Technological innovation continues to be a major catalyst for change across Canada’s financial services industry. There’s no doubt that the payments space is rapidly evolving, as new players like FinTechs enter the market with innovative digital solutions for the everyday consumer.
Diving deeper into these trends, from May 24 to May 26, Payments Canada hosted The Payments Canada Summit, inviting members of the financial services industry to learn about how Canada’s payments space is changing and what the future of payments looks like.
“There’s two key trends that are happening and it’s really due to the widespread use of smartphones so the digitization of money.” – Paul Parisi
The summit hosted a series of keynote speeches, panels, and breakout sessions that covered a variety of topics, including the payment experience, artificial intelligence in payments, digital ID and authorization, and the future of blockchain and distributed ledger technology.
Paul Parisi, president of PayPal Canada, kicked off day two by emphasizing key trends occurring in the payments space, including changing payment habits among consumers, and the rise of “contextual commerce.”
“There’s two key trends that are happening, and it’s really due to the widespread use of smartphones — so the digitization of money, which is just purely cash moving into online digital funds. It’s changing the way people transact,” said Parisi. “The second major trend in payments is this contextual commerce…it’s Uber, it’s Pinterest, Instagram. It’s the ability for a person to be able to buy what they want, where they want, when they want it in an online fashion.”
Parisi also pointed to a recent study conducted by Payments Canada, which found that 50 percent of Canadians are “somewhat” anxious about the arrival of e-wallets, while at the same time, many are willing to let go of cheques, coins, and cash.
“A high % of online retail transactions are taking place in the physical store.” -Paul Parisi of @PayPalCA #PayCanSummit pic.twitter.com/1Au5mkGqt9
— The SUMMIT (@thesummit) May 25, 2017
The importance of open data for innovation
In a panel moderated by Douglas Soltys, BetaKit’s editor-in-chief, Dinaro Ly, director of FinTech and commerce at MaRS, talked about how open data — banking data in particular — is a critical component for emerging FinTech companies.
He recalled MaRS’ 2015 partnership with Tangerine and Envestnet | Yodlee, which was meant to give entrepreneurs access to data through Yodlee’s cloud-based financial services data platform.
“[Yodlee is] an open bank API platform that aggregates and anonymizes the banking data and makes it accessible to companies and third party buyers to build solutions on it,” said Ly, adding that access to this data can also help startups understand who their customers are, their behaviours, and how they can serve them.
“We have a lot of great innovation here but we are limited in resources from the institutions and organizations that can provide that leadership.”
When Soltys asked about how startups tackle concerns of privacy, security, and trust, Christian Ali, chief marketing officer at Dream Payments, stressed the importance of gaining the trust of your company’s clients.
“To the point around open data, trust is what our brand is about,” said Ali. “When you’re in financial services and you’re in tech, you’re a startup…what you’re building is trust. So it’s very, very important how you manage that data.”
Ali also noted that to help startups scale globally, Canada needs to focus more on leadership. “I think we do need leadership at a federal level to set that tone and get that message out there,” said Ali. “We have a lot of great innovation here but we are limited in resources from the institutions and organizations that can provide that leadership. There’s one MaRS, that’s it. And then there’s…a tremendous amount of startups and FinTechs and companies trying to get in through the same door.”
While the panelists agreed that open data is critical to supporting innovation and building out new solutions, Pat Chaukos, chief of the Ontario Securities Commission LaunchPad, stressed the need for companies to protect clients’ personal information.
“To me open data…is really around anonymized data,” said Chaukos. “I think that is important so that you have the data and you’re able to run the new types of solutions, technology solutions on that data…but when it comes to personal and confidential information, that’s something obviously that the client needs to consent to.”
The future of the payments experience
The Payments Canada Summit also hosted a panel that looked at how the payments experience can be a success driver for Canadian tech, as well the pitfalls, opportunities, and the future of payment-centred businesses.
When asked about how leading tech companies can tackle consumers’ demands for innovative services at lower costs, panelist André Lyver, director of engineering at Shopify, said that providing services with added value to customers often trumps their need for low costs.
“The value-added services and differentiation is really where it’s key,” said Lyver, giving the example of how Shopify merchants who weren’t previously using Shopify Pay made the switch because it provides tools such as Shopify Capital or machine learning that prevents issues like fraud.
“They’re willing to pay a little bit more for card processing in order to have that value-added service,” said Lyver.
“Walmart spends over $2B /year to accept electronic payments globally.” – Mario de Armas of @walmart #paymentexperience #PayCanSummit pic.twitter.com/Ik5xtGGfdd
— The SUMMIT (@thesummit) May 25, 2017
When it comes to defining the next phase of payments, Lyver said the future of payments will be largely influenced by things like chat bots and artificial intelligence-powered tools.
“We’ve seen that with things like conversational commerce, where you’re interacting with chat bots with various stores where you contact the store owner over Facebook Messenger and they say, ‘we know you’ve been shopping for blue dresses, here are some blue dresses’…you can complete that purchase right there within your messenger chat and the whole interaction with that store and shopping experience was sort of guided through machine learning and AI, and ultimately it’s just a one-click checkout.”
The Payments Canada Summit also featured a FinTech Cup, a pitch competition hosted by CIBC, Paysafe, 500 Startups and the Digital Finance Institute. Finn.ai, an AI-powered personal banking and financial management assistant, received the grand prize of $20,000.
Mindbridge.ai, an AI-enabled auditor that helps professionals detect and prevent employees from committing fraud, took home the People’s Choice Award first place prize of $10,000; Payment Rails, which provides a cloud-based platform for businesses to send payments to any individual or company around the world, received the People’s Choice Award second place prize of $5,000, and Ceribri, which provides AI and machine learning solutions to help enterprises grow revenue through better understanding of data, took home the People’s Choice Award third place prize of $2,500.