Interchange Optimization for a Regional Bank​

Background: A large regional issuer was seeing deterioration of interchange economics and wanted to understand how to reverse the trend and brought in AQN to provide a diagnostic and recommendations​

Outcome: AQN's optimization of legacy network product structure, identification of gaps in network services, and network variance implementation are expected to increase spend margin by 5 bps and generate ~$45M in incremental NIAT over 5 years

What we did:

  • Performed a gap analysis of interchange revenue to identify network service drivers leading to suboptimal interchange treatment and helped the issuer remediate gaps​

  • Created a valuation algorithm with which to size impacts of upgrades, worked with issuer’s cross functional team to flesh out & implement upgrade process, and created systematic post-upgrade monitoring​

  • Educated the issuer about network variances and negotiation strategies for interchange optimization; supported the issuer with iterative analysis throughout the negotiation process​

Key Results:

  • Remediated network service setup so that all accounts were earning optimal levels of interchange​

  • Stood up network product upgrade process & upgraded all PV positive accounts leading to increased interchange​

  • Supported issuing client in getting several valuable variances to maximize interchange revenues & minimize associated costs​