By John Armstrong

To say that Canada’s payments modernization plans or “Canadian Payments 2.0” are ambitious would be an understatement. With plans for real-time payments, data-rich transactions, more efficient standards and open-banking platforms, these initiatives will revolutionize how Canadians transact: much to the benefit of businesses and consumers alike.

These plans include a migration from the current large value transfer system (LVTS) towards a real-time gross settlement system (RTGS), the adoption of the more data rich ISO 20022 messaging standard and the introduction of real-time payments.

This “Real-Time Rail” that the modernization encompasses will facilitate near-immediate delivery of payments. It will also lay the foundation for value-added overlay services such as request for payment, where one party can send a message requesting payment and with a click of a button the recipient can reply with the payment. This has the potential to drive huge efficiencies for corporate customers, as reconciliation of invoices to payments made becomes very easy.

Opening doors to open banking

In addition, the forthcoming 2019 updates to Canada’s Bank Act will almost certainly include provisions for so-called “open banking”, wherein customers can compel their financial institutions to share their financial services data with third-party providers. Open banking will provide more aggregated views of customers’ financial positions. Enabled by application programming interfaces (APIs), these services will enable Canadians to wield greater control over their financial affairs. For example, some will enable consumers to better compare products or services on aggregated platforms, while others will permit secure real-time payments between authorized users.

We’ve yet to grasp the full potential for open banking, but we know the opportunity is not lost on today’s venture capital investors and FinTechs, many of whom are lining up to provide these new services. In KPMG International’s biannual global analysis of FinTech investments, The Pulse of FinTech 2018, we noted the payments and lending sectors continued to be the most mature of the FinTech sub-sectors in Canada.

That’s not to say the incumbent banks are standing still. To the contrary, open banking will enable Canadian financial institutions the opportunity to differentiate themselves with their customers and increase customer “stickiness” through value-added services of their own, or services acquired through partnerships with FinTechs.

Other countries’ “2.0” initiatives

Canada may be eyeing a new era for digital payments, but it is not alone. In February 2018 Australia launched its New Payments Platform (NPP) initiative, rolling out a national payments infrastructure that will enable instant, data-rich payments. The first overlay application, Osko, will let consumers send money transactions between authenticated users in under a minute and accompany those transactions with 280 characters of text or emojis to describe the payments. Osko is slated to be available through more than 60 financial institutions.

Open banking was launched in the U.K. in January 2018. Both FinTechs and established financial institutions are developing their own aggregated banking that will give customers access to comparison sites, digital ID and personal data services, customer loyalty programmes and all manner of customer-focused applications.

Payments modernization and the update to the federal Bank Act will unlock new opportunities for players in the Canadian FinTech market in the payments space and around open banking, according to John Armstrong, national industry leader of financial services with KPMG in Canada. The market has seen significant venture capital (VC), private equity (PE) and merger and acquisition (M&A) activity.

Modernization impacts

Indeed, the impact of Canada’s payments modernization will be dramatic. In addition to spawning new entrants and innovations, it will empower both existing financial institutions to redefine how Canadians interact with their financial providers and control their financial futures. There is no question it is an exciting time to be part of the payments ecosystem.

John Armstrong is national industry leader of financial services with KPMG in Canada. Read The Pulse of FinTech 2018 and learn more about Canada’s payments modernization at



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