Episode 31: Future trends in payments

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Transcript of the recording

Elizabeth (Liz) Dempsey:
Hi everyone. Thanks for joining us for this episode of The PayPod. I'm Liz Dempsey, lead of Event Communications and Content at Payments Canada, and today we're revisiting one of our main stage panel discussions from The 2024 Payments Canada SUMMIT, all around future trends and payments. On May 31, our Chief Delivery Officer and interim Co-CEO, Jude Pinto, interviewed a panel of experts on their experiences and predictions for the future of payments in Canada for Canada. Joining Jude on this panel were Paul Thomalla from Unifits, Ramesh Siromani from RBC, Kristy Duncan of Women in Payments Canada and Michiel Wielhouwer from Visa Canada. Innovation and collaboration in a digital world with the customer in the centre were key themes, along with resilience and the security of Canada's payment systems and of course how far we've come and how bright the future truly is for the Canadian payment ecosystem. I hope you enjoy the discussion.

Jude Pinto:
Welcome to our closing panel for The SUMMIT. We've just experienced three days of content. We've had our main stage, the Idea Exchange, over 70 in-person and virtual breakout presentations, the exhibitor hall and these spontaneous connections that we make in the hallways, bringing people together in very rich ways. Our goal in this panel is to discuss in a forward looking way, given that this morning we've talked about the things that are barriers to moving ahead, things that have to be solved like open banking and rules, regulations and RTR infrastructure being in there, let's think about what are the trends in payments and explore what we'll be talking about in the years to come. Kristy, it's good to have you back and why don’t I ask each of you to give an introduction of yourself, who we haven't heard from yet, and also answer the first question, which is around innovation. How do you think about innovation and what do you see in innovation in payments from each of your perspectives? So Michiel?

Michiel Wielhouwer:
Thank you very much, great to be here. I'm Michiel Wielhouwer, I'm the president and Country Manager for Visa Canada. I joined Visa a long time ago, but in Europe, so I've taken over the role in Canada since February. And I must admit the collaboration and the energy here in the room is fantastic to see that this kind of dynamic is possible in a payment landscape, because innovation is challenging, it's important to be constantly responding to market needs, consumer changes, and the amounts are huge, Generation Z is looking at us probably a bit archaic and we need to continuously develop ourselves. But innovation is not just responding to consumer needs, but it also needs to fit in your mission. What is it that you want to deliver as a company? And for us that's very much the best way to pay and to be paid, and that's how we see innovation develop. And we see two areas where we really want to focus on our innovation, embedded finance, so you can do anything, anywhere with mobile payments now and it becomes far more integrated in day-to-day life than just the traditional way of doing banking. And of course, artificial intelligence, GenAI, it's an important part of our world. It's not only important for breaking the barriers of the technology, linking it to consumer demand, but also making sure that we are protecting ourselves from what's happening out there.

Jude Pinto:
Right. Very good. Okay, thank you Michiel, Kristy, I want to return to you. We heard you talk about innovation just a couple of sessions ago and what do you hear in all of your travels, around what innovation and payments is going to look like over the next few years?

Kristy Duncan:
This is such a fun conversation and I always love talking about innovation and especially as I go around the world of payments, literally. I just figured out I've been at six conferences, or sorry, five conferences in six weeks, so it's really interesting to see how innovation is advancing in the different markets around the world. So I was at Money 20/20 in Bangkok last month and our own conference in London and at Finovate last week and Women in Payments LATAM next week. And what I really like to see about innovation is not just the iterative improvement but the true new thinking, the out of the box thinking, addressing that customer delight: “We didn't even know you could do that!”, “How cool is it that you can do that!”, and seeing some of the players do that. I love seeing the collaboration and there's so much new thinking coming out of the fintech space in all of these different markets that it's really lovely to watch and it's really inspiring to see that we've got so much opportunity, not only in Canada but around the world in payments and also as we collaborate and start to facilitate things like instant cross-border, so many great opportunities.

Jude Pinto:
That's fantastic. Customer driven reimagining of what the future will be is going to be critically important. Paul, introduction and your thoughts on innovation please.

Paul Thomalla:
I'm Paul Thomalla. I've been in the industry for something like 40 years, so I'm an old so-and-so. I’ve been running several payment companies, ACI, Finastra amongst others. Interestingly enough, I was part of the Faster Payments rollout team in 2006 delivered 2008 in the UK and I’ve been involved in a lot of regulation, PSD2, PSD3, NPA, et cetera., I could go on for a long time and I promise I won't. Currently I am working as a non-exec at Unifits, which is a payment compliance firm, which is a very cool thing in our industry, which it needs a lot. And I have a podcast there and I'm talking about history, trying to explain how we got here in payments, which is quite a fascinating subject. But when it comes to innovation, it's really interesting, I know the guys are going to talk in perhaps slightly more positive terms than I will, but I would say a lot of people go “Innovation, ah, you mean I've got to do more work, right, and I've got to run all this stuff”, I mean don't let go. And it was really fascinating, I was listening to Andy White from AusPayNet and he was the first person that I've heard say he was going to close down payment rails. In 1659 the first cheque was written and you know what, we still kind of use cheques. We don't want to get involved with is it a good thing or a bad thing, but we kind of need to let go. And a lot of our systems are actually focused in and around technology that was prevalent and the operations that was relevant in the fifties and sixties and frankly a lot of them are still there. But our opportunity in this innovation is to think perhaps in a slightly different way. It's not about AI or blockchain or the whatever buzzword we want to come about with. The truth of the matter is we're going from an analogue world into a digital world and what got us in the analogue world to where we are ain't going to get us where we need to be in the digital world.

Jude Pinto:

Yeah, it's a good touchstone type of thinking. Ramesh, your introduction and your thoughts on innovation.

Ramesh Siromani:
Jude, first, thanks for having me here and it's always wonderful to come to The Payments Canada SUMMIT, and it's made in Canada and all the geeks and payments, it's a wonderful place to meet, so thank you. I head our cards and payment businesses at RBC and also look after transformation for the retail and commercial bank. In terms of innovation, I think Radhika was here on stage and she made a good point about using the customer lens and really thinking hard about what does the future look like and what audacious goals you can set. I think one is that audacious, ambitious thing about payments in terms of whether you want to make it fast, simple, convenient, safe and secure and data rich. And I think it's a continuous journey. You have that ambition, but it is continuous and incremental and it goes on and on. I was just reflecting on some of the things Canada has done in innovating in payments, and it's a lot. I think we've got a very rich history, which we sometimes forget, whether it is ATMs or whether it is smart cards or if you actually Google “cloud payments tokenization in the world”, it was actually the patent, I'm proud to say RBC was involved, but it was here in Canada that we made the first payment on the cloud, so that patent belongs here and it's a Canadian patent. So it's a lot of things that we've done and I think it's time to again make this kind of leap forward. RTR, we just heard the panel, it's fantastic to see that Team Canada come together. There's a lot we can do, and we have to also look at the different customer segments. We have large institutional customers who move trillions of dollars of money in a year, and then there are small and medium businesses and then individuals. And I think each of those segments require a different kind of thinking and innovation, whether it is cash management, treasury at the upper end or having a CFO desktop kind of thing for small and medium businesses, or very convenient, user friendly things for individuals. I think innovation can be looked at from various lenses, but those are a few thoughts.

Jude Pinto:
No, that's fantastic. I love the idea of Canada's focus on reclaiming or continuing to claim top world spots on what innovation can be here. But going back to your comment, Paul, it also means work. It usually just means more work. So switching to the topic of agility and resilience, consumers, businesses needing more and different, they see innovations around the world. Canada will be scrambling to figure out, okay, how do we continue to play a huge role in that? And at the same time, the ecosystem of involvement will grow from Canadian players to global players more actively participating in this. How do we deal with this notion of keeping agile and resilient and not being overwhelmed as we go down the payment journey? Let's go in reverse order, and Ramesh start with you

Ramesh Siromani:
Great question. And it's timely because we need to move, like I said, we need to move forward fast. Again, payments is such a complex topic that to simply kind of have a simple structure around, again, institutional, small and medium businesses and individuals, we need to think and therefore we need to make payments fast, rich data, quick, secure, safe, et cetera. If you have that frame in mind and what the customer needs are, you then say, “Hey, what do I do for large value customers?” For example, in RBC, we move about six and a half trillion dollars every year for businesses. We think about what do they need? They need to move money internationally, they need sweeps for treasurers, they need to make payroll work, they need to make the working capital more efficient. So how can we look at all those needs and think of ways to say what is priority, invest in that and move it. And then small and medium businesses, I talked about the CFO desktop, again, what are the needs? They need to connect to banks, what are the APIs? Can you make it easy for them to use accounting software, tax software or payroll? And how can you package it and provide value-added services? So for individuals, whether it is real-time rails or whatever, today, Interac does a great job of providing e-transfers, it's pretty instantaneous, but how can we make it faster, data rich, good settlement mechanisms? And I think the way to think about agility is to, I always say, measure twice and cut once. I think the requirements and understanding the customer need a lot more than we did. And then going after it, like you're doing for team Canada in RTR, it requires that kind of focused effort to pick a few things and go after it together. And fraud is another one. These are things that we need to solve together. And I think coming together, putting our resources together makes that agile thing come alive.

Jude Pinto:
That's great. Paul, how do you think about agility or what have you learned elsewhere that we need to be applying here?

Paul Thomalla:
Well, I was just listening to this guy. He speaks very well, right? I think the things that I would say to change, I agree, put it that way. And so there's a couple of other things I think we need to think about is that if we're not careful, we get caught up in all the technology and all the buzzwords and it feels like…somebody tells you something wonderful and it's great and it's fun, but actually what's it got to do with the day job? And I do feel a lot of the time our customers need a really good listening to, and I mean that in the sense that people say the customer's always right. Well, to a degree the customer's always right, but they don't necessarily know what they are right about. And sometimes it needs the partnership of a technology firm, a banking firm and the customer to be able to get at what it is that they actually do want. And I think what you've got here is a massive step forward. A lot of people, my country has real-time payments, but not in the same way that you guys are going to have. I think what you'll find is the benefits of that will be the part of the business model. And you should almost, I mean this guys, don't shoot me for saying this, but this is almost not about payments, it's about banking and banking services and what does your client actually want? And that's what you need to give them a good listening to and be the people that say, this is how some of that's possible. Enabling partner.

Jude Pinto:
That client-led, segment-led, understanding of stuff of builds on, Kristy, what you had talked about at the outset. Other thoughts on agility and how we remain agile as an industry, as an ecosystem?

Kristy Duncan:
Well, I'm going to come at this from a very different perspective and I'm going to talk about infrastructure and I think we obviously want market ubiquity, but we need to base that on a very strong and flexible infrastructure. So going back to, I remember doing some work for Visa many years ago and they said, well, we've got this, I dunno what it was, 10,000 page rules book and this database like this, and some of the most innovative products come from someone who's taken the time to go through all the pages in that book and saying, oh, we could pluck this tiny little piece of data and this one and put them together and come up with some cool new product. And so being able to have that infrastructure that provides all of that. And so I think that's a couple things. I think it's certainly our new open banking and RTR. I think there's another piece that we need to, and I'm not involved with this day to day, but the digital ID to enable security needs to be able to help us move to where you want to be.

Jude Pinto:
And Michiel, you sit in that intersection between account-based payments and card-based payments. What's agility for you?

Michiel Wielhouwer:
I mean, it's amazing to see that in the last five years, the payment sector has changed more than in the last 50 and it has mainly driven what we see by consumer demand and we not always know that the consumer is right, but also by the technical possibilities that we have. And the amazing thing is to make that really successful. I do believe there are two things that are really needed. One is the infrastructure. Make sure that there is an interoperable environment that really works and creates a foundation that makes sure that consumers remain trust in the system. And trust is only created by making sure there's no fraud. And that's I think one of the biggest challenges with all the endless possibilities with artificial intelligence and all the technology that we have. The challenge is that it's not only us who have those technologies, it's the fraudsters too. And they are probably not the ones that need, in collaboration, to be very successful. 

Jude Pinto:
They are already collaborating

Michiel Wielhouwer:
They're a bit faster in adopting. So I think for us, it's very important that we are collaborating very, very closely, taking the competition out of, especially around fraud because it is an important environment that protects trust in the ecosystem. And Visa has been investing relentlessly in artificial intelligence to protect the system. Over the last three to five years, we've invested 10 billion US dollars into fraud protection to protect the ecosystem, and all the players involved. And I think that is something that we need to be very much mindful of, that we have technology, we have tools, fantastic, but the forces have them too.

Jude Pinto:
Thank you for that. We talked about, I think Ramesh actually mentioned the notion of, as we imagine these future services and talk to the customers about what segments are going to need, data rich payments. So with all of the modern infrastructure enabling data rich payments and adoption of ISO 20022 as well as other interoperability standards, see, can you share some of the innovation that you're hearing from your customers, your segments or thinking about in your firms because of that alone being a significant change in the infrastructure underlying payments? Paul, why don't we just start with you?

Paul Thomalla:
Yeah, look, I think data was the new oil and we've had all those phrases for quite some time, but I would look at it in a slightly different way. There's an old poem and I can't remember the name of the poem, but I'll paraphrase: data everywhere, but not a drop of intelligence. And we have so much data in the payment industry. I mean we've got, I dunno how many trillion gigabytes or whatever the new term. The problem that we have though is the intelligence side of it, and it's all very well and good with things like ISO being able to have various payloads and be able to, the question is really what are you going to do with it and why are you going to do those things with it? And by and large, guess what? That's going to come from the customer. And I see that particularly in the corporate space. We've had a lot of time talking about citizens and what citizens are doing and that's great, but the truth of the matter is the people that really want to benefit from this, I think other corporates and trying to deliver to them, insight, intelligence, whatever you want to call it, rather than just say “Hey, we've got all this data, it's really cool and we've got ISO and it's brilliant”. It's like, no, what are we trying to do? We're trying to give insight to a bank's customers in this sense, a corporate to be able to help its supply chain, do what it needs to do, rather than just saying, “Hey, I'm a great data scientist”. Why are we doing it? What's the insight for? Where's the intelligence? That's what we need.

Jude Pinto:
Remove friction in the whole value chain that involves most corporates. Absolutely. Ramesh, how do you think about that? Where's the value of data-rich payments going to show up?

Ramesh Siromani:
Yeah, you talk well too. Not a drop of intelligence quote was very cool. Like Paul said, ISO 20022 and Kristy talked about the infrastructure. I think it's very important that when we do stuff like that, ISO was introduced whatever, five years back and if all of us were marched towards that promised land, but it never really came because the businesses weren’t equipped to ingest that data. So whether it is Oracle or SAP or all the systems they had, maybe some could, some couldn't. A lot of the small businesses did not know how to use that data rich stream that was coming in. Ninety per cent of all the data in FIs are from payments, so it's a very rich landscape there, but we need to make sure it's actually used, because we've spent a lot of money and we don't see enough usage in that adoption and education is important. And on the individual side, I think earlier we talked about open banking and also talked about digital wallets and so on. It's going to be very powerful. The other day in the many long meetings which are boring, I uploaded a couple of statements onto chat gps, my wife’s and my credit card. I said, just generally generate a profile and compare the two. It was ridiculously frightening because it just said, here is the comparison in a table, here's a pie chart with categories of spend, and here is what the profile looks like based on your limits and usage and your payments and where you live. And so this is the kind of future we are looking at. And Michiel mentioned AI, it's going to be very, very powerful. And so what we do with that and use it in the right way for customers with open banking, with the right secure guardrails and looking after fraud, getting customer consent, looking after privacy is going to be very important.

Jude Pinto:
Thank you. Michiel, any thoughts to share on how to use data? 

Michiel Wielhouwer:
I think for data, I mean first and foremost, it's important to understand that it is the consumer's data and that we are protecting the consumer. And I think the challenge there is how do you make sure that it is smooth and allows them to be really feeling in control? Because one of the things saying you're in control is another thing that you feel that you're in control. And then the moment that that is unlocked, the consumer can really have a personalized experience where we really believe that not only payment data but much more enriched will help consumers to get the experience, and their demands will be met better than before. But it's always, we have to make sure that we are taken into account that the consumer needs to be protected and we need to help them to protect themselves sometimes against themselves because it is certain demands they might have are overstretching a bit the abilities of technology that is there today.

Jude Pinto:
Interesting. Kristy, other thoughts on insight intelligence?

Kristy Duncan:
Yeah, clearly I'm not a service provider, so I don't have the same perspective, but I do have a wishlist. As a small business, I'd love to see more than just a wire payment landing in your account. Okay, please, some detail would be very helpful. But as a consumer, I was helping my daughter a couple years ago apply for a mortgage and 17 PDFs that we had to send in to submit copies of payroll, copies of past bank statements, copies of blah, blah, blah, blah. Seriously, if we could get to that lovely open banking state where you didn't have to do the 17 PDFs, you could just do one permission, that'd be so awesome.

Jude Pinto:
Fantastic, fantastic. Okay, so maybe this is on behalf of next year's SUMMIT coordinators, but let's do some prognostication here. What do you think will be the biggest topics at The 2025 SUMMIT? Kristy, let's start with you on this one.

Kristy Duncan:
Oh my gosh. Well,

Jude Pinto:
Maybe it's a wishlist too.

Kristy Duncan:
Yeah, yeah, wishlist. I think there's lots of stuff that is going on in the world that's now coming to Canada and hopefully vice versa that hopefully will be starting to lead in some of these areas. I am very, very excited about what's going on here with the RTR and open banking. So clearly that's going to be on that topic. One thing I haven't heard, and this, sorry I missed yesterday, but I think GenAI, of course, quantum has been a little bit low on the radar screen. I am thinking that as time marches on, it's going to get higher and higher so we need to be paying more attention, and digital ID, I think we should be talking about more.

Jude Pinto:
As well in the context of fraud or frictionless and open banking. Exactly. Okay. Very good. Very good. Michiel?

Michiel Wielhouwer:
So I think it will be very much how we apply the things that we talk today about how do we see more of this real life use of generative AI, fraud protection, how do we really give the consumer the sense of control, and how do we make sure that they are feeling in control, and also the flexibility, and that the financial industry understands what their needs are and responds to that well. And I therefore believe some people touched upon it, buy now, pay later installments is something I do believe we'll see more on and we'll see more around. People really want to have flexibility in the way they pay day in, day out, but in a secure way, so authentication and the way they can use their card more in a secure way is absolutely an area I think is application of all the things we heard about today in the day-to-day life.

Jude Pinto:
Oh, very good. Some more actually starting to show to market and becoming more tangible and nothing theoretical. Continue traction, that stuff. Paul, next year's SUMMIT, big topics.

Paul Thomalla:
I think nobody wakes up in the morning says, I want to do a payment. Maybe there are people in this room, that's not sure about right, but this room is a bad audience for that statement. But the truth of matter is people don't by and large do that. And I think the question that I would have is that you don't talk about real time because it's not about real time. It's what it does and what it enables. And sorry guys, you're right in front of me, how rude of me. But the point that I'm making is it's not about that per se, it's what enables on your journey that is really, really important. And I think the real big thing here is fraud. The issue of people of this generation, it will be if we don't fix that or if we don't push them away from, in this case Canada or from the UK, push them somewhere else, then the next generation will not forgive us. And I think we really need to think through just how important fiscally, socially, and emotionally fraud is. Sorry to be a bit of a Debbie Downer.

Jude Pinto:
No, it's critically important we think about it, a lot of people here are thinking about that as we heard throughout the week. Ramesh next year.

Ramesh Siromani:
Yeah, I think all great topics. I feel when we get together as a group like this, it's always good to talk about innovation and innovation in all the different respects, whether it is moving money faster or making the customer experience better, things like fraud of course. And I think some of the things like the future of digital wallets, for example, and what is a made in Canada, suitable for Canada solution when it moves from money movement to open banking and data sharing to identity. These things are going to be very powerful in the hands of the customer and we are going to make it safe and secure. New things like Pass Keys and the Fido Alliance and what they do for us, it's important to discuss everything that comes together and how can we innovate for Canada would be a great topic.

Jude Pinto:
That's fantastic. Well, thank you all so much. It has been an absolute pleasure to reflect on the future of payments with each of you, and I'm sure the audience appreciates it as well. Thank you.

Liz Dempsey:
What a great panel discussion and one of my personal favourites from The 2024 SUMMIT. I hope you enjoyed it as much as I did. Just before we go, be sure to stay connected to all things payments. Visit our website payments.ca and sign up for our newsletter, the Exchange. And be sure to visit thesummit.ca for the latest highlights from this year's conference and upcoming information on next year's conference happening in Toronto from May 6 to 8, 2025, where we'll see if the predictions of this panel came true. I'm Liz Dempsey. Thanks for joining us for this episode of The PayPod.