Universal (UKH) Kredi Kartı Hizmetleri A.Ş. Presentation - Sunumu (2005)

UNIVERSAL KART

July 2005

IntroductionMilestonesProducts and ServicesCustomersStrengths, Opportunities and StrategyTurkish Payment SystemCompetition POS Outsourcing/Sharing

Contents

Founded in 1998, acquired by Teknoloji Holding in December 2001.

Established to provide card and POS outsourcing services to banks and financial institutions.

Strong infrastructure and 72 qualified employees.

Universal Kart

Production System

Infrastructure

Windows 2003 Server Platform HP Servers Ms Sql Database Visual Basic 7.0 Issuing & Acquiring Management Switching ATM Driving

Racal 8000 Two Racal 7600’s Racal 6000

Hardware Security Module

Network Nationwide EFT/POS concentration nodes (44

nodes in 34 cities) Cisco routers at the central nodes IEN and NCC products at the center & regions

BKM Connection 64 Kbit/s digital 19 Kbit/s analog Dial-back-up

Established

To be established

Infrastructure

Card Personalization Machines Four DataCard 9000 with

11 chip stations 2 Photo&signature printing modules

NBS Horizon NBS Advantage

Infrastructure

Card Enveloping Machines Two DataCard 9000 UFI

Mailers Logica Mailer Ptrotechno Card Mailer

Card management - Matrix/Prosis

Merchant and POS management - Matrix/Prosis

Switch - Matrix/Prosis

POS terminal management system - developed in-house by Planet - GMS

Help desk and field service task management system - developed in-house by Universal

Smart card personalization – Gemplus-Gemsense Pro

ATM management - Matrix/Prosis

InfrastructureSoftware*

* Source codes are available to maintain and develop all the applications.

1998: Established as an Egebank subsidiary to provide issuing and acquiring services to the bank.

1998: Took over the card operations for Asya Finans and Ihlas Finans.

1999: Became the only TPP company with Visa and MasterCard issuing

and acquiring licenses in Turkey. Added Anadolubank, Yurtbank and Sitebank, which had recently

obtained MasterCard memberships, to its customer portfolio.

2001: Following the economic crisis in Turkey, several of Universal’s customers’ as well as Egebank’s licenses were revoked. After being managed by SDIF (Savings Deposit Insurance Fund) for two years, Universal was acquired by Teknoloji Holding in December 2001.

Milestones

2002: Şekerbank was signed up for acquiring processing.

2003: Şekerbank was signed up for MasterCard issuing and personalization.

2004: Fully certified by Visa & MasterCard for EMV card personalization. Akbank was signed up for EMV card personalization. International Financial Services of Romania was signed up for card &

POS processing. Universal Bank of Northern Cyprus was signed up for card & POS

processing. Şekerbank was signed up for POS sharing.

Milestones

2004: Koçbank was signed up for EMV card personalization. Boyner was signed up for card personalization.

2005: Dışbank was signed up for POS sharing. Family Finans, formerly a customer of AKK-Provus, was signed up for

card and POS operations. Albaraka Türk has recently signed a contract for card operations

services. Finansbank has recently signed a contract for POS sharing services. Asya Finans has agreed to the terms for a contract for e-commerce

payment gateway. Şekerbank has agreed to the terms for a contract for e-commerce

payment gateway.

Milestones

Card operations Card personalizationPOS/Merchant operations

Products and Services

Card OperationsProducts Charge cards

Revolving credit cards

Installment cards

Business cards

B2B card payments

Loyalty cards

Gift cards

Cooperative cards

Virtual cards

POS Operations

ProductsStandard EFT/POSGSM POS GPRS POSSales draft captureCash register - POS integrationLAN POS

Software Installment applications Reward applications Loyalty applications

Services POS renting Shared POS Merchant contact center

IntroductionUniversal’s MilestonesProducts and ServicesCustomersStrengths, Opportunities and StrategyTurkish Payment SystemCompetition POS Outsourcing/Sharing

Issuing Processing8 customersTop 3 customers: Asya Finans, Şekerbank, and Family Finans*

• Shared POS Operations– 5 customers– Top 3 customers: Fortis

(formerly Dışbank), Şekerbank and Finansbank

* New customer

CustomersAcquiring Processing

8 customersTop 3 customers: Asya Finans, Şekerbank, and Family Finans*

• Card Personalization– 8 customers– Top 3 customers: Koçbank,

Asya Finans and Şekerbank

Universal - Cards Processed

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

280,000

Universal – POS Terminals Managed

0

20,000

40,000

60,000

80,000

100,000

120,000

Jan-04Feb-04

Mar-04

Apr-04

May-04Jun-04

Jul-04

Aug-04

Sep-04

Oct-04

Nov-04Dec-04

Jan-05Feb-05

Mar-05

Apr-05

May-05

Strengths Established and reputable brand name in Turkey’s third party

processing market.

An “independent” third party processor - not associated with financial institutions.

Synergy with group companies.

Strong infrastructure with high capacity to sustain future growth.

Strong network with 44 nodes in various locations in Turkey.

Supports multiple brand POS and network equipment, providing flexibility and competitive advantage to its customers.

Highly skilled and experienced team with significant banking and credit card experience.

Low penetration of TPP services in Turkey.

Potential for market growth due to increased cost awareness among financial institutions.

Visa and MasterCard EMV migration.

Strong growth in number of credit and debit cards issued in Turkey.

Opportunities for Growth

UNIVERSAL’S UNIVERSAL’S GOALGOAL IS TO BECOME THE BEST PERFORMING AND IS TO BECOME THE BEST PERFORMING AND LARGEST PROCESSOR IN CARD PAYMENT SYSTEMS IN TURKEYLARGEST PROCESSOR IN CARD PAYMENT SYSTEMS IN TURKEY

Steps to achieve this goal : Maintain existing service levels Increase market penetration Continue proactive marketing to take on all the card processing and

terminal management operations of medium sized banks Continue proactive marketing to offer modular services (statement

printing, card personalization) to large banks Increase service/product segmentation Offer new products and/or services including collections, application

scoring, debit card management, ATM management outsourcing

Strategy

Turkish Market

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

USD Millions Credit Card Transaction Volumes

Cash AdvancesPurchases

Cash Advances 3,613 4,408 1,999 2,023 2,860 4,677

Purchases 9,038 12,424 10,347 14,986 24,154 41,506

1999 2000 2001 2002 2003 2004

Turkish Market

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Number of Credit Cards

Visa MasterCard

MasterCard 3,306,237 5,068,747 6,102,024 7,718,049 10,255,667 13,450,664 13,440,655Visa 6,687,284 8,280,783 7,829,906 7,947,302 9,572,460 13,202,147 14,769,616

1999 2000 2001 2002 2003 2004 2005 May

Turkish Market

05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,000

1999 2000 2001 2002 2003 2004 2005May

Number of Debit Cards

Private Label 6,019,497 6,501,205 7,537,673 7,157,812 5,879,099 3,536,574 1,664,146Cirrus & Maestro (MasterCard) 10,401,854 13,873,135 14,628,251 16,966,124 20,601,196 24,506,797 25,560,121Electron & Plus (Visa) 2,743,856 2,720,517 2,711,896 3,080,776 3,613,896 3,058,946 3,351,472Plus (Visa) 88,846 71,687 57,672 50,766 45,069 39,915 37,656Electron (Visa) 4,853,270 6,393,759 6,721,452 7,801,830 9,424,197 11,942,762 13,738,163

1999 2000 2001 2002 2003 2004 2005 May

Turkey is a Credit Card Market

1.86% 2.2

0% 1.56%

0.94%

2.27%

0.21%

90.96

%

CC Purchase DC Purchase DC ATM Cash WithdrawalCC Cash Advance Europay/Visa Issuer Gateway DC ATM Balance InquiryEuropay/Visa Acquirer Gateway

POS Terminals in Turkey

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

POS 188,957 299,636 364,636 495,718 662,429 912,118 1,037,0491999 2000 2001 2002 2003 2004 2005 May

ATM’s in Turkey

Since most banks will have to replace/upgrade a significant portion of their ATM’s, there is an opportunity for establishing and managing an ATM network.

10,000

11,000

12,000

13,000

14,000

ATM 9,939 11,991 12,127 12,069 12,857 13,544 14,0001999 2000 2001 2002 2003 2004 2005 May

Outsourcing Market – Issuing Operations

Outsourcing Market Share -POS- 105,000 ,

10.13% 932,000 , 89.87%

In-house POSOutsourced POS

Credit card outsourcing is still insignificant.

Outsourcing of POS operations is more common.

Outsourced Market Share - Card

27.845.441 ; 98,60%

396.000 ; 1,40%

Inhouse ProcessedOutsourced Card Number

Market Segmentation – Credit Cards

789-10%-6%7.547.2914,11%1%2%1.018.747ZiraatbankZiraatbank

88686%118%9.291.3644,50%72%83%1.116.452DDisisbankbank

991015%20%15.021.6646,84%21%27%1.695.854VakVakiifbankfbank

8610134%45%14.247.1286,93%75%125%1.719.344HSBCHSBC

866138%68%14.472.6506,96%78%71%1.725.762FinansbankFinansbank

789-10%-6%7.547.2914,11%1%2%1.018.747ZiraatbankZiraatbank

88686%118%9.291.3644,50%72%83%1.116.452DDisisbankbank

991015%20%15.021.6646,84%21%27%1.695.854VakVakiifbankfbank

8610134%45%14.247.1286,93%75%125%1.719.344HSBCHSBC

866138%68%14.472.6506,96%78%71%1.725.762FinansbankFinansbank

1113930%56%29.186.68910,83%56%2%2.686.236AkbankAkbank

13141229%25%37.160.10911,56%42%2%2.868.767IsIsbankasbankasii

19161364%61%74.921.75515,55%39%27%3.856.829GarantibankasGarantibankasii

17181620%25%67.907.07016,12%29%10%3.998.617YapYapiikredikredi

200420032002% Chg.2003-2004

% Chg.2002-2003

Transaction/cardCC Trx. #CC Trx. #%

Market% Chg.

2003-2004% Chg.

2002-2003CC #Bank Name

1113930%56%29.186.68910,83%56%2%2.686.236AkbankAkbank

13141229%25%37.160.10911,56%42%2%2.868.767IsIsbankasbankasii

19161364%61%74.921.75515,55%39%27%3.856.829GarantibankasGarantibankasii

17181620%25%67.907.07016,12%29%10%3.998.617YapYapiikredikredi

200420032002% Chg.2003-2004

% Chg.2002-2003


Market% Chg.

2003-2004% Chg.


Market Segmentation – Credit Cards

111513-6%52%1.474.0330,55%32%29%136.068AsyafinansAsyafinans

88841%-11%2.136.4311,08%38%-6%266.807SSekerbankekerbank

99947%17%3.015.4881,40%46%27%347.606OyakbankOyakbank

1091030%36%5.258.4602,03%16%44%504.140KoKoççbankbank

468-26%-20%2.149.1702,12%9%8%526.858CitibankCitibank

688-42%-31%3.802.2982,58%-24%-25%639.631PamukbankPamukbank

57850%9%3.652.5312,71%99%20%672.658HalkbankHalkbank

65763%65%4.447.3663,19%46%139%792.023DenizbankDenizbank

111513-6%52%1.474.0330,55%32%29%136.068AsyafinansAsyafinans

88841%-11%2.136.4311,08%38%-6%266.807SSekerbankekerbank

99947%17%3.015.4881,40%46%27%347.606OyakbankOyakbank

1091030%36%5.258.4602,03%16%44%504.140KoKoççbankbank

468-26%-20%2.149.1702,12%9%8%526.858CitibankCitibank

688-42%-31%3.802.2982,58%-24%-25%639.631PamukbankPamukbank

57850%9%3.652.5312,71%99%20%672.658HalkbankHalkbank

65763%65%4.447.3663,19%46%139%792.023DenizbankDenizbank

200420032002% Chg.2003-2004

% Chg.2002-2003


Market% Chg.

2003-2004% Chg.

2002-2003CC #Bank Name200420032002% Chg.

2003-2004% Chg.

2002-2003


Market% Chg.

2003-2004% Chg.


1013-16%-379.7180,15%52%-37.859KuveyttKuveyttüürkrk

1212-27%-67.5700,02%25%-5.477TurkishTurkish

649349%-62%4.2160,00%176%-5%710BankeuropaBankeuropa

783-50%-65%14.3750,01%-46%-85%1.972MNGBankMNGBank

933-18%-3%54.9180,03%-73%13%6.271TekfenbankTekfenbank

71012-1%-13%310.3640,17%32%10%43.319TekstilbankTekstilbank

556-7%12%312.0340,27%4%36%68.090AnadoluAnadolu

899-10%10%547.2290,29%8%10%71.393TEBTEB

1013-16%-379.7180,15%52%-37.859KuveyttKuveyttüürkrk

1212-27%-67.5700,02%25%-5.477TurkishTurkish

649349%-62%4.2160,00%176%-5%710BankeuropaBankeuropa

783-50%-65%14.3750,01%-46%-85%1.972MNGBankMNGBank

933-18%-3%54.9180,03%-73%13%6.271TekfenbankTekfenbank

71012-1%-13%310.3640,17%32%10%43.319TekstilbankTekstilbank

556-7%12%312.0340,27%4%36%68.090AnadoluAnadolu

899-10%10%547.2290,29%8%10%71.393TEBTEB

Market Segmentation – POS

30%15%49.456.67225,6%47,0%21,7%180.100AkbankAkbank

27%21%43.003.28154,4%40,5%19,5%161.562IsIsbankasbankasii

76%45%65.558.62629,2%32,9%12,2%101.097GarantibankasGarantibankasii

19%62%70.011.5367,2%18,9%15,7%129.878YapYapiikredikredi

2003/3-2004/32002/3-2003/32003/3-2004/32002/3-2003/3

Transaction Increase %TransactionVolume

% Change% Market

POS #Bank Name

30%15%49.456.67225,6%47,0%21,7%180.100AkbankAkbank

27%21%43.003.28154,4%40,5%19,5%161.562IsIsbankasbankasii

76%45%65.558.62629,2%32,9%12,2%101.097GarantibankasGarantibankasii

19%62%70.011.5367,2%18,9%15,7%129.878YapYapiikredikredi

2003/3-2004/32002/3-2003/32003/3-2004/32002/3-2003/3


% Change% Market

POS #Bank Name

-5%65%1.601.38523,2%119,0%0,2%1.814ZiraatbankZiraatbank

50%26%14.788.83451,8%47,7%7,9%65.924DDisisbankbank

29%9%16.023.15363,5%7,4%6,8%56.284VakVakiifbankfbank

313%112%3.786.9387,8%-24,8%0,1%583HSBCHSBC

85%64%10.363.86269,8%54,5%3,8%31.594FinansbankFinansbank

-5%65%1.601.38523,2%119,0%0,2%1.814ZiraatbankZiraatbank

50%26%14.788.83451,8%47,7%7,9%65.924DDisisbankbank

29%9%16.023.15363,5%7,4%6,8%56.284VakVakiifbankfbank

313%112%3.786.9387,8%-24,8%0,1%583HSBCHSBC

85%64%10.363.86269,8%54,5%3,8%31.594FinansbankFinansbank

31%25%3.653.77633,6%74,9%0,9%7.841AsyafinansAsyafinans

196%53553%1.629.537490,7%7455,9%1,8%15.176SSekerbankekerbank

66%6%4.447.25452,4%50,1%2,2%17.998OyakbankOyakbank

-34%-3%5.694.85714,0%32,8%3,3%27.637KoKoççbankbank

-2%18%34.717--0,0%0CitibankCitibank

-25%-62%1.908.847-26,2%-23,6%1,0%8.198PamukbankPamukbank

59%96%1.485.61868,0%506,1%0,5%4.369HalkbankHalkbank

98%73%3.079.644206,2%45,7%1,9%16.032DenizbankDenizbank

31%25%3.653.77633,6%74,9%0,9%7.841AsyafinansAsyafinans

196%53553%1.629.537490,7%7455,9%1,8%15.176SSekerbankekerbank

66%6%4.447.25452,4%50,1%2,2%17.998OyakbankOyakbank

-34%-3%5.694.85714,0%32,8%3,3%27.637KoKoççbankbank

-2%18%34.717--0,0%0CitibankCitibank

-25%-62%1.908.847-26,2%-23,6%1,0%8.198PamukbankPamukbank

59%96%1.485.61868,0%506,1%0,5%4.369HalkbankHalkbank

98%73%3.079.644206,2%45,7%1,9%16.032DenizbankDenizbank

2003/3-2004/32002/3-2003/32003/3-2004/32002/3-2003/3


% Change% Market

POS #Bank Name2003/3-2004/32002/3-2003/32003/3-2004/32002/3-2003/3


% Change% Market

POS #Bank Name

--0--0,0%0KuveyttKuveyttüürkrk

--57--0,0%0TurkishTurkish

216%-1.032--0,0%0BankeuropaBankeuropa

-72%-100%33--0,0%0MNGBankMNGBank

0%27%1.987--0,0%0TekfenbankTekfenbank

23%82%111.499160,5%31,3%0,2%1.477TekstilbankTekstilbank

56%-52%8.958--0,0%0AnadoluAnadolu

-12%28%796.0297,0%57,8%0,2%1.734TEBTEB

--0--0,0%0KuveyttKuveyttüürkrk

--57--0,0%0TurkishTurkish

216%-1.032--0,0%0BankeuropaBankeuropa

-72%-100%33--0,0%0MNGBankMNGBank

0%27%1.987--0,0%0TekfenbankTekfenbank

23%82%111.499160,5%31,3%0,2%1.477TekstilbankTekstilbank

56%-52%8.958--0,0%0AnadoluAnadolu

-12%28%796.0297,0%57,8%0,2%1.734TEBTEB

Market Segmentation – POS

Customers of AKK - Provus

CustomerCustomerss CardCardss (est.) (est.) POS (est.)POS (est.)

Tekfen Bank 7.184

Turkish Bank 5.990

Family Finans * 111.208 *5.000

MNG Bank ** 1.070

Bank Europa 704

* Signed a contract with Universal; migration will be completed in the coming months.** Currently negotiating with Universal.

Outsourced Market Share

Outsourced Market Share (Card)

381,208 ; 96%

14,948 ; 4%

UKH

AKK-PROVUS

Outsourced Market Share (POS)

- ; 0%

104,949 ; 100%

UKH

AKK-PROVUS

Market Dynamics Issuing is the most profitable business for banks while acquiring is no longer profitable.

Profitability in issuing entails high transaction volumes, which require a large POS network and a large merchant portfolio, necessitating heavy investments in infrastructure and significant operational costs.

Currently, large banks, which have already established their networks, prefer to keep their operations in-house. Medium and small sized banks consider POS outsourcing.

Due to sophisticated loyalty applications, each bank installs its own POS terminals at merchant locations and builds its own network.

UKH currently has 4 medium-sized financial institutions as customers in POS outsourcing: Fortis (formerly Dışbank), Şekerbank, Asya Finans and Finansbank.

Universal’s POS Outsourcing/Sharing Model covers the following services:

POS Help Desk & Call Center Services

Fraud and Charge Back Services

Network and

Transaction Switching

Settlement Services

Providing POS

Terminals

POS Field

Services

POS Terminal

Management

POS Outsourcing/Sharing Model

Universal’s Proven POS Sharing Approach:

No colors, logos or identification marks are associated with a specific bank.POS terminals are owned and insured by Universal.Banks share Universal’s terminals wherever possible.Merchants select the default acquirer bank for non-on-us transactionsBanks’ names appear in alphabetical order.Banks are required to sign Merchant Acquiring Agreements in order to share a POS.Pricing model depends on the number of banks sharing the POS.

POS Sharing Approach

For Banks No upfront investment in infrastructure No POS terminal inventory No ongoing operating costs Savings in marketing expenses Use of a larger network with higher geographic & merchant coverage Experience and know-how of Universal Ready-to-use POS sharing infrastructure Quality assurance with Service Level Agreement

For MerchantsSingle point of contact Maximum on-us transactions; less commission paidPotential for extra revenue with non-banking applications

Advantages of POS Outsourcing

PLANETExclusive distributor of IngenicoProvides:

POS terminalsNetwork devicesPOS application development

Largest POS software development team in Turkey, with 30 experienced software engineers

TEKNOSERLargest POS field services provider with 43 offices in Turkey and Northern Cyprus500 employeesCurrently serves 230.000 POS terminals

Single Point of Contact (Synergy with other group companies)

Why Universal Kart?

Ready-to-use Infrastructure

Network coverage throughout Turkey with 44 nodesField operations through Teknoser’s 43 officesLargest portfolio in POS outsourcing/sharing in Turkey

105.000 POS terminalsMore than 90.000 merchants

Ready-to-use systems for POS outsourcing Terminal management system Network management system POS operations system

Task tracking POS tracking

Why Universal Kart?

Financial Highlights2002 2003 2004 2005 E 2006 E 2007 E 2008 E 2009 E

REVENUES 1,256,840 1,512,408 2,141,277 6,804,383 12,302,649 16,197,374 20,090,424 23,094,800

Issuing 807,787 966,403 649,842 1,401,667 2,811,180 3,852,138 4,849,746 5,795,304

Acquiring 312,942 369,020 970,468 1,772,352 2,919,590 3,784,800 4,634,287 5,382,554

Outsourcing - - 80,487 2,598,138 5,169,064 7,108,854 9,055,241 10,180,887

Personalization - 36,418 326,547 743,056 987,667 936,060 942,071 1,038,351

Printing & Enveloping - - - 176,569 322,548 422,921 516,479 605,105

Yearly Service Fee 126,601 71,940 72,215 88,600 68,600 68,600 68,600 68,600

Others 9,510 68,627 41,718 24,000 24,000 24,000 24,000 24,000

CAPEX 5,900,000 3,800,000 1,060,000 960,000 100,000

POS 4,800,000 3,700,000 1,000,000 900,000 40,000

Others 1,100,000 100,000 60,000 60,000 60,000

Thank You!

Universal (UKH) Kredi Kartı Hizmetleri A.Ş. Presentation - Sunumu (2005)

Technology

Transcript of Universal (UKH) Kredi Kartı Hizmetleri A.Ş. Presentation - Sunumu (2005)