Wise Revisted with Brigit Carroll | E283
An update on open banking.
On this episode, host Jason Pereira talks to Brigit Carroll, the policy lead for the Americas at Wise. Wise is a company that has previously appeared on the show. Jason has invited Bridget to discuss the progress or lack thereof regarding open banking in North America. They discuss various topics related to cross-border payments, banking apps, and the challenges faced by the industry. Bridget emphasizes the need for transparency in pricing and reducing the cost of remittances. They also talk about the evolving narrative of fintech disruptors and the importance of collaboration within the payment ecosystem.
Episode Highlights
00:42: Bridget provides a recap of what Wise (formerly known as TransferWise) is all about.
01:18: Wise is a global payments company that focuses on providing the best solution for moving money across borders.
01:52: Bridget mentions that Wise empowers community banks and credit unions to offer international payments to their own customers by leveraging Wise's technology. This has resulted in saving customers about 2.5 billion Canadian dollars annually compared to traditional providers.
02:22: Open banking is seen as a crucial component of the overall modernization of the payment ecosystem in Canada.
03:20: Bridget highlights that despite these efforts, the major Canadian banks still control the majority of banking assets, which affects how money moves domestically and across borders.
05:59: Jason suggests that the close relationship between finance, banking associations, and the revolving door of personnel contributes to the slow progress in Canada. He proposes returning to discuss the different facets of open banking and continuing to critique the Canadian system.
06:42: Bridget explains that real-time payments refer to payments that are sent and received within 20 seconds or less. She mentions that around 60 countries already have real-time payment systems in place, but Canada's launch of the real-time rails (RTR) has been delayed with no definitive timeline.
07:48: Jason agrees with the need for faster transactions and mentions that although e-Transfer has made things easier, there is a need for a system that facilitates transactions across institutions.
08:33: Bridget emphasizes the importance of faster payments, stating that Canadians deserve it and it's not just a luxury. Failure to deliver on this promise would be detrimental to consumers and businesses during the cost-of-living crisis.
09:24: The Retail Payments Activities Act (RPA) aims to create a new payments license in Canada. Jason compares it to the Payment Services Directive in the UK and Europe, which brings payment companies into the regulatory framework to ensure customer money safety and risk management.
10:54: Bridget discusses the regulatory oversight by the Bank of Canada and mentions that registration for the RPA will open soon. Oversight is expected to begin in 2024. The focus is also on opening up access to payment systems for fintech companies, not just banks, to foster competition and broaden access to the system.
11:26: Bridget emphasizes the importance of bringing Canada up to speed with the rest of the world.
12:25: Payment services like Wise have to rely on direct competitors or banks to access critical infrastructure for originating and settling payments. This reliance on intermediaries makes payments more expensive and slower. Opening up access to payment systems for non-banks would make payments faster and cheaper for consumers and businesses.
14:48: Being cautious and slowing down innovation can harm consumers; Bridget emphasizes that the current situation is already detrimental. She mentions the high costs of remittances, particularly for new Canadians.
16:22: Canadian banks are not competitive and are expensive compared to other financial institutions globally.
18:06: There are long lead times for various initiatives, such as the retail Payments Activities Act, which is currently undergoing consultations.
18:39: Open banking in Canada will only succeed if there is a landscape that incentivizes it. It shouldn't rely solely on regulators forcing the opening up of data. All industry players need to be incentivized and recognize the value in sharing data, says Bridget.
26:24: Change needs to happen in collaboration with regulators and incumbents as well. It's not about disrupting for the sake of disruption, but it's about working together to create a better system.
27:10: Knowing that we are making a positive difference in the lives of millions of people around the world is incredibly rewarding. It's why we do what we do, and it's what keeps us motivated to continue pushing for better solutions and a more inclusive financial system, says Bridget.
3 Key Points
Bridget explains that payments modernization in Canada includes various aspects such as real-time payments, modern payment licensing through systems like RPAs (Request-to-Pay Agreements), open banking, and enabling fintech companies to access the payment system through amendments to the Canadian Payments Act.
Jason highlights the frustration of waiting several days for a payment to clear and emphasizes that instant payments are crucial for individuals who cannot afford to wait for their paychecks or for small businesses seeking instant liquidity.
Jason criticizes banks for their generic marketing approaches that fail to address individual needs.
Tweetable Quotes
"Canadian banks may strongly resist open banking, while noting that Europe has taken a legislative approach, and the United States has embraced free market capitalism." – Jason
"Wise was the first non-bank to access the Bank of England's faster payment system, resulting in cost reductions for customers and significantly faster payment processing." - Bridget
"Change needs to happen in collaboration with regulators and incumbents as well. It's not about disrupting for the sake of disruption, but it's about working together to create a better system." – Bridget
"The most rewarding part for me personally has been seeing the impact that we're making on people's lives. We receive feedback from our customers all the time, telling us how Wise has made it easier for them to send money to their families, to pay for their education, to start businesses, and to pursue their dreams." - Bridget
Resources Mentioned:
Facebook – Jason Pereira's Facebook
LinkedIn – Jason Pereira's LinkedIn
Woodgate.com – Sponsor