Why Bankserv?

| Our Services: Summary

As the trusted partner of the South African banking industry, BANKSERV is an integral part
of the infrastructure. We have been appointed by PASA (Payments Association of South
Africa) in terms of the National Payments Systems Act 78/1998 as a payment clearing house
operation - providing inter-bank electronic transaction switching services to the banking
sector. We pride ourselves on providing our clients with the highest quality of transaction,
switching and value-added services in support of their business objectives while effecting
significant cost savings and reducing risk and complexity in the industry.

BANKSERV is an exceptionally successful company. We perform well financially and

employ a number of loyal, talented and experienced individuals. Intellectual capital and
integrity form the bedrock of BANKSERV and we are committed to achieving the best
possible results for all our stakeholders.

Our Background and history

Prior to the establishment of BANKSERV in the first half of 1993, the banking industry in
South Africa jointly owned several companies that provided shared services to the banks in
a number of different payment channels. The companies in this sector each followed their
own direction and operated in their separate silo's. There was clearly a need to consolidate
them into a single structure. An Inter-bank task group was appointed to investigate the
feasibility of this proposal and in March 1993, the banking industry reached agreement and
founded BANKSERV.

The following companies were incorporated into BANKSERV:

- The ACB
- Saswitch (Pty) Ltd.

Subsequent consolidation helped streamline the non-competitive operations of banks and

the resultant benefit in economies of scale has significantly contained payment related costs.

WHY BANKSERV?
Now that you know who we are and what we do, here are a few reasons why your Bank
chooses BANKSERV as the partner of choice in the banking industry...
We are trusted
We have an excellent track record
We are non-competitive with our owners and clients
We have integrity
We are cost-effective
We have economies of scale
We have momentum
We have resources and capacity
Multiple participants share investments in joint projects
Having been successful, we are self-sufficient
Experienced industry experts maximise our intellectual capital
We have great relationships
We open doors and facilitate introductions through clients and Boards
We are viewed as a good opportunity for partners and vendors
We have an excellent service record
Our company culture and incentives are based on professional excellence
We have existing, successful, state-of-the-art products and services
Unique in Africa with a blue-chip client base
We have focused business units
Focusing current products on business principles
Managing new products and services
The Trusted Partner
We are proud of our position as the very nucleus of the banking industry and are determined
to grow our presence in previously uncharted territories. We have the expertise, the
intellectual capital, the heritage and an incomparable team of people that will lead us from
strength to strength.
Join us on our journey...

Summary of our Services

As the trusted partner of the South African banking industry, we provide the following
services to our clients:
Real-time Switching Services (SASWITCH)
Electronic Funds Transfer (ACB EFT)
Code Line Clearing (CLC)
Cheque Verification System (CVS Plus)
Inter-bank Credit Payment System (ZAPS)
Fraud Management (FMS)
Into Africa
National Bank Account (NBA)
Mzanzi Money Transfer product (MMT)
Electronic Bill Presentment (EBP)
Web Based Management Information Services (WIS)
Research and Development
Consulting Services

Saswitch ATM Authorisation

All transactions with a valid local currency BIN number are switched between Acquiring and
Issuing financial institutions. ATM Card transactions bearing an International Bank
Identification Number (BIN) are not switched via Bankserv.
Once a transaction is received from an acquiring financial institution, Bankserv applies PIN
security algorithms, secures the transaction on both the local processor and at Bankservs
DR Processor, and then forwards the transaction to the issuing financial institution. This is
followed by the standard authorised/not-authorised transaction flow back to the acquiring
financial institution.

ATM Graphic Representation

Acquiring Bank | Bankserv Real-time Switch | Issuing Bank
Validation
All received data are subjected to various validation actions in preparation for transferring
STP compliant transactions to the participating banks. The validation system is rules based
and parameter driven, and the subject of continuous amendment depending on business
requirements and risk profiles.
Typical validations are:
Compliance with Bank Identification Number (BIN) parameters
Pin Number Verification
Clearing house or banking authority rules
Transaction type, content validity and relational checking
Structural compliance
Failed validation results in immediate on-line notification to the Acquiring Bank.

Settlement Query System

A 24-hour cycle cut-off occurs at 19h00 local time. The settlement data are supplied to all
system participants and the central bank, as described later.
Bankservs audit trails provide functionality to allow participating banks on-line access via
Bankservs Settlement Query System. This is in the event that queries might arise for a
variety of practical reasons.
The system interfaces to Bankservs EFT system for the collection of operational and other
deemed costs.

Billing
The Billing module allows for electronic invoicing, as well as electronic collection and
distribution of fees.
The collection and distribution of the fees is achieved by creating EFT files that are fed
through the EFT system to debit and credit the participating banks nominated accounts.

Risk Management
The increased velocity and value of transactions in the banking industry leads to the
common concern of the financial institutions ability to manage the process and concomitant
threats and risk, including:
Transaction based fraud
Business exposure risk
Containment of processing cost
The Bankserv solution addresses the transaction based fraud issue by focussing on:
A rules based transaction validation module
Delivering data timeously and correctly by means of its sophisticated delivery module
A modular, international standards based technology model that:
> contains costs
> eliminates single points of failure
> provides throughput capacity in compliance with stringent SLA demands
Industry benchmark DRP procedures
Parameter Files
The validation system is a core component of the Risk management suite. It is driven by a
set of rules and parameters that are the subject of continuous amendment depending on
business requirements and risk profiles.
Bankservs strict adherence to Service Level Agreements extends to controlling valid
processing dates and times in parameterised formats.
Data Encryption
Bankserv uses state-of the-art DES encryption algorithms for Personal Identification Number
(PIN) data for inward and outward transmission. Key exchanges occur on a regular basis.
BIN
Valid Bank Identification Numbers are maintained as part of the risk module parameters
Financial Limits
Bankserv applies an item limit validation to every financial transaction in terms of financial
regulatory requirements.
In any event, extensive financial and operational, fully auditable MIS reporting is made
available on a periodic and on demand basis. Daily reporting to sending banks may occur as
changes are effected to user security parameters.
Technology Model
Bankservs on-line, real-time system is implemented on an industry standard non-stop
Compaq. This approach allows a modular upgrade path with full access to the latest
developments in the industry.
Disaster Recovery
Compliance with strict Service Level Agreements is part of Bankservs culture. To this end,
the on-line, real-time system allows for the implementation of a parallel real-time process in
a remote location, which is part of the every day production suite.
Simultaneous system and financial parameter updates and other processes result in
successful daily, synchronised operations.
The remote location is subjected to the same stringent operational requirements as the main
production site, such as Uninterruptible Power Supply, no single point of failure, air
conditioning, water supply, etc.

Settlement Interface
The current settlement process is capable of providing Singular Settlement that may easily
be integrated into the settlement process for other payment streams.
End of Day Settlement
The Settlement Process provides daily inter-bank settlement information. This information is
delivered via a standard SWIFT interface to wherever these data are required. The end point
would typically be the central bank, with complementary data being delivered to participant
banks.
Upon reaching settlement for the EFT payment stream, the Settlement Process will deliver
the following information:
MT298 Settlement Instruction message to the central bank process via the SWIFT network
MT298 Settlement Notification messages to the participant member bank(s) via the SWIFT
network
Optional paper reports in support of the above messages
Scheduled List
The Settlement Process can deliver two types of settlement instruction messages:
Standard MT298 Settlement Instruction Messages
These are settlement instruction messages, which are for immediate settlement, once the
MT298 message has been delivered to the central bank system
Scheduled List MT298 Settlement Instruction Messages
These settlement instruction messages are delivered to the central bank system, placed in a
holding queue and then scheduled to effect settlement at a given date and time, as specified
in the MT298 message. These MT298 messages contain specific settlement tag fields,
which identify that it is a scheduled list instruction message.
BANKSERV believes that there is more than one possible solution and that the final choice
will be based on achieving a balance between risk and cost.

Secure Network Services

A key requirement for the on-line real-time system is an effective and robust network service
for the delivery of data in a reliable and secure manner.
Bankservs EFT system integrates fully with the following security processes:
Authentication
Encryption
Segregation and Confidentiality of bank data
Protection against attack (virus or denial of service)
Authentication
Authentication is used to confirm that the data received originated from the source from
where it was expected.
The internationally accepted authentication process details the actions required of the
sender of the data, also referred to as the source, and the receiver of the data (destination).
Encryption
Encryption is a cryptographic checking process to ensure that the data transmitted from one
location and received at another have not changed in any way
The internationally accepted security process authenticates the source and introduces a
hash total into the security process. This is the first step in ensuring the data integrity of the
file being transmitted.
The encryption routine used is the ANSI X9.9 standard 64 Bit DES encryption algorithm.

Network Requirements
A secure network should consist of a backbone Ethernet to which the existing equipment is
connected. (A direct connect x.25 network interface is also available optionally.) The firewall
must be a fail-over system with two separate sets of hardware so that, even if one device
fails, sessions or data will not be affected.
From the firewall the data itself will enter into an encrypted tunnel (Virtual Private Network -
VPN) to its endpoint, which will be a participating bank. Physically the data leaves the
firewall and hops to the router. This router should also be a fail-over system, and if the router
or line should fail, the second router may be used via Integrated Services Digital Network
(ISDN) dial-up connection. If all local leads fail, i.e. the leased line and dial-up connection,
then the alternate satellite path may be used. The VPN tunnel is used, because the satellite
transmission cannot be considered secure. A leased line is secure, because it is a point-to-
point line, but it should be encrypted using Internet Protocol Security to prevent possible
Telecommunications company personnel attempting to use sniffers. In addition, intrusion
detectors may be placed at the site to listen for any attack patterns.
Segregation and Confidentiality of Bank Data
The segregation of data between each bank is achieved by implementing internationally
accepted best practice in terms of firewall and router installations.

Protection against attack (virus or denial of service)

The system relies on the best-of-breed Firewalls, Intrusion Detection Services and Content
Security (including Anti-virus mechanisms) to protect against viruses and Denial of Service
attacks. These tools also protect against other types of attack.
Inter-bank Credit Payment System (ZAPS)
In the payments industry, the need for a real-time, on-line inter-bank payment mechanism
remains paramount. The Bankserv process provides the necessary settlement information
infrastructure in support of this payment instrument.
It is important that this service is provided in the most cost effective manner, without
incurring an increased risk profile.
Bankservs Inter-bank Credit Payment System provides a service to the participating banks
in deriving inter-bank gross settlement obligations for electronic credit push transactions.
After various validation and accounting processes, the inter-bank settlement information is
supplied to the central bank and the banks treasury departments via a SWIFT link.
BANKSERV usually processes in excess of 43,000 transactions per month to the value of
ZAR6 billion and is able to cope with peaks far in excess of this figure.

Inter-bank Credit Payment

Credit push transactions may be originated either at request of a customer or due to an
internal banking business need. The originating bank transmits the transaction (MT100) to
the Beneficiary bank using the SWIFT network.
The same transaction details are transmitted to Bankserv via the SWIFT network using an
MT205 message format. After a validation process, transactions are routed to a settlement
accounting or warehouse process. Transactions may be pre-dated for 7 days and will be
managed in Bankservs electronic warehouse.
Originating and beneficiary banks will receive MT950 based accounting statements of inter-
bank gross settlement positions. The statement intervals are parameter based and
transmitted by Bankserv using the SWIFT network for delivery.
End of-day statements are transmitted to all participants as well as to the central bank.

Validation
All received data are subjected to various validation actions in preparation for transferring
STP compliant transactions to the participating banks. The validation system is rules based
and parameter driven, and the subject of continuous amendment depending on business
requirements and risk profiles.
Typical validations are:
Compliance with bank and bank branch parameters
Clearing house or banking authority rules
Duplicate transaction detection
Transaction type, content validity and relational checking
Structural compliance
Valid processing dates
The results of the validation checking are supplied to submitting banks on a continuous
basis.
The output of the core Inter-Bank Credit Payment processing system results in balancing
and reconciliation settlement data for participating financial institutions.

ZAPS Graphic Representation

Risk Management
The increased velocity and value of transactions in the banking industry leads to the
common concern of the financial institutions ability to manage the process and concomitant
threats and risk, including:
Transaction based fraud
Business exposure risk
Containment of processing cost
The Bankserv solution addresses the transaction based fraud issue by focussing on:
A rules based transaction validation module
Delivering data timeously and correctly by means of its sophisticated delivery module
A modular, international standards based technology model that:
> contains costs
> eliminates single points of failure
> provides throughput capacity in compliance with stringent SLA demands
Industry benchmark DRP procedures
Parameter Files
The validation system is a core component of the Risk management suite. It is driven by a
set of rules and parameters that are the subject of continuous amendment depending on
business requirements and risk profiles.
Bankservs strict adherence to Service Level Agreements extends to controlling valid
processing dates and times in parameterised formats.
Bank Master File Information
Control information for participating banks is maintained, particularly for the control of
incoming transactions, risk controls and duplicate transaction detection.
In any event, extensive financial and operational, fully auditable MIS reporting is made
available on a periodic and on demand basis. Daily reporting to participating banks may
occur as changes are effected to security parameters.
Technology Model
Bankservs Inter-bank Credit Payment system is implemented on an industry standard, open
NT platform using an SQL database. This approach allows a modular upgrade path without
lock-in to a particular vendor and possible cost spiral effects.
An international standard SWIFT application interface is used, together with the trusted
SWIFT security procedures. Bankserv is fully involved with SWIFTs current software
upgrade strategies.

Disaster Recovery Model

Bompliance with strict Service Level Agreements is part of Bankservs culture. To this end,
the Inter-Bank Credit Payment system allows for the implementation of a parallel real-time
process at a remote location, which is part of the every day production suite.
Simultaneous system updates and other processes result in successful daily, synchronised
operations.
The remote location is subjected to the same stringent operational requirements as the main
production site, such as Uninterruptible Power Supply, no single point of failure, air
conditioning, water supply, etc.

Settlement Interface
The current settlement process is capable of providing Singular Settlement that may easily
be integrated into the settlement process for other payment streams.
End of Day Settlement
The Settlement Process provides daily inter-bank settlement information. This information is
delivered via a standard SWIFT interface to wherever these data are required. The end point
would typically be the central bank, with complementary data being delivered to participant
banks.
Upon reaching settlement for the Inter-bank Credit Payment stream, the Settlement Process
will deliver the following information:
MT298 Settlement Instruction message to the central bank process via the SWIFT network
MT298 Settlement Notification messages to the participant member bank(s) via the SWIFT
network
Optional paper reports in support of the above messages
Scheduled List
The Settlement Process can deliver two types of settlement instruction messages:
Standard MT298 Settlement Instruction Messages
These are settlement instruction messages, which are for immediate settlement, once the
MT298 message has been delivered to the central bank system
Scheduled List MT298 Settlement Instruction Messages
These settlement instruction messages are delivered to the central bank system, placed in a
holding queue and then scheduled to effect settlement at a given date and time, as specified
in the MT298 message. These MT298 messages contain specific settlement tag fields,
which identify that it is a scheduled list instruction message.
BANKSERV believes that there is more than one possible solution and that the final choice
will be based on achieving a balance between risk and cost.

Secure Network Services

A key requirement for the Inter-Bank Credit Payment System is an effective and robust
network service for the delivery of data in a reliable and secure manner.
Delivery Process
The Inter-Bank Credit Payment System integrates seamlessly with the SWIFT network that
is used for data delivery to and collection from the participating banks.
The system uses, inter alia, the full security, possible duplicate detection and guaranteed
delivery functionality offered by SWIFT.
This system is fully up to date with the latest SWIFT interface release level.
Security
Bankservs Inter-Bank Credit Payment system integrates fully with the following security
processes:
Authentication
Encryption
Segregation and Confidentiality of bank data
Protection against attack (virus or denial of service)
Encryption
Encryption is a cryptographic checking process to ensure that the data transmitted from one
location and received at another have not changed in any way
The internationally accepted security process authenticates the source and introduces a
hash total into the security process. This is the first step in ensuring the data integrity of the
file being transmitted.
The encryption routine used is the ANSI X9.9 standard 64 Bit DES encryption algorithm.
Network Requirements
A secure network should consist of a backbone Ethernet to which the existing equipment is
connected. (A direct connect x.25 network interface is also available optionally.) The firewall
must be a fail-over system with two separate sets of hardware so that, even if one device
fails, sessions or data will not be affected.
From the firewall the data itself will enter into an encrypted tunnel (Virtual Private Network -
VPN) to its endpoint, which will be a participating bank. Physically the data leaves the
firewall and hops to the router. This router should also be a fail-over system, and if the router
or line should fail, the second router may be used via Integrated Services Digital Network
(ISDN) dial-up connection. If all local leads fail, i.e. the leased line and dial-up connection,
then the alternate satellite path may be used. The VPN tunnel is used, because the satellite
transmission cannot be considered secure. A leased line is secure, because it is a point-to-
point line, but it should be encrypted using Internet Protocol Security to prevent possible
Telecommunications company personnel attempting to use sniffers. In addition, intrusion
detectors may be placed at the site to listen for any attack patterns.
Segregation and Confidentiality of Bank Data
The segregation of data between each bank is achieved by implementing internationally
accepted best practice in terms of firewall and router installations.

Protection against attack (virus or denial of service)

The system relies on the best-of-breed Firewalls, Intrusion Detection Services and Content
Security (including Anti-virus mechanisms) to protect against viruses and Denial of Service
attacks. These tools also protect against other types of attack.

System Overview
Bankservs Cheque Clearing System (CLC) is an electronic cheque clearing system whereby
data is transmitted to BANKSERV by collecting banks. After various processes, the validated
data is transmitted to the homing banks. The inter-bank settlement information is supplied to
the central bank and the banks treasury departments via a SWIFT link.
The original cheque paper is also forwarded to Bankserv at an agreed to later stage. An
electronic match and physical sort phase occurs, followed by cheque paper collection by
homing banks.
BANKSERV usually clears in excess of 10 million transactions per month and is experienced
in all the various operational requirements.
CLC Electronic Service
Cheques deposited at bank branches are processed at centralised depots. The cheques
MICR data line is captured electronically, assembled into electronic files, and transmitted to
Bankserv. The transmission occurs via high-speed Telecom lines from the banks processing
centre, to Bankservs Automated Transmission System (AXS).
Validation
All received data are subjected to various validation actions in preparation for transferring
STP compliant transactions to the participating banks, or to an optional generic clearing
process. The validation system is rules based and parameter driven, and the subject of
continuous amendment depending on business requirements and risk profiles.
Typical validations are:
Compliance with bank and bank branch parameters
Clearing house or banking authority rules
Duplicate file detection
Transaction type, content validity and relational checking
 Structural compliance
Valid processing dates
The results of the validation checking are supplied to submitting banks on a continuous
basis.
The output of the core Cheque Clearing processing system results in switched Clearing and
balancing data for participating financial institutions.
Cheque paper processing
The physical cheques are delivered to Bankservs processing centres countrywide. This
process allows the optional matching of physical cheque paper received with a database of
electronic cheques submitted for clearing. In addition a sort of the cheques, either at bank
level, or down to serial number, occurs for the distribution of the physical cheques.
MIS suites provide information regarding the tracking of physical paper and a variety of
associated reports.

CLC Graphic Representation

............Collection Bank..|.Bankserv Processes.| Drawee & Central Bank

CLC Risk Management

The increased velocity and value of transactions in the banking industry leads to the
common concern of the financial institutions ability to manage the process and concomitant
threats and risk, including:
Transaction based fraud
Business exposure risk
Containment of processing cost
The Bankserv solution addresses the transaction based fraud issue by focussing on:
A rules based transaction validation module
Delivering data timeously and correctly by means of its sophisticated delivery module
A modular, international standards based technology model that:
> contains costs
> eliminates single points of failure
> provides throughput capacity in compliance with stringent SLA demands
Industry benchmark DRP procedures
Risk Management: Parameter Files
The validation system is a core component of the Risk management suite. It is driven by a
set of rules and parameters that are the subject of continuous amendment depending on
business requirements and risk profiles.
Bankservs strict adherence to Service Level Agreements extends to controlling valid
processing dates and times in parameterised formats.
Bank Master File Information
Control information for participating banks is maintained, particularly for the control of
incoming files and data sets, risk controls and generation numbers.
Customer Information System
Banking branch information is maintained in a central CIS System.
In any event, extensive financial and operational, fully auditable MIS reporting is made
available on a periodic and on demand basis. Daily reporting to participating banks may
occur as changes are effected to security parameters.
Risk Management: Technology Model
Bankservs CLC system is implemented on an industry standard, open Unix platform using
an Oracle database. This approach allows a modular upgrade path without lock-in to a
particular vendor and possible cost spiral effects.
Risk Management: Disaster Recovery
Compliance with strict Service Level Agreements is part of Bankservs culture. To this end,
the CLC system allows for the implementation of a parallel real-time process at a remote
location, which is part of the every day production suite.
Simultaneous system updates and other processes result in successful daily, synchronised
operations.
The remote location is subjected to the same stringent operational requirements as the main
production site, such as Uninterruptible Power Supply, no single point of failure, air
conditioning, water supply, etc.

Settlement Interface
The current settlement process is capable of providing Singular Settlement that may easily
be integrated into the settlement process for other payment streams.
Settlement Interface: End of Day Settlement
The Settlement Process provides daily inter-bank settlement information. This information is
delivered via a standard SWIFT interface to wherever these data are required. The end point
would typically be the central bank, with complementary data being delivered to participant
banks.
Upon reaching settlement for the CLC payment stream, the Settlement Process will deliver
the following information:
MT298 Settlement Instruction message to the central bank process via the SWIFT network
MT298 Settlement Notification messages to the participant member bank(s) via the SWIFT
network
Optional paper reports in support of the above messages
Settlement Interface: Scheduled List
The Settlement Process can deliver two types of settlement instruction messages:
Standard MT298 Settlement Instruction Messages
These are settlement instruction messages, which are for immediate settlement, once the
MT298 message has been delivered to the central bank system
Scheduled List MT298 Settlement Instruction Messages
These settlement instruction messages are delivered to the central bank system, placed in a
holding queue and then scheduled to effect settlement at a given date and time, as specified
in the MT298 message. These MT298 messages contain specific settlement tag fields,
which identify that it is a scheduled list instruction message.
BANKSERV believes that there is more than one possible solution and that the final choice
will be based on achieving a balance between risk and cost.

Secure Network Services

A key requirement for the CLC System is an effective and robust network service for the
delivery of data in a reliable and secure manner.
The CLC system integrates seamlessly with a cost effective and robust Automated
Transmission System (AXS) that is used for data delivery to and collection from the
participating banks.
The AXS system enables banks to connect directly to the CLC system for the electronic
submission and receipt of data; the system has proven itself in a bulk file data delivery
environment, and provides amongst others, the following features: -
Automated error recovery
data compression.
This system can be configured to provide for a SWIFT bulk file interface.
Secure Network Services: Security
Bankservs CLC system integrates fully with the following security processes:
Authentication
Encryption
Segregation and Confidentiality of bank data
Protection against attack (virus or denial of service)
Authentication
Authentication is used to confirm that the data received originated from the source from
where it was expected.
The internationally accepted authentication process details the actions required of the
sender of the data, also referred to as the source, and the receiver of the data (destination).
In the file transfer session, the AXS system will act as a source or a receiver of data,
depending on whether the file transfers are to or from banks. All players initiating a file
transfer will have a source identifier.
Encryption
Encryption is a cryptographic checking process to ensure that the data transmitted from one
location and received at another have not changed in any way
The internationally accepted security process authenticates the source and introduces a
hash total into the security process. This is the first step in ensuring the data integrity of the
file being transmitted.
The encryption routine used is the ANSI X9.9 standard 64 Bit DES encryption algorithm.

Network Requirements
A secure network should consist of a backbone Ethernet to which the existing equipment is
connected. The firewall must be a fail-over system with two separate sets of hardware so
that, even if one device fails, sessions or data will not be affected.
From the firewall the data itself will enter into an encrypted tunnel (Virtual Private Network -
VPN) to its endpoint, which will be a participating bank. Physically the data leaves the
firewall and hops to the router. This router should also be a fail-over system, and if the router
or line should fail, the second router may be used via Integrated Services Digital Network
(ISDN) dial-up connection. If all local leads fail, i.e. the leased line and dial-up connection,
then the alternate satellite path may be used. The VPN tunnel is used, because the satellite
transmission cannot be considered secure. A leased line is secure, because it is a point-to-
point line, but it should be encrypted using Internet Protocol Security to prevent possible
Telecommunications company personnel attempting to use sniffers. In addition, intrusion
detectors may be placed at the site to listen for any attack patterns.
The network can be configured to utilise the SWIFT Network architecture.
Segregation and Confidentiality of Bank Data
The segregation of data between each bank is achieved by implementing internationally
accepted best practice in terms of firewall and router installations.

Protection against attack (virus or denial of service)

The system relies on the best-of-breed Firewalls, Intrusion Detection Services and Content
Security (including Anti-virus mechanisms) to protect against viruses and Denial of Service
attacks. These tools also protect against other types of attack.

Fraud Management Service Introduction

BANKSERV signed a deal with ReD to implement and support a hosted PRISM Debit and
Credit Card Fraud Management Service (FMS) on behalf of the banks in January 2004. The
BANKSERV FMS proactively monitors Automated Teller Machines (ATM) and point of sale
(POS) debit card transactions to detect suspicious activity.The FMS system is a cost
effective means to monitor debit and credit card based transactions in near real-time for
fraud as these are processed for approval.
Combining card transaction fraud is a shared responsibility between banks, and the banks
trusted partner, BANKSERV. This FMS system will help reassure the growing number of
customers relying on e-payment transactions that we are serious about offering the best
level of protection available.
Key Features
Real time or near real time transaction authorization scoring
Rules based strategies match each authorization against a set of user-defined conditions
that contain profiles of suspicious behaviour
Windows based GUI workstation automates fraud analysis, control and workflow
Supports model updates for earlier detection of new fraud patterns
Providing 24 X 7 non-stop access
Provides comprehensive reports including fraud savings and losses, queue status and
model performance.
Minimizes false alerts on credit cards by using a comprehensive set of cardholder, merchant
and transaction data.
By combining patented neural networks the system is updated to ensure rules remain up to
date with new fraud patterns.
Why BANKSERV?
BANKSERV has built an enviable international reputation for rock solid systems, benchmark
service level agreement compliance and a thorough understanding of inter-bank clearing
systems. It is this experience coupled with the disciplined quality management for new
systems requirements that add value to our service offering to clients.
BANKSERV's systems comply with strict control guidelines for statutory rules and
regulations, security, authentication, service level requirements, supporting systems,
disaster recovery measures, uninterrupted power supply and change control using total
quality management methodologies.
All these features are built into the Fraud Management Services (FMS) product offering.
The non-stop real-timer transaction acquiring, switching, and issuer authorization model
implemented at BANKSERV is a highly secure and reliable process. BANKSERV uses
internationally benchmarked application software running on a non-stop platform. This
ensures ultra reliability for the business critical Fraud Management Service (FMS)
environment.
Fraud Management Service
BANKSERV's suite of fraud management solutions (FMS) provides predictive fraud
detection and case management for credit and debit card fraud. These products are helping
some of the largest financial institutions and retailers in the world control fraud losses and
reduce the threat of illicit funds moving through their institutions.
The secret behind our intelligent solutions is patented neural network technology. Neural
networks are a form of artificial intelligence that function much in the same way as your
brain. Unlike rules-based exception reporting systems, neural networks learn continuously
from data.
And, where rules-based systems are efficient at detecting known fraudulent activity and
criminal schemes that can be cast in a rule or table-entry, they are, nonetheless, static.
Predictive neural networks are the perfect complement, providing an adaptive and early
warning system for new and ever-changing criminal tactics and customer behaviour that
have yet to impact profitability.
BANKSERV's neural network solutions are truly unique, dynamically learning changes in
your business and markets. For example, bankcard fraud schemes are transient behaviours
that can change as fast as existing schemes are uncovered. Rules-based fraud detection
applications and systems that implement conventional neural network models are limited,
deteriorating over time as the behaviour patterns impacting your business change.
At BANKSERV the solutions keep pace with this volatility, enabling you to update the
predictive neural models with current transaction data, customer demographics and criminal
tactics - at your facility, according to your schedule and with no interruption in system
processing.
Credit Fraud Management
Credit is an adaptive risk management system that dramatically reduces losses associated
with credit, retail and commercial card fraud. Credit Fraud Management system proactively
monitors card transactions, payments, postings and cardholder information to detect fraud in
real-time. A Windows-based graphical user interface (GUI) delivers comprehensive
transaction and account information, so you can take informed actions to prevent fraud.
Credit Fraud Management system learns dynamically from its experience with your card
fraud, to detect new fraud schemes in real-time or within minutes of the transaction.
Debit Fraud Management
Debit Fraud Management system is an intelligent risk management system that monitors,
detects and prevents online and offline debit card fraud. Debit Fraud Management system
combines the pattern recognition of neural network transaction scoring with custom risk
models, rules-based strategies and advanced client/server account management software.
These complementary technologies enable you to manage and control losses from debit
card fraud.

Term Description

ACB Automated Clearing Bureau

AML Anti Money Laundering
ATM Automated Teller Machine
AXS Automated Transmission Service
BIC Bank Identification Code
BIN Bank Identification Number
BOD Beginning Of Day
BRP Business Resumption Plan
BSP Biller Service Provider
BUB Banking the Unbanked
CBPL Continuous Batch Processing Line
CLC Code Line Clearing
CLS Continuous Linked Settlement
CMA Common Monetary Area
CNP Card Not Present (Secure Internet Payments)
COLD Computer Output on Laser Disc
CPI Consumer Price Index
CSP Customer Service Provider
CVS Cheque Verification Service
DR Disaster Recovery
DRP Disaster Recovery Procedure
EBPP Electronic Bill Presentment and Payment
ECT Electronic Communications and Transactions (Act)
EFT Electronic Funds Transfer
EFT POS Electronic Funds Transfer at Point Of Sale
EOD End Of Day
FATF Financial Action Task Force (on Money Laundering)
FIC Financial Intelligence Centre (Act)
FMG Financial Messaging Gateway
FMS Fraud Management System
GUI Graphical User Interface
HSM High Security Model
ICMS Integrated Cash Management Service
ICMS Integrated Cash Management System
ICMS Intergrated Cash Management System
IDE Intra-Day Exposure (monitoring)
IDV Intra-Day Value
INCF Industry Negative Card File
KPI Key Performance Indicator
LAN Local Area Network
MAC Message Authentication Code
MIS Management Information System
MMT Mzanzi Money Transfer
NBA National Bank Account
NPS National Payment System
PASA The Payments Association of South Africa
PCH Payment Clearing House
PIN Personal Identification Number
POS Point of Sale
PSO PCH System Operator
RFI Request for Information
RFP Request for Proposal
RMS Remote Monitoring System
RTC Real-Time Clearing
RTGS Real-Time Gross Settlement
RTL Real-Time Line
SADC South African Development Countries
SAMOS South African Multiple Option Settlement (system)
SARB South African Reserve Bank
SDV Same Day Value
SLA Service Level Agreement
SQS Saswitch Query System
SSV Same Day, Soonest Value
STIP Stand In Processing
STP Straight Through Processing
Society for Worldwide Interbank Financial
SWIFT
Telecommunication
TCP/IP Transfer Control Protocol/Internet Protocol
UPS Uninterruptible Power Supply
VBV Verified by VISA (See CNP)
VPN Virtual Private Network
WAN Wide Area Network
XCOM Communication Protocol
XML Extensible Mark-up Language
ZAPS South African Payment System