With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1296256
ON THE RADAR ( the informer ) ISTOCK I f you're like me, you have a small pile of change on your dresser or bedside table. It's been making the rounds of your pants and jacket pockets for months. As the COVID-19 pandemic has mandated a shift to contact- less payment—the tap of a credit card or scan of a phone app—those coins have become excess baggage. And the change could be permanent. "You have a whole swath of the population that's been forced to adopt financial technology," observes Steve Marshall, CEO of RevoluGroup Canada, a Vancouver-based digital payments startup. "There's no going back." Indeed, Marshall foresees the transition accelerating as early adopters urge their family and friends to download apps for things as simple as chipping in for a colleague's retirement present. Eventually, he pre- dicts, banks will experience a tipping point like that already felt by travel agencies and photo-finishing shops, when consumers move en masse to a cheaper, easier digital solution. It's already happening in Europe, says the globe-trotting Brit, who led a reverse takeover of a mineral exploration com- pany listed on the TSX Venture Exchange in 2016 to create RevoluGroup and pivot to digi- tal payments. Today's cash-free COVID economy is further pres- suring Canada's government to create a legal framework for so-called open banking. The concept got its start more than a decade ago in China, where phone apps such as Alipay and WeChat became increasingly popular for day-to- day transactions. Recognizing a viable innovation, Chinese au- thorities began developing reg- ulations for digital payments. Not long after, public revul- sion at the bailouts of com- mercial banks following the 2008-09 credit crisis prompted the European Central Bank to explore ways to increase com- petition in the financial sector, in the hope that, in the future, no institution would be "too big to fail." One way was to en- courage financial technology, or fintech, that could compete with the banks for at least parts of their business. The first version of PSD (Payment Services Directive) gave banks the exclusive right to take deposits but forced them to give up their data to licensed third parties for Bank Shot As the rest of the world pushes ahead with open banking, B.C. fintech players are keen to make it a reality here, too by Michael McCullough F I NA NC E SEPTEMBER/OCTOBER 2020 BCBUSINESS 15 OPEN SESAME B.C. financial institutions might be primed for less regulation than ever before COIN TOSS Across Canada, here's how cash transactions stacked up against other forms of payment in 2018 $93 Average credit card transaction amount in Canada 1.65%-2.71% Fees Canadian merchants pay for credit card transactions at point of sale 83.4% Share of Canadian bank assets held by the five largest banks (RBC, TD, Scotiabank, BMO and CIBC) in 2016 8th Canada's rank among 10 countries in open banking readiness as of 2019, according to Ernst & Young SOURCES: PAYMENTS CANADA, CANADIAN FEDERATION OF INDEPENDENT BUSINESS, ERNST & YOUNG CASH $92 BILLION DEBIT $256 BILLION CREDIT CARD $552 BILLION CHEQUE AND PAPER $3.9 TRILLION ELECTRONIC FUNDS TRANSFER $4.9 TRILLION