Sibos 2011 - O Canada

While some of the get-togethers have already started to happen, Sibos 2011 starts in earnest in Toronto on Monday and promises to raise some important issues.

I was last in Toronto almost thirty years ago and, unsurprisingly, a lot has changed, notably the huge number of tall buildings now clustering around the tallest, the CN Tower. Thirty years ago, the land around the tower was, for the most part, vacant. These days the sky is getting filled up with large offices of global banks and firms, a testament to Toronto’s success as a city for business. As one walks around Toronto, it is impossible to avoid the tower’s stony gaze as it peers through the gaps over its lesser rivals.

In the last thirty years a lot has happened in the way that payments are made. As a tourist then it was important to take with one traveller’s cheques and a credit card in addition to the obligatory cash. Card transactions were processed on paper and some businesses could not accept cards from all the major schemes. Today, as I wandered across town, buying cups of coffee in the multiple chains, I used contactless payments rather than cash and, for those larger purchases, EMV transactions. We now have many more choices concerning how we pay, but are we making the most out of them and should some, like signed, paper-based card processing , be retired.

Back in 1982, the Canadian ACH, the Automated Clearing Settlement System was yet to be launched in 1984. Since then Canadians have led the way in electronic payments with high usage of both online banking (around half the population) and electronic bill payment (three out of five remote banking customers use it). One of the service providers, Central1 now claims a database of over 6,900 billers.

Although the usage of cheques is decreasing, the cheque processing system has also recently embraced electronification with imaging of cheques now commonly accepted. And Canadians seem to like contactless and mobile payments with contactless debit cards being rolled out, as I experienced.

But Canada appears not to want to rest on its laurels: a report from the Canadian Financial Executives Research Foundation (CFERF) earlier this year asks the question “Electronic Payments in Canada: what’s the hold up?”. From the report “86% surveyed would choose electronic transactions, but only 27% use these for the majority of their transactions”. The question relates to customer adoption both for businesses and consumers: what are the impediments which need to be overcome to further increase usage.

This is a key question, not only for Canada, but also for Europe and the SEPA project. We think we know that hard and fast end-dates to migrate away from domestic clearing systems is the answer to consumer adoption of SEPA Credit Transfer and Direct Debit. Certainly it fails to drive the business case for corporates, but I believe that education and confidence are two factors we must not overlook.

The discussion at this Sibos of Innovation, Techology and Regulation will be significant and should resolve some uncertainty for the banking industry. But we forget the consumer and business customer at our peril.