APRIL 2018 ISSUE
CANADIAN BANKER w www.rfigroup.com t twitter.com/RFiMediaGRB
Senior Vice President, Ontario, Business Development Bank of Canada RFi INTERVIEW 12
RFi GROUP INSIGHT
SAVINGS & BORROWING
SME & COMMERCIAL
06 Event Recap: RFi Group 2018 Canadian SME Banking Forum
19 Rate of mortgage arrears lowest level in more than 10 years
25 Group of SMEs negotiate lower credit-card fees
RFi GROUP APRIL STA TEN SELECTED STATISTICS FROM DAILY STATS ON RFi GROUP WEBSITE (www.rďŹ group.com)
34% of UK consum
Almost 1 in 3
have used live chat banking services wit virtual assistant
(31%) of commercial businesses in Canada do not currently sell products/ services online
21% of US businesses are very likely (8+/10) to switch their primary Credit Card provider in the next 12 months
58% of businesses in the UAE
of consumers in Mexico agree that they would use mobile wallets more frequently if given rewards for doing so
have no preference between Islamic and conventional banking products
of consumers in Singapore are very interested (4+/5) in trying new ways of making purchases
of Australian consumers would be willing to conduct at least one banking task via messaging services
1 in 3
of consumers in India have used video chat services with a member of staďŹ€ from their bank
Australian credit cardholders would not return to a store/ business if they imposed a surcharge for using their card
Welcome to the April edition of the Canadian Banker, a newsletter designed to give you an update on news and trends within the Canadian retail and commercial banking market, contextualized by RFi Group data.
entrepreneurs across the nation.
Following the Canadian SME Banking Forum on 22nd March, we have a special post event edition for you this month!
I hope you enjoy this issue!
Firstly, our thought leadership interview comes from Lesley Lawrence, Senior Vice President, Ontario Region, Business Development Bank of Canada (BDC), who, following her panel discussion entitled â€œhas business funding lost the human touchâ€? shared more on this, as well her passion for supporting female
For those who could not join us, our insight piece provides an evaluation of the key take-outs from the day and top insights from our incredible line-up of speakers.
Cyrielle Chiron +1 416 644 8524 firstname.lastname@example.org
CONTENTS APRIL 2018
06 RFi GROUP INSIGHT Event Recap: RFi Group 2018 Canadian SME Banking Forum
10 PODCAST The Global Digital Banker
RFi GROUP INTERVIEW
ECONOMY & REGULATION
Lesley Lawrence, Senior Vice President, Ontario, Business Development Bank of Canada
Canadaâ€™s GDP grows by 3% in 2017
SAVINGS & BORROWING Rate of mortgage arrears lowest level in more than 10 years
25 SME & COMMERCIAL Group of SMEs negotiate lower credit-card fees
Payment Source and Canada Revenue Agency enable Tax Payments by QR code
RFi GROUP INSIGHT
EVENT RECAP: RFi GROUP 2018 CANADIAN SME BANKING FORUM WORDS MARK SCHULTZ
arch 22nd 2018 saw RFi Group’s 2nd annual Canadian SME Banking Forum being held at the Shangri La hotel in Toronto. The title of this year’s event was “Moving Towards Aggregation”, and after hearing from the multitude of speakers, panelists and participants on the day, it quickly became obvious just how far the market has moved in that direction and how far there is left to go. The first speaker of the day was Kirk Simpson, CEO of Wave. While the story of Wave’s success is extremely impressive, Kirk demonstrated how new players are entering the market and the threat they pose to incumbent players by focusing on another runaway success story – Square. Originally starting as a payment acceptance provider, Square has since moved into lending and payroll, and has applied for a banking licence. If it successfully acquires this license, it will be able to meet all of the payments and banking needs of small businesses, and this could potentially mean that an SME will never need to look beyond Square to meet their banking needs. While Square is moving in the retail market, Shopify is making similar inroads into the online banking space and Wave is doing the same for service-based businesses. It quickly became evident that traditional banks need to pay close attention to these players, or else risk never even entering SME customer consideration. Next, we heard from Brian Merrit, CEO and co-founder of Seed, a mobile-first online SME bank in the US. Seed was started as a result of demand from SME owners – while 90% were being served on digital platforms, 74% were unhappy with these platforms, and the majority were considering switching, which suggested a hunger for a better online
06 RFi MEDIA
banking experience. What struck me most about Brian’s talk was his great advice on the Build/Buy/Partner conundrum, and which route banks should go down when dealing with Fintechs. While building internal solutions gives providers the most control in the long term, it requires a cohesive long-term strategy to be successful – something all too often lacking in a world where changes in managers often resulted in changes in focus and direction. For those looking to partner, the risk comes from sharing the customer - Partnering can be effective as a lower risk, lower cost alternative, but can also bring challenges with objectives between the partners diverging. Buying is often the best solution, unless you cannot justify the risk or cost, or if you feel you can do it better internally. Following Brian’s presentation, we had our first panel of the day, titled “Tools to encourage growth of SMEs beyond funding”. I was again impressed by the capabilities and potential offered by the Wave platform – by leveraging customer analytics, Wave could identify borrowing triggers and potential cashflow shortfalls for SMEs before they actually occur, and offer lending solutions to these businesses before they realize they need a loan. The ability to provide benchmarking was also identified as a key area for business assistance, and being able to identify the behavior that differentiates successful and unsuccessful businesses and inform small business owners how to build success. Our next speaker was Jennifer Reynolds, President and CEO of the Toronto Financial Services Alliance. Jennifer talked to us about the role of Fintech in the Canadian SME market, and the
RFi GROUP INSIGHT
The ability to provide benchmarking was also identified as a key area for business assistance, and being able to identify the behavior that differentiates successful and unsuccessful businesses and inform small business owners how to build success.
effect of regulation. What stuck out the most was just how burdensome legislation and compliance is for the average Canadian Fintech – often they do not know which legal entities have jurisdiction across different areas that affect the company, and don’t have the scale to invest in dedicated legal compliance in order to navigate these potential minefields. Jennifer identified key areas that the government could address in order to foster innovation in the Fintech space, including the need to adapt to changing market dynamics as well as the need for a policy lead in Canada to facilitate Fintech development. Next, we heard from Robert Gellar, the head of Financial Services for Facebook. It quickly became obvious throughout Robert’s talk just how integral social media platforms had become to engaging with small business decision makers (BDMs) in Canada – they spend more time on Facebook and are more likely to engage with the platform than other users. Robert shared with us several examples of how companies had effectively designed engagement tools to reach BDMs and other customers via Facebook. He highlighted the importance of removing friction in the customer journey, and the importance of providing a world-class mobile experience (which doesn’t necessarily have to cost the world!). We then heard from RFi Group’s CEO, Charles Green, who spoke about the importance of SME payment relationships, the value of providing integration to improve efficiency, as well as building digital engagement. Most importantly, he provided evidence that investing in winning payments
relationships and building digital engagement can help banks to win more profitable customers as well as improving engagement, which can help build support for investing in these platforms. Our second panel sought to answer the question – has business funding lost the human touch? Several key areas emerged over the course of the discussion. Firstly, the importance of analytics and data, and the extent to which open banking and data sharing would help catalyze growth in business lending. Secondly, the theme of regulation emerged again, and how a unified view of what’s permitted in terms of data sharing and privacy legislation would supercharge the business lending sector. Finally, the question of whether the business lending sector required education or transparency resulted in a draw – both would be necessary to really engage with SME borrowers, and improvements in financial literacy would also need to be matched with more transparent, easier-to-understand lending. Next, our third panel looked at how to enhance the world of borderless payments. What again emerged as a key theme from this section was the importance of data – this time in terms of the amount of data that could accompany electronic transactions. This is a major reason cheques are still so prevalent among Canadian SMEs, and they will continue to linger until more data could be sent along with electronic payments. What I found to be the key theme of this session was that no one bank, institution or fintech is going to solve the payments problems faced by SMEs, and winning
CANADIAN BANKER 07
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Interac, the Interac logo and the Interac Own your world design are trademarks of Interac Corp. The Contactless Indicator mark, consisting of four graduating arcs, is a trademark owned by and used with permission of EMVCo, LLC.
08 RFi MEDIA
RFi GROUP INSIGHT
solutions will require intense collaboration to be successful. Our final talk of the day was from Jeremy Fisher, Senior Product Manager at Securefact. Jeremy walked us through the customer acquisition and servicing journey, and focused on the role of compliance in the customer onboarding journey. I loved Jeremy’s description of the Tim Hortons test for customer onboarding – can a small business customer open an account while sitting in a Tim Hortons with nothing more than their phone, wallet, and what’s in their head? Jeremy’s talk had 3 key takeaways; providers need to take a critical look at the customer onboarding journey; setting the right objectives is critical (and ‘digital’ isn’t an objective, it’s a means to an end!); and finally, success is a matter of adopting the right technology to meet business needs. The audience then split into three groups for the final sessions of the day; roundtable discussions looking at three distinct but equally fascinating topics. I was truly disappointed that I wasn’t able to be in three places at once to hear the answers to the three different questions: What role should banks actually play in SME banking?; Who needs to drive innovation in payments – merchants or consumers?; and How does Canadian uptake of Fintech compare? I had the privilege to lead the discussion on the first topic, and was grateful to hear the thoughts of several of Canada’s leading institutions in the space. What came out most strongly was a topic reflected on extensively over the course of the day – the role of data and analytics, and how it can be leveraged to provide a better, more compelling SME banking experience. Hearing summaries of the discussions from the other two groups, it seemed that Canadian merchants would need to be the instigators of payments change, but ultimately it would be the consumers that drove real, lasting change, and Canada had a long way to go in terms of facilitating the growth and adoption of Fintechs. With that, the day was over. It was completely fascinating from start to finish, and I would like to take this opportunity to thank all of our sponsors, speakers, panelists, delegates, as well as my colleagues at RFi Group for their hard work in making the day such a resounding success. For those of you that weren’t able to join us, I hope this recap has helped give you an idea of the richness and depth of discussion on the day, and I await the 2019 event with bated breath.
Hearing summaries of the discussions from the other two groups, it seemed that Canadian merchants would need to be the instigators of payments change, but ultimately it would be the consumers that drove real, lasting change, and Canada had a long way to go in terms of facilitating the growth and adoption of Fintechs.
CANADIAN BANKER 09
THE GLOBAL DIGITAL BANKER
A weekly, insight-backed podcast focused on key trends, market insights, thought leadership and best practice within the fast growing and dynamic world of digital banking. We interview Banking and FinTech leaders from across the world, providing a truly global perspective on some of the biggest trends within the industry. If you havenâ€™t already, make sure to have a listen to our episodes from the month of March. EPISODE 1
Banks vs. FinTechs Has the pendulum swung back? Charles Green, CEO, RFi Group START LISTENING HERE
Can value trump trust? How digital-only providers can position themselves as a MFI for consumers Anne Boden, CEO, Starling Bank Eric Wilson, CEO, Xinja 10 RFi MEDIA
START LISTENING HERE
PODCAST EPISODE 3
Differentiator today, hygiene factor tomorrow? Where consumers stand on chatbots and virtual assistants globally Pete Steel, EGM - Digital, Commonwealth Bank Alan Shields, Managing Director - Consulting, RFi Group START LISTENING HERE
Changing the game in cross-border payments Andrew Boyajian, Head of Banking - The Americas, Transferwise Jack Zhang, CEO & Founder, Airwallex Eleanor Page, Group Commercial Director, RFi Group START LISTENING HERE
Money 2020 Asia Special Part one Brett King, Founder & Executive Chairman, Moven Kristo Kaarmann, Founder & CEO, Transferwise START LISTENING HERE
NEVER MISS AN EPISODE! SUBSCRIBE & LISTEN TO THE PODCAST ON ANY OF THE BELOW PLATFORMS:
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CANADIAN BANKER 11
RFi GROUP INTERVIEW
“I think there is much better access to capital for entrepreneurs today than there was before. The challenge now for entrepreneurs is navigating that landscape and knowing who to go to, for what, and when”.
Lesley Lawrence Senior Vice President, Ontario, Business Development Bank of Canada WORDS SARAH HOLLINSHEAD
12 RFi MEDIA
RFi GROUP INTERVIEW
ending to small businesses can be difficult. Every business is different, the challenges they face are complex, and it can take time to understand the business case. Is it then surprising that financial institutions have traditionally underserved small and medium-sized enterprises (SMEs)? At the Canadian SME Banking Forum last month, RFi Group’s Sarah Hollinshead caught up with Lesley Lawrence, a senior banking executive who has dedicated most of her career to supporting SMEs. Lawrence, Senior Vice President for Ontario with the Business Development Bank of Canada (BDC), has 30 years of banking experience, 18 of which have been spent with BDC. She shared her views on upcoming changes to the industry, which customers need what types of services, and ultimately how to drive innovation in this space. A forward-thinking executive As someone who has spent the majority of her career working with entrepreneurs, her perspective on the future is bright, and she remains focused on what is next for the industry. “I think there is much better access to capital for entrepreneurs today than there was before. The challenge now for entrepreneurs is navigating that landscape and knowing who to go to, for what, and when.” Marrying her professional experience with a passion for aiding SMEs, Lawrence brings incredible expertise to the industry. In particular, Lawrence is the driving force behind BDC’s initiatives to better support women entrepreneurs. “In 2015, we were asked by our shareholder, the federal government, to hit a $700 million target to lend to majority-owned female businesses in three years. I was appointed as national champion for this strategy, and went to market by engaging with perspective partners across Canada: government, associations, private organisations, etc. We focused on visibility and bringing
awareness to women entrepreneurs.” By the end of January, after 30 months, BDC had authorized over $912 million in loans to majority-women owned businesses across Canada. BDC also made a push to bring greater internal awareness about the subtle differences that distinguish women entrepreneurs, what they value differently and how to help them scale up their companies. “We as an organisation recognise this is one of the fastest growing market segments in Canada. We wanted to be a market leader in helping them grow their businesses.”
We as an organisation recognise this is one of the fastest growing market segments in Canada. We wanted to be a market leader in helping them grow their businesses.” Entrepreneurs need more than money to succeed BDC’s exclusive focus on entrepreneurs and the combination of both advisory and lending is unique in the Canadian market and applies for all their customers. “Our experience has shown that entrepreneurs need access to two things to grow their business: They need money, but also advice to handle adversity and overcome their challenges.” Entrepreneurs are often priced out of quality advisory services. Lawrence highlights that by providing expert advice alongside loans, business owners are empowered to build stronger, growing businesses, to the overall
CANADIAN BANKER 13
RFi GROUP INTERVIEW
benefit of the bank. “We judge every project on its on merit, and sometimes that means the advisory side of the business is needed to help guide and grow companies. We do that because it means the company is more likely to have a longer life and their ability to succeed is significantly higher. That is the kind of customer that we want and benefit from.”
We judge every project on its on merit, and sometimes that means the advisory side of the business is needed to help guide and grow companies. Ensuring entrepreneurs have access to the services they need Although BDC does not offer a broad range of banking services, they work with other actors in the ecosystem to complement what is already offered in the market. “We will introduce entrepreneurs to our partners, which again is a value-added service for our customers. We recognise that we are just one piece of the puzzle for entrepreneurs and that they need to have other financial intermediaries there to support them.”
We recognise that we are just one piece of the puzzle for entrepreneurs and that they need to have other financial intermediaries there to support them. Lawrence talks about establishing the right service model for each business owner, with some businesses wanting a close personal relationship, some
14 RFi MEDIA
wanting a purely digital approach, and others sitting somewhere in between. “We used to have a ‘one size fits all’ approach to our relationship with clients, not recognising that every clients want to interact with us differently. We are now in the process of determining how every client wishes to interact. We are leveraging technology to work with clients and we have created online channels so that clients feel they can come to us and have a relationship online.” Driven by relationships The relationship with business owners is central to what drives Lawrence in her day-to-day. “I always say, if you are ever having a bad day, get into your car and go visit a client, they will always inspire you with their business success, and what they go through to achieve it. That is one of my favourite things about my job”.
I always say, if you are ever having a bad day, get into your car and go visit a client, they will always inspire you with their business success, and what they go through to achieve it. That is one of my favourite things about my job. The passion that emanates from Lawrence is clear, and perhaps integral to her successes in a dynamic and evolving sector.
If you would like to keep up to date with the latest interviews and news at RFi Group, follow @RFiMediaGRB on Twitter.
We are leveraging technology to work with clients and we have created online channels so that clients feel they can come to us and have a relationship online.
Lesley Lawrence Senior Vice President, Ontario, Business Development Bank of Canada
In a world of more access to data and better digital tools to understand customers, why is there such little variation or personalisation in the mortgage market? This webinar explored how customer information can be leveraged to empower front-end staff to provide the right offering for customers and ultimately, how to differentiate in the mortgage market.
Key insights presented by:
Cyrielle Chiron Managing Director, North & Latin America
MISSED THE WEBINAR LAST WEEK? Donâ€™t worry, you can listen to the 60 minute recording here!
Click here, enter your details and enjoy the listen
Johnathan Bant VP, Canada, NomisCANADIAN Solutions BANKER
ECONOMY & REGULATION
Economy and Regulation
Canada’s GDP grows by 3% in 2017 WORDS ORIN MARKLE
ccording to Statistics Canada, the Canadian GDP grew by 1.7% in Q4, which despite being lower than the overall 3% growth of 2017 is considerably higher than the 1.4% growth experienced in 2016. This growth was driven by a 2.3% in business investment and a 0.5% rise in household spending. National Bank of Canada economist, Krishen Rangasamy, said “with growth like this, you can expect a sharp moderation”. Rangasamy believes 2018 GDP will grow by 2.6%, with the year being “still positive”. This sentiment isn’t shared by all economists, as Craig Alexander, the Chief Economist for Conference Board of Canada, believes 2018 will be a soft year and “this cooling in Canadian growth comes at a time when there are a host of downside risks to the domestic economy from abroad, particularly U.S. trade and tax policy.”
16 RFi MEDIA
This growth was driven by a 2.3% in business investment and a 0.5% rise in household spending.
ECONOMY & REGULATION
Credit Unions can say Bank again WORDS ORIN MARKLE The Federal government has backtracked changes proposed by the Office of the Superintendent of Financial Institutions (OSFI), which would have forced Credit Unions to avoid using terms like ‘Banker’, ‘Banking’ and ‘Bank’. The changes, proposed in June 2017, faced fierce backlash from the Credit Union sector, prompting a government review. The news, revealed in the Federal budget, has been welcomed by the Credit Union sector. CEO of the Canadian Credit Union Association, Martha Durdin said she is “quite pleased that the government has recognized that credit unions should use banking vernacular that Canadians are used to using”. Credit unions believe the lack of banking vernacular would have rendered them less competitive, and changing marketing, websites, legal documents, and signage would have cost over $80 million. The original announcement appears not to have had any adverse short-term effect on Credit Unions’ customer acquisition; according to RFi Group’s Canada Payments Council study, the proportion of Canadians that consider a Credit Union to be their main financial institution grew by 3 percentage points to 18% between the first and second half of 2017.
Quite pleased that the government has recognized that credit unions should use banking vernacular that Canadians are used to using Martha Durdin, CEO, Canadian Credit Union Association
WHICH OF THE FOLLOWING INSTITUTIONS DO YOU CONSIDER TO BE MAIN FINANCIAL INSTITUTION? Credit Unions 25% 20% 15%
10% 5% 0% H1 2017
Source: Canada Payments Council
CANADIAN BANKER 17
ECONOMY & REGULATION
Ontario to close gender wage gap with ‘pay transparency’ bill WORDS ORIN MARKLE Ontario’s provincial government has announced, as part of their three-year $50 million plan to help women, that it will table a bill titled “Then Now Next: Ontario’s Strategy for Women’s Economic Empowerment”. This new bill will force Ontario companies to not only include salary within job postings, but also track and report what they pay workers categorized by gender and ethnicity. According to Ontario’s government, women still earn 29% less than men despite the provinces 30-year-old equal pay legislation. According to Premier Kathleen Wynne, “we know that too many women still face systemic barriers to economic advancement… It’s time for change”. Part of this $50 million in funding will help with job training, supporting women centres, mentorship, and the creation of an entrepreneurial association for women.
18 RFi MEDIA
SAVINGS & BORROWING
Savings & Borrowing
Rate of mortgage arrears lowest level in more than 10 years WORDS JONATHAN RUSTON
he proportion of mortgages in arrears in Canada is at the lowest level for more than 10 years. According to the Canadian Bankers Association, only 0.24 per cent of mortgages were more than three months past due in November 2017. Somewhat paradoxically, regions which have seen the highest growth in house prices in recent months have even lower arrears rates; In Ontario, the level of arrears is at an all-time low at only 0.09%, and in British Columbia, just 0.16% of mortgage payments were in arrears. This has been attributed to several factors; Firstly, mortgage rates have been low over the past few years, what has helped to keep repayments relatively stable despite rising house prices. Secondly, the tightening of mortgage lending criteria to borrowers with <20% deposits in 2016 has meant borrowers are currently more resilient to adverse borrowing conditions than they have been in the past. Finally, the housing markets in these areas have been extremely active, meaning that borrowers that face difficulties making loan repayments are easily able to convert their home into cash.
According to the Canadian Bankers Association, only 0.24 per cent of mortgages were more than three months past due in November 2017.
CANADIAN BANKER 19
SAVINGS & BORROWING
Amount of Canadians borrowing against their homes growing at the fastest rate in 5 years WORDS JONATHAN RUSTON The number of Canadians borrowing against their homes is growing at the fastest rate in over 5 years. According to a report by the Office of the Superintendent of Financial Institutions (OSFI), home equity lines of credit (HELOC) balances increased by 7.2% year-on-year in December to $230 billion, the fastest growth since 2012. Over the same period other types of consumer debt, including personal loans, credit card balances, car loans and overdrafts increased by 3.2%. HELOCs allow customers to borrow up to 65% of the value of their homes, with the funds commonly used for renovations, investing and consolidating debt. However, the Bank of Canada has previously warned about the impact of HELOCs, as this type of loan could leave borrowers vulnerable to rising interest rates and corrections in the housing market. RFi Group data reflects the recent growth of HELOC loans, with 15% of Canadian retail banking customers holding a secured line of credit against their home or investments, an increase of 3% over the past 12 months.
RFi Group data reflects the recent growth of HELOC loans, with 15% of Canadian retail banking customers holding a secured line of credit against their home or investments, an increase of 3% over the past 12 months.
% WITH SECURD LINE OF CREDIT (AGAINST HOMES/ INVESTMENTS) 20% 15% 12%
0% H2 2016
Source: Canada Priority and Retail banking Council H2 2016 â€“ H2 2017
20 RFi MEDIA
SAVINGS & BORROWING
Canada Housing Market shows sign of slowing in the light of new Mortgage rules WORDS JONATHAN RUSTON Following the introduction of tighter mortgage stresstesting criteria by the OSFI effective January 1st, Canada’s housing markets demonstrated its first signs of cooling in January. A report by the Canada Real Estate Association (CREA) outlined that there were 39,609 seasonally-adjusted residential sales in January, the lowest monthly level for three years. This represents a 14.5% drop since December, which saw the highest monthly level for over 60 years as buyers brought forward their purchases in anticipation of the tougher mortgage rules. According to Andrew Peck, the President of the CREA, “The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion”.
The piling on of yet more mortgage rule changes that took effect starting New Year’s Day has created homebuyer uncertainty and confusion. Andrew Peck, President, CREA
CANADIAN BANKER 21
PAYMENTS & TECHNOLOGY
Payments & Technology WORDS JONATHAN RUSTON
Payment Source and Canada Revenue Agency enable Tax Payments by QR code
ayment Source, an alternative payments provider, have announced that they have expanded their relationship with the Canada Revenue Agency (CRA), and Canadian consumers will now be able to make tax payments at any Canada post location across the country. In the new initiative, T1 tax forms will incorporate a QR code (with codes also able to be generated online), enabled by Payment Sourceâ€™s Loadhub technology. Canadians will be able to scan the QR code in-person and pay using cash or debit at Canada Post locations. The new payment method, made
available at the end of February, will facilitate the process of making tax payments for Canadians, with payments received immediately by the Canadian Revenue Agency. According to RFi Group data, 23% of Canadian retail banking customers would prefer to pay tax with a debit card, with 11% preferring to do so with cash, an increase of 3% and 1% over the last 6 months respectively. Therefore, the new initiative from Payment Source has the potential to serve a large customer base. TAX PAYMENTS Trend - Preference for using Cash and Cheque Preference for Cash
The new payment method, made available at the end of
February, will facilitate the
process of making tax payments
for Canadians, with payments
received immediately by the Canadian Revenue Agency.
Preference for Debit card
5% 0% H1 2016
22 RFi MEDIA
Source: Canada Payments Council- H1 2016-H2 2017
PAYMENTS & TECHNOLOGY
Dream Payments announces partnership with Mastercard to facilitate insurance payments Dream Payments, a Toronto-based cloud payments solution company, has announced a partnership with Mastercard to facilitate faster payments to insurance policyholders. The payments are enabled by the Mastercard Send platform through the Dream Payments Hub and can be received into an account or payment card. Mastercard Send is a system specifically designed to work with banks and money transfer services to deliver funds in near real-time. Northbridge Financial will be the first insurer in Canada to use the new platform, with others expected to follow soon, both nationally and internationally. As a result, insurance companies using the service will be able to disburse claim payments digitally without the need to print and mail cheques. Zahir Khoja, Vice President of global acceptance and solutions at Mastercard noted, “This collaboration with Dream Payments demonstrates our commitment to expand the reach and depth of digital payments, enabling insurance companies to transform the customer experience”.
“This collaboration with Dream Payments demonstrates our commitment to expand the reach and depth of digital payments, enabling insurance companies to transform the customer experience”. Zahir Khoja, Vice President of global acceptance and solutions, Mastercard
CANADIAN BANKER 23
PAYMENTS & TECHNOLOGY
Canada Government to examine the merits of open banking The Canadian Government announced that will review the benefits of introducing open banking in Canada as part of the federal budget. Already adopted in the United Kingdom, open banking enables consumer financial data to be shared between banks and other third party financial service companies. According to the government, open banking could lead to more tailored products being offered, resulting in greater competition and innovation. As a result, the initiative has
According to the government, open banking could lead to more tailored products being offered, resulting in greater competition and innovation.
24 RFi MEDIA
the potential to catalyse the growth of Fintech companies and improve the ease at which consumers can move and manage their money as well as providing a greater level of transparency. However, the budget highlights the potential risks associated with open banking, with the government stating that it holds the highest regard for consumer privacy, data security and financial stability.
SME & COMMERCIAL
SME & Commercial Group of SMEs negotiate lower creditcard fees WORDS ORIN MARKLE
he Canadian Federation of Independent Business (CFIB) has successfully negotiated a reduction in fees for accepting American Express cards from 3-3.5% to 1.8% for some members. Dan Kelly president of CFIB believes “this will lead to an expansion of American Express coverage in the small business marketplace therefore creating, we’re hoping, some more competition”. Data from RFi Group’s Merchant acquiring council shows that merchant preference for accepting American express is considerably lower than preference for Visa or Mastercard credit card payments, which shows how its historically high fees have impacted their preferred acceptance.
ASSUMING YOU HAD THE CAPABILITIES TO ACCEPT ALL OF THE FOLLOWING PAYMENTS, WHICH OF THE FOLLOWING WOULD BE PREFERRED? Merchants Preference
Percieved Customers Preference
According to Walmart Canada spokesman Rob Nicol, “we continue to believe credit-card fees are excessive in Canada. Canadian merchants pay fees at least three times higher than what all merchants – big and small – pay in the 27 countries of the European Union”.
While fees in Canada are high relative to other nations, Visa believes that these higher rates have championed innovations in chip cards and contactless payments, which have benefited many consumers across the world. Visa says it will “continue to work with the government and other stakeholders to promote a competitive, efficient, innovative and secure payment system in Canada”.
American Express Credit
Source: H2 2017 Canada Merchant Acquiring Council
CANADIAN BANKER 25
SME & COMMERCIAL
Loophole, or not a loophole? SMEs clash with Ottawa WORDS ORIN MARKLE With the new Federal Budget announced last week there has been mixed emotions for Canadian-controlled private corporations (CCPCs). CCPCs used to enjoy small-business tax deductions, and within this new budget these deductions have been hindered, but not completely removed. Historically CCPCs could choose to have their first $500,000 in earnings taxed at a small-business rate, while the new plan is implements a sliding scale, which reduces the tax benefit for those higher on the economic ladder. Shane Onufrechuk of KPMG believes this “huge problem that everybody was excited about in July, the government has completely walked away
from,” citing the initial government plan to close the tax benefit or charge CCPCs 73% on income from passive investments. Backlash came from the idea that when doctors and lawyers use these deductions it effectively allows them to avoid income tax and be taxed at the much lower small-business rate. The argument to not change these deductions, as articulated by Iain Black of Greater Vancouver Board of Trade, is the “little company with $10 million or $15 million a year in revenue, and you’re sitting on $3 million or $4 million because you’ve been saving… the government is now going to penalize you for that.”
Canada Small Business Lending Slowed in December WORDS JONATHAN RUSTON According to the PayNet Small Business lending index, small business lending in Canada decreased in December. The index dropped to 112.6, down from 115.9 in November, with lending to medium-sized business also declining with a decrease from 199.8 to 193.1 over the same period. Businesses in the agriculture and retail sector saw the biggest decline, with the agriculture sector falling to 187.3 from 191.3 in November, and the retail sector dropping to 197.5 from 201.9. PayNet President Bill Phelan commented that the figures point to weaker economic growth in the future but with low delinquency rates, business borrowing could easily bounce back. Phelan stated, “Right now, it’s looking like a rough patch that could easily turn around because the financial health is so strong”. 26 RFi MEDIA
In addition, the number of small businesses that were more than 30 days overdue on their loan repayments dropped to 0.82 per cent, down from 0.86 percent in November, with the proportion of those that were more than 90 days in arrears remained at 0.25 per cent.
Right now, it’s looking like a rough patch that could easily turn around because the financial health is so strong. Bill Phelan, President, PayNet
T H E C A N A D A S M E D I G I TA L B A N K I N G CO U N C I L THE CANADA SME DIGITAL BANKING COUNCIL PROVIDES DEEP INSIGHT INTO THE FASTMOVING SPACE OF DIGITAL TECHNOLOGY USE, INNOVATION AND ADOPTION WITHIN THE SME SEGMENT. KEY FOCUS AREAS ARE DEVICE OWNERSHIP AND USE, BUSINESS MOBILE BANKING AND PAYMENTS AND CHANNEL PREFERENCES. THE CANADA SME DIGITAL BANKING COUNCIL UNCOVERS INSIGHTS SPECIFIC TO PRODUCTS, ACROSS PRODUCTS AND CUSTOMER RELATIONSHIPS THROUGH THE LENS OF DIGITAL CHANNELS
KEY INSIGHTS FOR FINANCIAL SERVICES ORGANISATIONS IN CANADA INCLUDE:
CHANNEL USAGE AND PREFERENCES
Banking channels used, satisfaction with channels, preferred banking channels
BARRIERS TO DIGITAL
Reasons for not banking via online or mobile, appeal of new technologies, usage and preference towards digital product applications
ONLINE AND MOBILE BANKING
Usage of digital channels for banking tasks, preferred digital functionality, engagement with digital channels
Usage and appeal of integrated software, preferred integrated functionality
For further information, please contact Nish Gnana, Business Development Manager firstname.lastname@example.org or +1 416 644 5088 CANADIAN BANKER 27
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RFi Group is a global intelligence and digital media provider focusing exclusively on financial services. We specialise in data and information gathering, customer based insight generation and business decision support for the worldâ€™s leading financial service providers. Our aim is to combine global intelligence and local knowledge to provide insightful, valuable and actionable recommendations, with a core focus on the provision of exceptional client service. OUR BRANDS
Covering 44 key global markets with regional offices in San Francisco, Toronto, London, Singapore, Hong Kong and Sydney, RFi Group consistently provides clients with tailored advice and independent intelligence relevant to their specific markets and business needs. EXCLUSIVE FOCUS ON BANKING AND FINANCE RFi Groupâ€™s expertise and deep understanding of the banking and finance sector delivers high-value outcomes. Our areas of expertise include: Retail Banking Mortgages Transaction Accounts Savings Accounts Consumer Lending Cards and Payments
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RFi Group’s syndicated research RFi Group is a global intelligence and media provider focused exclusively on financial services. We specialize in data and information gathering, customer based insight generation and business decision support for the world’s leading financial service providers. Our syndicated research is delivered via our Financial Councils model. Upcoming North American Financial Council research includes:
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Canada SME Banking Council – 2017 H2 Canada Payments Council – 2017 H2 Canada Commercial Banking Council – 2017 H2
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