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Digitizing international remittances
By Peter Maoloni C anadians have been early adopters of payment technologies that provide access to digital payments and money transfer capabilities. Payment providers and financial institutions (FIs) have made great strides meeting those needs domestically. But, the next frontier transcends our borders as attention turns to digitizing international remittance services.
A growing market Many Canadians have international roots. For good reason: Canada regularly ranks among the most desirable places for immigration thanks to favourable government policies, a highly multicultural population and a generally accepting attitude toward newcomers from all parts of the world.
Canada’s appeal as a destination for highly skilled workers, many of whom still have families in their countries of birth, combined with the growing number of Canadian businesses operating in an increasingly global marketplace, have created a large market for international payments. According to recent figures from the World Bank, more than US$27.8 billion in international remittances were sent from Canada to other countries in 2018.
Many people want to be able to send money to family and friends in their country of origin to help cover basic living costs, as gifts or to
help defray the expenses for major life events such as weddings and births. Statistics show new Canadians are among the most frequent and high-dollar-volume users of international remittances. They need access to financial services that serve their global needs in safe, secure and cost-effective ways.
The surge in the use of money transfer options outside those traditionally offered by FIs indicates a dissatisfaction with the international remittance services that have been available to date. People are increasingly looking for options that offer the ease and convenience of digital and mobile payment solutions similar to those that are currently used across Canada.
Changing the game Interac has unique insights into how consumers and businesses are embracing digital payments domestically and how this knowledge can be applied to international remittances. For more than 35 years, Interac has provided payment solutions and access to money on secure, interoperable, reliant and efficient shared platforms.
Based on those insights, Interac worked collaboratively with Mastercard to develop a game-changer in international remittance for consumers and for FIs. This new solution, International Transfer
by Mastercard and Interac, will enable Canadians to send money to bank accounts, and eventually mobile wallets and cards, in other countries. The National Bank of Canada will be the first bank to pilot for its personal banking clients. The initial launch is to Europe with plans to expand further in the future.
This new solution leverages both Mastercard Send and the Interac e-Transfer platform. Consumers will be able to access the solution through online and mobile banking in the same way they already use Interac e-Transfer for domestic money transfers.
As with any new financial solution, the key to ensuring customer acceptance and use is to incorporate elements that meet consumer and business needs. The solution leverages the trust and reliability of the Interac and Mastercard brands. Funds are transferred using established banking procedures, backed by industry-leading fraud mitigation. Senders will have a seamless and transparent customer experience when it comes to moving their money to international contacts.
A new tool for FIs The growing international remittance market offers many business opportunities for Canadian FIs looking to attract new customers and retain the ones they already have. The integration of a reliable, low-cost and convenient international remittance service within a FI’s suite of services increases customer satisfaction, provides transaction integrity and security, and reduces the customer’s overall service costs.
For current customers, having access to an easy-to-use, secure international remittance service enhances loyalty by removing the need to opt for third-party services outside the familiarity and security of their existing FIs.
For potential new customers who want to be able to send money abroad, their choice of which FI to use could ultimately come down to the one that offers them a safe, secure and low-cost remittance service. With Canada relying upon new Canadians to continue growing our economy, providing “in-house remittance” services can give FIs the opportunity to win net new customers and provide a deeper and more meaningful engagement.
Why act quickly? The increasing adoption of digital payments by consumers and businesses, and the integration of these technologies into money transfers at home and abroad, will become even more ubiquitous as technology continues to evolve and improve.
FIs of all sizes should move quickly to provide safe, reliable and transparent international remittance services to maximize their connection with customers, the efficiency of their transaction processes and the speed of real-time money transfers. This is particularly critical in Canada given its growing market for international payments as Canadians increasingly seek financial services that meet their global needs.
For if existing payment providers and FIs don’t give customers what they want, they will turn to new entrants who will.
Technology level resets the cheque landscape
By Jason Schwablin e
It’s simple. Consumers want convenience. And in today’s world of big-name online retailers, we’re conditioned to expect effortless and immediate responses with slick apps and eye-catching appearances.
The banking climate is no different, putting pressure on long-standing, traditional brick-and-mortar institutions to adapt or be left behind. And because of this, it’s no surprise that we’ve seen such a tremendous growth of mobile banking and remote cheque deposit as compared to other in-person transactions.
No longer is a physical branch location required to expand the client base and meet the needs of the customer, thereby eliminating what were once geographical inhibitors of growth. In fact, a December 2018 study from Abacus Data reported that 91 per cent of Canadians believe technology has made banking more convenient, with mobile and app-based transactions continuing to grow.
Meanwhile, many financial institutions still struggle with data silos and disparate systems, each with different business rules and other internal blockades that don’t allow for a unified customer experience or data sharing for business intelligence and analytics.
Innovation expectations Providing access to innovative financial solutions, anywhere, anytime has become a minimum customer expectation. Although Millennials represent Canada’s largest segment of the population and account for nearly 36 per cent of mobile banking usage, 23 per cent of all other demographics are also following suit, according to the Abacus Data study.
A true catalyst for change, technology is pushing financial institutions and the deposits market to meet the 24/7 needs of consumers and business customers alike. The latest findings published by Payments Canada in the 2019 Canadian Payment Methods and Trends report reflect the impact that technology has had on the payments landscape.
According to the report, in 2018 the payments market in Canada grew to 21.1 billion consumer and business transactions worth more than $9.9 trillion. When compared to the data from five years ago, it’s clear that a transition is underway as Canadians continue to expand their use of mobile and electronic payments.
The strength of cheques While cheques are slowly declining due to the entry of other electronic payment types, Canada still sees nearly one billion cheques processed each year and a growing self-service channel.
In addition, Payments Canada data shows that while debit and credit cards continue to make up the largest portion of the transaction volume, electronic fund transfers and cheque and paper transactions still dominate the overall transaction value.
In 2018, the total value of cheque and paper items decreased by 4 per cent, marking a disruption to the previously established fiveyear average of 1.5 per cent annual value growth. Still, in 2018, even with fewer cheque items written, the average value of a cheque was $5,833: over 50 per cent higher than it was in 2013 ($3,737).
Moving to omnichannel deposits The true test of efficiency and convenience, however, comes when the same simple and intuitive user interface and user experience (UX)
can be deployed across all channels i.e. omnichannel. This is a blend of full- and self-service cheque acquisition, whether from a mobile phone or tablet, kiosk or desktop computer.
As these remote cheque deposit capabilities continue to grow with banks, other non-traditional or smaller financial services organizations are starting to look for ways to increase their customer bases and transaction volumes through similar offerings.
What once required a visit to a retail location to cash a cheque can now be done from one’s home.
What once required an in-person visit to a retail location to cash a cheque can now be done from the convenience of one’s home with the same mobile technology as a hosted offering or even as a service. Scalable, secure and able to provide a seamless UX, this cloud-based offering enables cheque cashers, merchants and smaller institutions that don’t have the same IT infrastructure as a national bank to offer a similar self-service experience.
Business intelligence key With new technology breaking down barriers to entry, and levelsetting the remote cheque deposit and cheque cashing landscape, banks, credit unions and non-traditional financial services organizations will surely look to the business intelligence linked to these applications and their usage. Not only does data analysis help to mitigate risk, it enables the organization to track trends, pinpoint shortfalls and enables the management of an effective payments ecosystem.
With the technology available today there is no reason why mobile cheque deposit cannot be leveraged to deliver cross-border payments capabilities to customers. This unified UX approach to cross-channel cheque acquisition also translates into simplicity for the financial institution: a simple and centralized reporting structure that turns otherwise idle information from various silos into a consolidated, usable resource.
According to the Canadian Bankers Association, more than 76 per cent of Canadians banked through online and mobile channels last year. With features like mobile cheque deposits tailored to both consumers and small business clients, and solutions scalable for institutions of all sizes with measurable benefits and tangible data assets, this figure is sure to grow into this year and this new decade.
