The 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 in- house 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
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.
In Europe, traditional banks had a large market share of international payments. Specializing in foreign exchange conversion was a high- margin business. However, the market has shifted. Innovation from FinTechs has increased pressure on banks and has resulted in a migration to lower margins for foreign exchange transactions.
The same trend in Europe is happening in Canada. This means the Canadian market is ripe for disruption. International transfers are currently concentrated, with the big banks capturing a significant market share. FinTechs are now challenging the traditional ways of international payments in Canada, providing customers with better rates, faster transactions and more transparency.