2020 Payments forecast details at a minimum will need to be encapsulated within messages. This adds further transparency to transactions, which should be a positive for the industry.
Cybersecurity The financial industry continues to be a critical part of Canada’s economic infrastructure. The Macdonald-Laurier Institute recently identified the key risks to Canada’s financial systems. Products, such as SWIFT for payments, the EFT systems and online banking/online brokerage are susceptible to cyberthreats. Therefore, identifying cybersecurity needs for institutions as well as establishing regulations in response to potential threats will be critical in 2020 and beyond. Personal information disclosure is now required and mandatory for regulatory purposes to protect against fraud. The rising concerns over security in cross-border payments primarily stem from mobility and digitization. Yet, new regulations and compliance technologies,
such as digital identities, can support and facilitate the need for higher security in the payments industry. Security is affecting customers all over the world and in varying industries. In the financial industry, it’s ultimately about managing and securing your digital identity. The primary focus for regulatory bodies as we head into 2020, especially for FIs, will likely focus on data security, anti-fraud and AML. Cross-border payments pose unique challenges for regulatory bodies and technology due to their complexities. Industry barriers continue to be removed with more players entering payments industry. In 2020 we will begin to see more regulations come into place as technological solutions continues to drive the industry forward to a more forward thinking and innovative marketplace. Jay Fischbach is chief operating officer at the Exchange Bank of Canada.
Opening the borders to opportunities Canadian credit unions take steps to expand international payments By Brian Raine
T
he payments environment in Canada and internationally is in flux. But credit unions are not just keeping pace with that change, they
are now leading it. Bringing the benefits of low transaction fees, digital interfaces and convenience to all credit union members. Central 1 continues to focus on providing the technology and innovation through leveraging the collective scale of the broader credit union system. Central 1 recognizes that speed to market and innovation are paramount. Achieving this optimum outcome means balancing inhouse development with external partnerships.
Growth and changes This opportunity now includes international payments, which are expected to grow four to five per cent in the coming years, according to a report by SWIFT and McKinsey & Company: A vision for the 14
PAYMENTSBUSINESS
future of cross-border payments. Although cross-border flows represent only one-sixth of total transaction value, international payments revenues total up to $200 billion globally. This expansion is being fuelled by increasing international commerce, migration and changing economic trends. In addition, the payments landscape is experiencing disruption that is changing the dynamics of international payments. These disruptors include: • Innovation from FinTech companies putting pressure on financial institutions; • Changing consumer demands focused on cost, simplicity, transparency and convenience; and • Regulatory pressures such as open banking, which is coming to Canada. Open banking enables bank customers to share access to financial data with third parties in exchange for services and products. Other markets including Europe and Australia are further along the open banking journey than Canada.
November/December 2019