Most people don’t think about payments. We just tap on our phone and money moves from one account to another in a matter of seconds. From the end user’s perspective, the system seems seamless and automatic. But from the inside, it’s much more complicated.
In the background, the dollars you transfer haven’t necessarily moved between financial institutions in real-time. Funds have to wait for one of the three windows throughout the day when financial institutions effectively settle all balances. What seems quick and easy is actually using old systems, processes and technology that is in need of an overhaul.
Payments Canada, the organization that operates payment clearing and settlement in Canada, began a modernization project in 2016. Their aim is to replace aging infrastructure, enhance existing systems and adopt global standards for exchanging data. This is happening in tandem to many other changes across the payments industry such as open banking (the use of open pieces of programming to enable third-party developers to build financial applications and services) and companies outside the financial sector (like Facebook) entering the market with new credit cards and cryptocurrencies. All these changes promise a new era of transparency, but also privacy and security challenges. To keep pace, the need for payments modernization has never been greater.
And Alberta Central is working to ensure credit unions across the province are ready to embrace the future of payments.
I recently spoke on a leadership panel about the future of payments at the Celero DigitalX Fintech Conference in Montreal, joined by Tracy Black, Executive Director, Modernization, Payments Canada and Matthew Angelstad, Partner, Financial Services, IBM Canada and moderated by Dave Kelly. We talked about payments modernization in Canada and the roadmap for credit unions. And certainly the consensus was that we need faster and more flexible payments without sacrificing security. As pointed out by Matthew, there is an opportunity to look at the legacy payments systems we have today and completely leapfrog them to something much better.
I cannot agree with his sentiment enough. What payments modernization means for credit unions and their members is not only better and faster service, but also increased innovation and new product offerings. It will make the lives – and banking – of all Canadians much easier.
Payments modernization is an example of credit unions working together successfully to find a solution to meet member needs. The coming changes represent an opportunity for the system to go further, innovate and grow in ways not possible before.
Because we’re in Alberta, think about it like this: there is a need to build a new payments pipeline. It will be a backbone for all the financial institutions, and everyone needs the same ubiquitous access to that pipeline. Alberta Central is working right now to help provide that access.