Mod Blog: Central 1 champions Modernized Payments

Payments Canada asked Kelly Latzel, VP Treasury & Operations at Central 1 to talk about the role her organization has played in engaging credit unions on the topic of payments Modernization, where she sees opportunities associated with this fall’s AFT enhancements and what excites her about Modernized Payments.

How is Central 1 ensuring that Canadian credit unions are engaged in the Modernization initiative and prepared for upcoming changes and the future of payments?
Central 1 (the central credit union for BC and Ontario), along with the other Group Clearer Centrals (Credit Union Central of Manitoba, SaskCentral and Credit Union Central of Alberta), are working cooperatively to provide a leadership role, engaging and communicating with the Canadian credit union system on Payments Modernization to generate awareness and understanding of the impacts, and enhance the readiness of the system. The Group Clearer has set out to achieve three main goals:

EDUCATE: Act as a single point of information for the Canadian credit union system, to ensure relevant information is available in a timely fashion while clearly identifying the choices credit unions will be able to make as well as anticipated consequences/impacts of those choices.

ENGAGE: Provide opportunities for proactive engagement and solicit input from the Canadian credit union system to share with Payments Canada;

GUIDE: As subject matter experts, effectively lead credit unions through the operational and project-related components of the Payments Modernization initiative. 

In early 2018, we established a Payments Modernization Advisory Group (PMAG) to represent the interests of credit unions nationally. The PMAG group, comprised of 12 credit unions across Canada, provides advice and recommendations to the Group Clearer on the future direction of payments initiatives.

We realized early on that we just needed to start the conversation with credit unions. The topic of payments modernization is relatively new and complicated, and so we created a dedicated website – www.cupaymentsmodernization.com –  with all the resources credit unions will need, all in one place. We also have held various webinars – both at a strategic level and detailed operations implementation level to ensure we have the opportunity to engage with our members. It’s also been invaluable working cooperatively with all the other Centrals to align on our approach and share best practices.

Part of the Payments Modernization initiative, includes upcoming enhancements to Automatic Funds Transfer (AFT) - specifically, the addition of a new exchange window. What type of impact will extending payment settlement hours in Canada (and providing funds availability within two hours of exchange deadlines*) have on credit unions and their customers? What are the opportunities?
The upcoming enhancements to AFT will have a positive impact on credit unions by allowing them the ability to offer their members quicker access to funds and greater predictability on when funds will arrive. It will also allow us to move towards service-level parity across the country for AFT processing. For business customers, the 2-hour funds availability will allow for faster access to funds which can help improve cashflow.

For credit unions and our clients, we see plenty of opportunities associated with the AFT enhancements including:

• Improved customer experience – our members are able to better service their customers, where they can now transact later in the day.
• Opportunity for innovation - our members can be more innovative in the services they are offering, as they look for ways to leverage the later deadline and move away from traditional paper-based and other more costly payment forms, and towards electronic payments.
• Opportunity to improve efficiency – the modernization project provides an opportunity for our members to review their existing payment practices and identify areas for innovation to better serve their membership base.
• Balanced Risk – moving payments faster and adding a third exchange allows payments to be returned same day, and this provides the opportunity for our members to both take action and resolve these returns faster.

What excites you the most about Payments Modernization? What have your members been saying?
I think I’m most excited about being part of something larger – while we are working to modernize Canada’s payments systems, it is really about being competitive in the global payments space.

What we’ve found in the many discussions, meetings and webinars that we’ve had with our members is that they are curious and excited to innovate and further differentiate their brand, see electronic payments to move across Canada faster, have access to richer information for more efficient reconciliation, and solve their cross-border payments issues.

Mostly they are excited to explore how this can help them serve their customers better.

*Clearing Agents will be required to make Automated Funds Transfer credit transactions to participating Indirect Clearers available as soon as possible, but no later than two hours following each deadline.