Published by IBS Journal
Thursday, July 12, 2012
Crédit Agricole Group is overhauling its payments infrastructure with the creation of a single payments processing platform based on ACI Worldwide's Base24-eps system, deployed on IBM Power 770 Systems. This is the first live installation of Base24-eps in France. The venture includes developing a new ATM acquiring solution for Crédit Agricole's network of 22,000 ATMs; building an international switch to enable its customers' payments to go directly to Mastercard, bypassing France's national switch; and using Base24-eps to authorise transactions for 30 million cards issued by the head bank and its subsidiaries. There are also far-reaching plans to attract financial institutions outside Crédit Agricole Group onto the new payments platform (see below).
Crédit Agricole started working with ACI in 2009. Around the same time, it adopted a 'revolutionary' strategy to completely renew the business and software of the group's payments business, says Bernard Noel, CEO of Crédit Agricole Cards and Payments (what used to be known as Cedicam). Noel joined the company last year, bringing 25 years of experience of working in the banking sector, including for Citibank and Société Générale. 'Having the largest market share in France is not enough for Crédit Agricole to survive and be competitive ten years from now,' he believes. There are two ways for the bank to increase volumes, he says. One is to connect external customers to the group's payments platform (which Crédit Agricole has not done before), and the other is to grow via partnerships with companies and industry bodies in the payments industry. For the former, Crédit Agricole has already onboarded the first customer, HSBC France (it will be connected to the payments platform next year). For the latter, there is an agreement with Equens, but the search for more partners is under way, says Noel. The partnership with Equens was agreed in late 2009 (IBS, November 2009, Equens and Crédit Agricole in talks over payments partnership) but was subsequently reduced in scope. Plans to create Equens France and for Crédit Agricole to become a shareholder in Equens were put on hold 'but not abandoned'.
Noel predicts a reduction of the number of payments platforms in the next ten years due to consolidation. Competition will get tougher, so should consider the payments business as strategic for the group, not just as a 'cost issue', he states. Customer loyalty is paramount, and the best way to achieve it is through competitive pricing and good customer service. Running costs of the new consolidated platform underpinned by Base24-eps are lower than those of the bank's competitors, claims Noel. This, he explains, is achieved by replacing eight different solutions with a single one, thus consolidating resources, attaining harmonisation and standardisation, and saving on expenditures otherwise required for replicating the system across subsidiaries. 'Dealing with massive volumes on one big platform makes the cost side very attractive.' However, the building costs are 'huge', he admits. Crédit Agricole is investing €300 million in this initiative over five to six years (it is now halfway through). Such an investment would not be feasible to instigate in the current economic climate, adds Noel, so the banks that have not started their payments projects beforehand will struggle to compete with Crédit Agricole.
Working with ACI has been a positive experience, says Noel. Pioneering Base24-eps in France is a challenge, he says, 'but ACI has demonstrated flexibility and commitment to the project and to meeting deadlines. We are satisfied.' Compared to the difficulties Crédit Agricole has experienced with other suppliers, he adds, 'ACI is one of the best'. He also remarks favourably on the system, describing its response time and performance as 'very good'.
The new strategy has brought a radical change to the IT development attitude at Crédit Agricole, says Noel. 'Instead of developing all our applications ourselves, we've agreed that IT development is not our core business, so from now on this will be covered by specilaised companies.' This includes vendors such as Clear2Pay, which has been building a SEPA payments platform for Crédit Agricole since early 2009 (IBS, April 2009, Crédit Agricole signs for Clear2Pay). The project is 'nearly finished', says Noel.
Knowledge of new systems is being brought in-house. Crédit Agricole Cards and Payments currently employs 900 developers, of which 350 are external contractors. All are working on the company's premises in the suburbs of Paris. The external workforce is gradually being replaced, says Noel, as Crédit Agricole is building up internal expertise.
Noel claims the payments platform undertaking of Crédit Agricole is unique in Europe. 'We don't know of any other business platform in Europe that has made such a choice and is so advanced in this project.' There are two sides to the payments 'battle' in the region, he says, 'industrial and volume'. Crédit Agricole is ahead on the industrial approach, but in volume concentration, it is 'still a bit behind' its counterparts, such as BNP Paribas, which has already started consolidation across its international subsidiaries. Crédit Agricole will embark on a similar venture by the end of this year or early next year, says Noel. 'We will concentrate the group's entire volume on one platform. One billion transactions on one platform – you won't find this anywhere else.'
Core banking software modernisation at Crédit Agricole Group
The 38 regional banks of Crédit Agricole are migrating to a single IT platform. Until now there have been about five platforms used between them to service their 20 million-odd customers, but the decision was taken about three years ago to take the best parts of each platform and combine them into a single system. It also involves re-jigging the personnel of the different banks into a single set-up. The first of the regional banks, Crédit Agricole de l'Ile de France (Cadif) in Paris, is in the process of going live.