In the Canadian market, both consumers and banks have been early adopters when it comes to banking innovation, whether it is mobile, desktop or behind the scenes technology. Canadian consumers generally expect, and are accustomed to, a cashless payment experience - either through mobile, online or card transactions. So, it comes as no surprise that a market which is so receptive to technology and innovation should recognize RTP as its next strategic opportunity.
Ovum, a leading research and consulting firm, have recently published a new report, commissioned by Icon Solutions, which highlights the main areas for planned investment by North American commercial banks.
Key findings from Ovum’s report shows quite how important Mobile Banking technology is for Canadian banks, with 100% of Canadian banks planning to increase their mobile banking spend, while only 58% of their counterparts in the United States had plans to do the same.
While customers are still using cheques in some instances for Me2Me payments, this method of payment is rapidly being pushed out of the market as a result of the more widespread use of Mobile and online banking.
In fact, there has been a lot of noise in the Canadian market around Me2Me payments. Email transfers have been widely adopted as a way of transferring money between individuals and small businesses for small amounts of money. Once an ancillary business of convenience, the banking industry as a whole is now seeing RTP as an enhancement of their banking offering and essentially part of their core business. New products and transaction limits are being adopted with added value features being increasingly added. Soon Push and Pull payment options will be available to all Canadian consumers and businesses, as well as the government.
While only 20% of Canadian banks are cited as seeing RTP as a top 3 IT spending priority, this may be a little misleading. The introduction of the ISO20022 message rich protocol associated with RTP is an industry-wide strategic area for IT spending. The ability to mine data from these information rich messages is in line with the banks’ data strategy which is to enhance the banking experience by providing personalised products and services, all based on empirical data.
Another key take-away is the risk management spend of Canadian banks against their American and Global peers, with 60% of Canadian banks planning to increase their Liquidity risk management spend over the next 18 months, in line with the United States (61%) and the rest of the world (58%). This is also part of the RTP spend as banks will be able to use ISO 20022 messages to enhance their current capabilities and build new functionality into their monitoring. This is also in alignment with the conservative risk approach adopted by Canadian banks in recent years, demonstrated by their success maneuvering through the global financial crisis in the last ten years.
So, while on the surface it may look like Canadian banks, and their neighboring peers, have been slightly behind when it comes to RTP, where European banks have been leading the global march so far, it would be foolish to think that they are anything but poised for future innovation. Their relative tardiness shouldn’t be seen as a negative when, in reality, it has afforded North American banks the benefit of learning from other’s experience and, as a result, allowed them to approach RTP as less of a necessary evil but more as an opportunity and platform for new products and services in the future.
If you would like to read the full Ovum report, download the whitepaper today.