing
systems are simply not built for such an environment; at the very least,
they will need to be placed behind an enterprise payments system that
can act as a common point of integration.

The key challenge will be funding the necessary infrastructure; for

banks that are accustomed to driving their technology spending
through the operational silos, this will require giving the payments
council real spending authority and budget, not just a strategy and
planning role. The silos will correctly perceive this shift as a threat to
their autonomy and prerogatives, requiring pressure from the CEO,
CFO, CIO, and CTO to overcome. Otherwise, technology investments
will continue to be driven by the priorities of the silos, and will not
support the collaboration needed to capture opportunities for revenue
growth and cost savings.

Actions for Vendors

Enterprise payments vendors will need to extend their product lines to

encompass areas such as cards and checks, which may not have much
market demand today but will be important in a year or two. The more
problems an enterprise payments solution can solve, the larger its
target market is. A key problem retarding the growth of the market is
an insufficiently compelling business case. Vendors must broaden
their focus to address this issue.

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Vendors must also expand their focus from purely electronic payment
types to imaging and document management. The enterprise payments
solution of the future must be able to handle the documentation
surrounding a payment, as well as the payment itself, to appeal to
corporate customers that rely on that documentation (e.g., the
remittance advice) for their reconciliation and accounting processes.
Although investments in check image management may seem to have
a short life span, in fact they can be leveraged for many other types of
paper documents as well, allowing the bank to provide a greater array
of services.

Success for vendors is naturally tied to the success of their banking

customers. To the extent that vendors can solve a wider range of
payments problems, they will be in a better position to help their
customers grow their businesses, and to capture the increased
technology spending that will result.

LEARN MORE

Related Research

● Top 10 Strategic Initiatives for 2006: Bankers Need to Make Better

Decisions (Financial Insights #FIN1718, January 2006)

● Will SEPA Pave the Way Toward Enterprise Payments? (Financial

Insights #FIN1708, December 2005)

● U.S. Check Transaction 2004–2009 Forecast and Analysis

(Financial Insights #FIN1704, December 2005)

● Dynamic IT and the Integrated Banking Enterprise (Financial

Insights #FIN1702, December 2005)

● U.S. Payments 2005–2009 IT Spending Forecast and Analysis

(Financial Insights #FIN1699, December 2005)

● U.S. General Purpose Card 2005–2009 Spending Forecast and

Analysis (Financial Insights #FIN1692, December 2005)

● Payments Fraud Management: Analysis Beyond the Transaction

(Financial Insights #FIN1640, August 2005)

● How to Get to the Promised Land: Alternative Pathways to

Enterprise Payments (Financial Insights #FIN1626, July 2005)

● Outsourcing Payment Processing: Asia Gets Interesting (Financial

Insights #FIN1583, March 2005)

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● Check 21 at the Crossroads: Shakedown or Shakeout? (Financial
Insights #FIN1578, March 2005)

● Top 10 Strategic Initiatives for 2005: Banking on IT More Than

Ever (Financial Insights #FIN1558, January 2005)

● Enterprise Payments: Assessing the Concept (Financial Insights

#FIN1527, September 2004)

● Time for a Change? Payment Systems Need a Rethink (Financial

Insights #FIN1520, August 2004)

● Hinge Technologies for the Dynamic Enterprise (IDC #31371,

May 2004)

Methodology

The vendor profiles in this report were compiled through one-on-one

interviews with the vendors themselves and with other market
participants such as banks or services firms. The ratings in Tables 2–4
were arrived at based on the author's subjective assessment of the
capabilities of each vendor in each area. Each vendor was given an
opportunity to review its ratings in context, although the final score
was determined solely by the author. The first column in Table 2,
"feature/function" is a weighted average of the scores for Tables 3 and
4 using the weights listed in Table 5.

T ABLE 5

Weights for Feature/Function Attributes

Attribute Weight Rationale

Payments acquisition 2 High market demand for corporate payment front ends makes this
an important component
Payments hub 3 Most important capability for an enterprise payments solution; the
hub is what enables integration of different payment systems.
Payments database 1 Although it is important to provide integration with a database, most
banks will prefer to build their own
Fraud/risk management 2 Can be a competitive advantage, but many banks will buy this from
a specialty vendor
Cards 1 Low market demand currently; will grow, however
Check 1 Low market demand; method is declining in those markets where it
still exists
ACH 2 Growing importance in wholesale as well as retail payments
Wire/RTGS 3 Area of greatest inefficiency (and hence opportunity) in most banks;
this is where many of the current deals are focused; in Europe,
growing emphasis on quicker settlement times
Total 15
Source: Financial Insights, 2006

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When weighted averages or raw scores are converted into circles, an
open circle is a 1.0–1.4, a half circle is a 1.5–2.4, and a whole circle is
a 2.5–3.0.

For the comparison chart in Figure 2, the vendors were positioned

along the y-axis (product competitiveness) on the basis of the
feature/function score. A weighted average of the scores in Table 2
was used to position the vendors along the x-axis (capability to
execute). The weights used are as listed in Table 6.

T ABLE 6

Weights for Capability to Execute Attributes

Attribute Weight Rationale

Feature/function 3 A more comprehensive offering is very important in getting the
initial meeting with a bank.
Scalability 3 For payment systems, the ability to scale to millions of transactions
a day is critical.
Integration capability 3 Because enterprise payments is a form of enterprise application
integration (EAI), integration capability is a key requirement.
Platform support 2 It is important to support a range of platforms, but support for a
variety of Unix flavors and J2EE is usually sufficient.
Architecture 2 An advanced technical architecture will provide a solution with a
long shelf life; however, the most advanced technologies are also
unproven, which can be a particular liability when dealing with
conservative bank IT departments.
Market coverage 1 Because most deals today are limited in scope, niche providers can
be very successful. Over time, the importance of this attribute will
increase.
Geographic coverage 1 The market is large enough that it is possible to be successful
playing in just one region (particularly if that region is Europe).
Total 15
Source: Financial Insights, 2006

Appendix: Provider Profiles

Note: To allow fair comparisons of companies that are pure-play

enterprise payment providers with those that have other substantial
lines of business, the profiles show the revenue, employees, and clients
specific to enterprise payments in parentheses after the whole-
company statistics. The comparison graph in Figure 2 is based on
enterprise payments revenue only. Where exact figures were not
provided, Financial Insights has estimated amounts based on industry
averages.

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ACI Worldwide (www.aciworldwide.com)
Figure 3 gives a brief overview of ACI Worldwide.

FIGURE 3

ACI W orldwide at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees 1,730 (1,560)
Asia/Pacific (11%)
# of clients 810 (670)
# of clients non-U.S.
486 (469) United States
(est.)
(39%)
Headquarters Omaha, Nebraska
Revenue (FY05, $M) 313.2 (281.9) EMEA (35%)
Public (division of
Ownership Transaction Systems
Architects Inc.)
Rest of Americas (15%)
Date founded 1975

Market Coverage
Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management X

Note: Revenue, employees, and clients specific to enterprise payments are shown in
parentheses after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
Bank of America, JPMorgan Chase, Citibank, Wachovia, CIBC,
Toronto Dominion (TD) Bank, Royal Bank of Scotland, Barclays,
ABN AMRO, ING, Fortis, PNC Bank

Ke y P a rt n e rsh ip s
IBM, HP, Sun, Stratus, NCR, Diebold, Wincor, Microsoft, Oracle,
Unisys, Visa, MasterCard

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Ar c h it e ct u r e s
● Linux (ACI eCourier only)

● HP Nonstop (BASE24, BASE24-es, ACI Proactive Risk Manager

Server)

● IBM z/OS (BASE24-es, ACI Payments Manager)

● IBM AIX (BASE24-es, ACI Payments Manager, OpeN/2)

● Sun Solaris (BASE24-es, ACI Proactive Risk Manager Server,

ACI Payments Manager, ACI Retail Commerce Server)

● HP UX (BASE24-es, OpeN/2)

● Unix variants, including zLinux (OpeN/2)

● Windows (ACI Proactive Risk Manager Client, ACI Proactive

Risk Manager Server, ACI Retail Commerce Server, OpeN/2)

Hardware platforms supported include HP Nonstop, IBM zSeries, Sun

Fire, IBM pSeries, HP 9000, HP Integrity, and Intel.

Middleware standards supported include .NET, J2EE, IBM

WebSphere, FTP, ODBC/MP, Net8, WebGate, WebLogic, Tomcat,
Jrun, and BEA Tuxedo. ACI Worldwide also uses a proprietary
middleware standard called XPNET.

P ro d u ct s/ P ro d u c t C o m p o n en t s
● BASE24: Acquires and switches transactions from the following
retail channels: ATM, EFT/POS, credit/debit cards, online
banking, telephone banking, and branch teller systems

● BASE24-es: Stands for "enterprise services" (This is ACI's next-

generation retail payment engine, designed to run on Unix variants
such as Sun Solaris, AIX, and HP UX as well as closed platforms
such as HP Nonstop and IBM zSeries. BASE-24es is built for
extensibility as new channels such as mobile or Internet become
important. It also adds support for credit and signature debit cards
to the BASE-24 capabilities. In May 2006, ACI announced an
enhancement to BASE24-es to support the United Kingdom's
Faster Payments initiative, which is intended to shorten the
processing cycle for electronic payments. ACI Worldwide intends
for BASE24-es to replace its legacy BASE24 system and is
working with its customers to facilitate the transition.)

● OpeN/2: Obtained through ACI's acquisition of S/2 on July 29,

2005 (This product acquires and switches transactions from the
following retail channels: ATM, EFT/POS, credit card, stored-

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 value cards, check, and Internet. It is designed to run on low-cost
platforms such as Windows and Unix variants, including zLinux.
In the long term, it will be converged with BASE24-es.)

● ACI Wholesale Payments System: Formerly the Money Transfer

System (MTS) marketed by sister company IntraNet; rebranded
when the two companies combined (It handles back-office clearing
and settlement for wholesale payments and interfaces with RTGS
systems, central banking systems, net settlement systems,
messaging systems such as SWIFTNet, clearinghouses, internal
systems, and third-party banking applications. It combines several
elements found in Figure 1, including a payments hub, risk and
fraud management, security, and data transformation. ACI
Worldwide announced on April 19, 2006, a version of this product
enhanced to support SEPA implementations with specific support
for prieuro, credeuro, and Pan-European direct debits as well as
proprietary formats.)

● ACI Payments Manager: Handles back-office processing and

settlement of retail payments, specifically card payments (It
includes some of the functions of the payments hub and payment
database shown in Figure 1, but only for card payments. It also
supports card issuance and management.)

● ACI Proactive Risk Manager: Provides rule- and neural

network–based fraud detection (There are specific versions of the
product for enterprise risk [primarily identity theft and account
takeover], debit and credit card fraud, merchant fraud [i.e., fraud
perpetrated by a merchant against its acquiring bank], private-label
card fraud [similar to merchant fraud], and money laundering.)

● ACI Monitoring and Management System: Provides centralized

monitoring of payment applications

● ACI Communication Services — Network Express: Supports

connectivity between distributed payment systems, with specific
modules for file transfer, file management, data transformation,
message management, security, and third-party access

Fin an ci al In s ight s Op inio n

ACI Worldwide is one of the dominant providers in the ATM and
EFT/POS space, and this is where it is strongest. After the integration
of IntraNet and InSession Technologies that was announced on
October 5, 2005 (all three firms previously having been owned by the
same company, Transaction Systems Architects), a strong wholesale
payments system and connectivity technology were added to the mix.
In addition, on July 29, 2005, ACI Worldwide completed its
acquisition of S/2, which had its own retail payment processing system

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and also contributed technology to the ACI Communication Services
— Network Express product.

As a result, ACI now has one of the most complete offerings in the
group of companies under review, at least on paper. However, it now
has several duplicative payment acquisition and processing systems,
each with its own client base that will need to be tended. This situation
places ACI at a disadvantage against competitors such as Clear2Pay,
which have developed their systems from scratch. BASE24-es is
intended to be the single solution toward which the others will
converge, but this will take time, slowing ACI's entry into the
marketplace. It remains to be seen how well the various technologies
and systems will work together; because stability and reliability are
crucial to success, this may complicate ACI's efforts to go to market
with a complete solution. ACI is currently in a strong position, but it
will have to execute well to maintain its lead.

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Bottomline Technologies (www.bottomline.com)
Figure 4 gives a brief overview of Bottomline Technologies.

FIGURE 4

Bottomline Technologies at a Glance

Firm Profile Distribution of Revenue by Region, 2005

# of employees 500 (80)
Australia (1.7%)
# of clients 9,000 (300)
# of clients non-U.S.
4,500 (200)
(est.)
Portsmouth, New United States
Headquarters United
(48.2%)
Hampshire Kingdom
Revenue (FY05, $M) 96.5 (30.0) (50.1%)

Ownership Public
Date founded 1989

Market Coverage
Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management X

Note: Revenue, employees, and clients specific to enterprise payments are shown in
parentheses after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
National City Corp., Lloyds TSB, Bank of America, JPMorgan Chase,
Standard Chartered Bank, UMB Financial, State Street Bank, Fifth
Third Bancorp, Franklin Templeton, Raymond James, Fidelity
Investments, GMAC, Travelex

Ke y P a rt n e rsh ip s
Business Objects, Oracle

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Ar c h it e ct u r e s
● Operating systems: Microsoft Windows XP Client; Microsoft
Windows Server System; Unix variants, including IBM AIX and
Sun Solaris

● Hardware platforms: IBM, Sun, Intel

● Middleware standards: MQ, J2EE, IBM WebSphere, WebLogic,

Tomcat, .NET through SOAP

P ro d u ct s/ P ro d u c t C o m p o n en t s
WebSeries Enterprise Payments Platform is a consolidated platform
for payment initiation and tracking, with support for ACH, RTGS,
check printing and management, and fraud detection. It was rebranded
from the WebSeries Electronic Banking Platform.

Fin an ci al In s ight s Op inio n

Bottomline Technologies has its roots in the corporate treasury market,
with an emphasis on accounts payable. It is therefore strongest in
payment acquisition, focusing on the most common corporate payment
types, which are ACH, check, and wire. The firm sells directly to
banks as well as their corporate clients. In the context of Figure 1,
Bottomline would supply software to support the Internet access touch
point as well as some payment hub and payment database
functionality, principally around routing, tracking, and reporting on
corporate payments. Fraud detection and security are also supported.

With a client base of more than 9,000, of which 3,000 use its software
through a hosted model, Bottomline has the widest customer base of
any company in this survey. Its focus on the front end gives it a strong
position in today's enterprise payments market, where the main
concern is serving corporate customers more effectively. However,
only 300 of these clients are banks using the software for enterprise
payments.

Bottomline's offerings can only mask duplication and inefficiency in

the back office, not resolve it. They are a first step, not the whole
solution. Any financial institution investing in a front-end solution
such as this will still have to grapple with its back-office infrastructure
down the road.

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Clear2Pay (www.clear2pay.com)
Figure 5 gives a brief overview of Clear2Pay.

FIGURE 5

Clear2Pay at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees 220 (150)
# of clients 40 (10) North America (15%)
Asia/Pacific
# of clients non-U.S. 10 (9) (30%)

Headquarters Belgium
Revenue (FY05, $M) 14.0 (9.8)
Ownership Private
Date founded 2001

EMEA (55%)
Market Coverage
Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management

Notes:
The Open Payment Framework has also been used to handle P2P and remittance payments.
Revenue, employees, and clients specific to enterprise payments are shown in parentheses
after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
National Australia Bank, DnB NOR (Norway), KCS (Thailand), ANZ,
ING, Wells Fargo

Ke y P a rt n e rsh ip s
IBM, HP, Oracle, Unisys

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Ar c h it e ct u r e s
● Clear2Pay uses a service oriented architecture (SOA) based on
open standards such as Business Process Execution Language
(BPEL), Web Service Definition Language (WSDL), and
eXtensible Markup Language (XML), which allows its various
components to interoperate with components supplied by other
vendors. This interoperability extends to the Business Process
Manager (BPM) module, which uses generic components that are
compatible with any other BPM package that supports BPEL.

● The Bank Payment Hub is built using J2EE and runs on any
compatible application server. It is not native to any hardware
platform.

P ro d u ct s/ P ro d u c t C o m p o n en t s
● Bank Payment Hub: A centralized payment infrastructure based
on an Open Payment Framework; consists of three modules:

○ Customer Interaction (front office): This module captures

payment instructions through two channels: a Web-based
interface and a file transfer system. Both channels use a
common validation engine that checks for errors, balances
debits and credits, and performs other tests. The online
interface can act as a payments dashboard, showing the status
of payments in process and allowing customers to fix problems
themselves. The file transfer system can convert payment
instructions from the format used by the corporate customer to
that used by the destination processing system. The module
also can provide notifications and acknowledgements.
Remittance advice transmission is officially supported but
requires additional process support from the sender, sender's
bank, receiver, and receiver's bank.

○ Order Management (middle office): This module consists of

a BPM running various generic components that can be reused
for all types of payments. These components include the
following:

● Parsers/Inbound Adapters: Converts incoming payment

instructions from acquiring applications not provided by
Clear2Pay to a common internal format, which is bank
defined

● Receive Payments: Classifies payments based on origin,

payment type, and data content

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 ● Archive Payments: Stores payment instructions for later
retrieval; can be moved to long-term storage according to
bank policies

● Validations: Comes with standard routines to catch

duplicate items, validate the registered agreements, and
validate compliance with the payment system rules;
additional validation business services can be created for
specific payment types to enforce other rules

● Repair: Presents exceptions to either bank staff or the

customer, depending on the type of error encountered, the
type of payment, and any terms or conditions; gives the
customer the ability to fix errors directly, increasing the
straight-through processing rate

● Limit Check: Allows the bank to set a limit on total

payments over a defined period

● Balance Enquiry: Interfaces with a balance check system

to check that sufficient funds are in the account to be
debited, and lock those funds prior to settlement

● Warehouse: Allows payment instructions to be stored for

later execution

● Notification Service: Can send notifications to bank staff

or customers of events in the system, including errors and
transactions requiring manual input

● Determine Routing: Routes a payment instruction to a

particular back-office system depending on bank-defined
parameters, which may include origin, destination, time
sensitivity, amount, and the ability of the receiving bank to
accept certain types of payments, such as check images

● Submitters/Outbound Adapters: Interface between the

Order Management System and the Payment Execution
Systems; can handle both batch and individual transaction
models

○ Payment Execution (back office): This module includes the

BPM, Parsers/Inbound Adapters, Validation, and Repair
modules for implementations that do not use the Order
Management module; also includes modules for execution
functions, including:

● Fee Determination: Both own and external charges that

must be included in the settlement

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 ● Determine Routing and Settlement Agents: The agents
that need to be involved for settlement to take place, as well
identification of the settlement accounts

● Verify Nostro Receipt: For risk management purposes,

allows processing to hold until confirmation is received that
funds have actually been deposited in the bank's nostro
account at the other end of the transaction

● Generate Pre-Advice on Incoming Transactions: Allows

notification of the customer of an incoming funds transfer
as early as possible; can be delivered through SWIFT
message, email, or Internet portal

● Generate Accounting Entries: Determines the suspense

account, and generates related FX accounting entries and
debit and credit accounting entries

● Generate Routing and Settlement Instructions: Ensures

proper communication with the external clearing and
settlement systems

Fin an ci al In s ight s Op inio n

Clear2Pay is technologically more advanced than most of its
competitors, but less mature. Any bank implementing Clear2Pay may
have to do extensive custom work depending on the complexity of its
internal payments environment, although this work will be less
expensive than it would be with a less open platform.

Clear2Pay originally got its start in person-to-person funds transfers

through its PayPark product, and also offers products to assist with
credit card chargebacks and card processing. As such, it has no
existing base of corporate banking business and must develop it from
scratch using partners such as IBM, HP, and Unisys. Although
competitors may have less sophisticated and flexible technology, they
have more referenceable clients and may appear to be safer choices to
many banks. However, a bank that is committed to SOA and wants a
forward-looking payments infrastructure will want to consider
Clear2Pay.

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Dovetail Systems (www.dovetailsystems.com)
Figure 6 gives a brief overview of Dovetail Systems.

FIGURE 6

Dovetail Systems at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees 33 (33)
# of clients 2 (2)
# of clients non-U.S. 1 (1)
Headquarters Fairfield, New Jersey
EMEA North America
Revenue (FY05, $M)
2.0 (2.0) (50%) (50%)
(est.)
Ownership Private
Date founded 1999

Market Coverage
Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management

Note: Revenue, employees, and clients specific to enterprise payments are shown in
parentheses after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
Global German Bank

Ke y P a rt n e rsh ip s
LogicaCMG, HP, Oracle, BEA Systems, IBM, Sun Microsystems

Ar c h it e ct u r e s
J2EE Application Server (IBM WebSphere, WebLogic) running on
Windows, Linux, and Sun Solaris

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P ro d u ct s/ P ro d u c t C o m p o n en t s
● Q5 — ENVOY: This payments hub is aimed primarily at
wholesale payments. It has a multientity structure, which supports
global banks that have separate legal entities in various countries.
It also supports multicurrency transactions as well as timed
payments, which can be scheduled for a specific time or triggered
based on another event. Also included are the following
components:

○ GUI: A Web-based front end for entering, researching, and

repairing payment transactions

○ Party Search Engine: Helps locate information about

particular payors or payees that have used the system

○ Fedwire and CHIPS gateways: Process incoming and

outgoing transactions using the Fedwire and CHIPS RTGS
systems

○ Messaging Gateways: Process incoming and outgoing

messages using the SWIFT messaging system as well as other
networks as needed

○ Payments Formatter: Manages the specific payment formats

and rules used by those clearing systems that employ SWIFT
as the delivery network (EBA, RTGSPlus, TARGET)

● CorpPay: Acquired from Consise, this adds a corporate payment

front end to the system, allowing corporate customers to generate
payment files, check their status, and repair problems.

● PayAssure: Also acquired from Consise, this is a high-volume

ACH processing system that the company claims can process as
many as 2.5 million ACH payments per hour.

Fin an ci al In s ight s Op inio n

Like Clear2Pay, Dovetail Systems uses a modern service oriented
architecture for better interoperability with existing legacy systems. It
has a channel partnership with services firm LogicaCMG, which is
integrating the Dovetail software into its own branded enterprise
payments solution.

Dovetail has two clients, both multinational banks. One is based in the
United States and one is based in Germany. Unlike most of the
companies profiled here, Dovetail has actually been engaged to
replace the German bank's wholesale high-value payment systems, not
merely wrap them in new technology. The project was originally
scheduled to have been completed by mid-2005, but only phase 3 of
the multiphase project was completed by then. Phase 1 (June 2004)
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brought up the Liquidity Management and Fedwire gateway
components; phase 2 (September 2004) brought up the Party Search
Engine component, and phase 3 (June 2005) added the SWIFT
interface, the payment scheduling engine, and automation of direct
debit processing.

For the United States–based international bank, Dovetail has

implemented a complete U.S. dollar clearing system covering both
Fedwire and CHIPS.

Although these clients are certainly evidence that Dovetail can provide
a scalable, robust solution for high-value payments, Dovetail will need
to add many more to compete with more established firms such as ACI
Worldwide and Fundtech. Its problems are similar to those of
Clear2Pay, although Clear2Pay has a more comprehensive solution.
(The Consise acquisition narrows the gap somewhat.) It has
technology that is superior to the more established competitors, but
lacks enough of a customer base to give banks confidence in its ability
to deliver. Are two major banks about all it can handle, or can it do
more? How much more? How well does its software function in a
heterogeneous environment?

We question whether Dovetail can succeed for long on its own, and we
suspect it will end up being acquired by a company such as
LogicaCMG or Oracle that is seeking to penetrate the enterprise
payments market.

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Fundtech (www.fundtech.com)
Figure 7 gives a brief overview of Fundtech.

FIGURE 7

Fundtech at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees 620 (125)
Asia/Pacific (1%)
# of clients 700 (200) EMEA (15%)
# of clients non-U.S. 30 (30)
Headquarters Jersey City, New Jersey
Revenue (FY05, $M) 72 (35)
Ownership Public
Date founded 1993

North America (84%)

Market Coverage
Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management X

Note: Revenue, employees, and clients specific to enterprise payments are shown in
parentheses after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
Citigroup, HSBC, HVB Bank Austria, Wachovia, Bank Atlantic,
Regions Bank, Commerce Bank

Ke y P a rt n e rsh ip s
Sun, BEA, IBM, Microsoft, Prime Associates

Ar c h it e ct u r e s
● Windows (PAYplus USA and OmniPAY) and Unix variants
(Global PAYplus) running on Sun, IBM, HP, and Wintel

● Supports J2EE, IBM WebSphere, and BEA Tuxedo

P ro d u ct s/ P ro d u c t C o m p o n en t s
● Global PAYplus: This multicurrency, real-time back-office
payments system for wholesale payments handles clearing and
settlement, FX pricing, payments scheduling, liquidity
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 management and funds control, and regulatory compliance. A rules
engine provides flexibility for changes in business requirements
and also supports fee determination. A notification engine provides
customers and bank staff with notices of events that have
completed.

● PAYplus USA: Despite sharing a brand name with Global

PAYplus, this is a separate product, geared specifically toward the
demands of the U.S. market. It focuses primarily on corporate
payments, with support for Fedwire, SWIFT, CHIPS, book
transfers, and Fedwire Securities Transfers. Intraday liquidity
management is supported, including bilateral and multilateral
positions. It is designed to integrate directly with other back-office
systems, tying them together in a single user-friendly Windows or
browser-based interface. It does not replace the back-office
systems, as does Global PAYplus.

● PAYplus RTGS: This multicurrency, rules-based payment system

is specifically designed to manage a bank's SWIFT, cross-border,
central bank RTGS, and net settlement payment activity. Like
PAYplus USA, it is designed to be easy to use, with a Windows
NT–based user interface sitting on top of a three-tier, Unix-based
client-server architecture. Intraday liquidity is a primary focus of
the system, which allows the bank to manage its euro positions at
networks such as TARGET, EBA, EURO1, and CHAPS. It is
focused on the European market.

● OmniPAY: This Web-based front end is focused on payments

acquisition from corporate clients. Primary functions include
receipt of bulk payment files, routing of payment instructions to
the appropriate back-office system, payment scheduling, and
workflow.

Fin an ci al In s ight s Op inio n

Fundtech has a broad client base, with more than 200 banks using the
firm's products for some sort of enterprise payments activity. Most of
this is with PAYplus USA at midsize banks, although the company is
experiencing rapid growth in Europe with its Global PAYplus product.

Fundtech is somewhere in the middle of the pack with regard to

technology — not as advanced in its use of J2EE and SOA as
Clear2Pay or Dovetail but more advanced in its use of a multitiered
architecture than ACI Worldwide.

Although Fundtech's support for corporate payments is excellent, its

lack of retail payments coverage makes it less suitable for a bank that
is seeking to place all of its payment systems, both retail and
wholesale, on a single integrated platform.

©2006 Financial Insights, an IDC Company #FIN202197 Page 31

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TietoEnator (www.tietoenator.com)
Figure 8 gives a brief overview of TietoEnator.

FIGURE 8

TietoEnator at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees (est.) 2,119 (1,060)
Asia/Pacific* (3.1%) North America* (2.0%)
# of clients (est.) 350 (175)
# of clients non-U.S.
350 (175)
(est.)
Headquarters Espoo, Finland
Revenue (FY05, $M) 303 (151)
Ownership Public
Date founded 1968 (Tieto)

Market Coverage EMEA (94.9%)

Payments acquisition X
Payments hub X
Payments database X

Fraud/risk management X
* The percentage of clients in North America and Asia/Pacific is estimated based on 5% of total
revenue being outside of Europe.
Notes:
Clients, employees, and revenue are for financial services business only. Financial Insights
estimates 50% of financial services business is related to enterprise payments.
Revenue, employees, and clients specific to enterprise payments are shown in parentheses
after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
Royal Bank of Scotland, Sampo Bank, Nordea, DnB NOR, BHF-
Bank, Swedbank, Svenska Handelsbanken, Dexia BIL, Banesto

Ke y P a rt n e rsh ip s
IBM, BEA Systems for technology

Ar c h it e ct u r e s
Developed in Microfocus Workbench; original platform was MVS;
now platform independent; will run on z/OS, OS/390, MVS, Unix
(AIX, HP-UX, Solaris), Linux, and Windows 2000/2003 Server;
clients may be Windows, J2EE, or .NET; database is DB2

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P ro d u ct s/ P ro d u c t C o m p o n en t s
ProPay was developed in the late 1990s and supports high-value
payments, a SWIFT interface, and file transfers. Multibank capability
permits multientity implementations throughout an international
network. The core payment system runs on CICS or IMS and DB2,
while auxiliary components operate on a J2EE architecture. The
development environment may enable portability to Unix platforms,
but it is untested. ProPay has Web-based user interfaces and handles
inward, outward, and standing orders.

Additional modules:

● ProDirectory (must be run with ProPay): Provides essential

processing rules, product definitions, fee schedules, and so on

● ProSwitch: The messaging and file-handling communications

interface; can be installed (as at ING-BHF) independent of ProPay

● ProRepair: An automated tool to examine inbound and outbound

messages for potential repair to improve straight-through
processing rate (This application runs in Windows.)

● ProScan: A tool for scanning transactions and accounts to detect

potential terrorist financing

● ProLiquidity and ProMatch: Tools for banks to provide

servicing to corporate customers; include intraday liquidity
management and automated matching

Fin an ci al In s ight s Op inio n

TietoEnator has a major strategic objective to break out of the
Scandinavian market. Its important new customer base in the United
Kingdom, Italy, and Eastern Europe shows progress toward this goal,
but the company is still dominated by its Scandinavian revenue (90%)
and clients. TietoEnator appears to have a particular strength in longer-
term transformation engagements with major banks involving a
significant amount of migration and integration with legacy systems.
Its collaboration with Nordea and others in implementing East
European M&A strategies provides evidence of the company's
openness to a more proactive partnership approach. It has paid
particular attention to performance and scalability issues and should be
well placed to offer cost-effective solutions. However, TietoEnator's
targeted approach and limited client base mean that most engagements
involve a different set of modules and integration activities in a mix-
and-match, best-of-breed environment rather than a standard offering.
The number of new signed deals has been consistent but fairly small,
and TietoEnator needs to scale up its strategy.

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Wall Street Systems (www.wallstreetsystems.com)
Figure 9 gives a brief overview of Wall Street Systems.

FIGURE 9

W all Street Systems at a Glance

Firm Profile Distribution of Clients by Region, 2005

# of employees 270 (40)
# of clients 43 (32) Asia/Pacific (14.3%)

North America
# of clients non-U.S. 28 (21)
(33.3%)
Headquarters New York, New York
Revenue (FY05, $M)
75 (15)
(est.)
Ownership Private
Date founded 1986
EMEA (52.4%)
Market Coverage
Payments acquisition
Payments hub X
Payments database X

Fraud/risk management X

Note: Revenue, employees, and clients specific to enterprise payments are shown in
parentheses after the whole-company statistics.
Source: Financial Insights, 2006

Ke y Cl i ent s
Global tier 1 banks, regional tier 2 banks, multinational corporations

Ke y P a rt n e rsh ip s
Sun, IBM, HP, Oracle

Ar c h it e ct u r e s
● Windows XP Client, Linux, Sun Solaris, HP-UX, VMS running on
Sun, IBM, or HP

● Supports .NET, J2EE, IBM WebSphere, webMethods, MQ, Mint,

and Minerva

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P ro d u ct s/ P ro d u c t C o m p o n en t s
The Wall Street System is an integrated, multicurrency global system
supporting payments and securities trading. There are four major
modules, or "hubs":

● Internet Extensions Hub: A Web-based corporate front end

supporting cash management, CLS payments, order management
(for securities trading), and other custom interfaces (It does not
provide full support for payment generation.)

● Global Trading Hub: Trading, pricing, and position management

tools for foreign exchange and money market trading and sales
(From the enterprise payments standpoint, the most relevant
component here is the foreign exchange trading.)

● Global Risk Hub: Manages various types of risk, including

operational risk, market risk, and credit risk (It also assists with
liquidity management by enabling the bank to net payments across
products and value dates.)

● Global Operations Hub: Cash management platform for the bank

(It includes components for cash management, general ledger
updating, securities clearance, cash settlement, CLS,
reconciliations, and confirmations.)

Fin an ci al In s ight s Op inio n

Wall Street Systems, as its name implies, has its roots in the securities
industry and is strongest in the corporate cash management area. It
recently adapted its flagship product, The Wall Street System, for bank
use and has had fairly good market penetration around the globe. The
company's strengths are its strong installed base and technology that is
designed around open standards for high-volume processing.

Wall Street Systems does not, however, provide a complete enterprise

payments solution. In particular, it does not support cards or ACH,
focusing solely on corporate payments (e.g., wire and check). In
addition, its front-end system is oriented more toward cash
management than payments, and it lacks the features of many of the
competitors' offerings. As such, Wall Street Systems is challenged to
fill the gaps, and may do so through partnerships or acquisitions. None
of the other companies profiled in this report considered Wall Street
Systems a competitor, which suggests that its wins so far have been
mainly on the cash management side of the bank, rather than in
payment operations. To become a recognized competitor in the
enterprise payments market, Wall Street Systems will need to sharpen
its marketing focus on enterprise payments.

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Synopsis

This Financial Insights report profiles the major software vendors

serving the enterprise payments market. Enterprise payments is an
umbrella term for a wide variety of initiatives aimed at centralizing
control and reporting for a bank's payment systems. The enterprise
payments market is complex and rapidly evolving, with a diverse set
of vendors approaching it from many different angles. The market has
not been growing as fast as it might because vendors have had
difficulty positioning their products in a way that provides banks with
a clear and compelling ROI.

According to Aaron McPherson, research director for Payments at

Financial Insights and the author of the report, "The thinking of both
bank executives and vendors with regard to enterprise payments tends
to be constrained by past experience in particular payment silos. This
leads many to miss potential opportunities for gains in revenue and
cost savings. Retail payments and checks are a particular blind spot,
especially in the United States, where enterprise payments has been
slow to take off."

Copyright Notice

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without written permission is completely forbidden. External
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