Canada's payments ecosystem is undergoing significant transformation, with modernization initiatives reshaping how money, data and risk move through the financial system. In this episode of CIBC Mellon Industry Perspectives, host Tim Pinnell speaks with CIBC Capital Markets' Andre Blanchard about what institutional investors and market participants should be watching as Canada advances initiatives such as Lynx, the Real-Time Rail and ISO 20022 adoption. Together, they explore the practical implications of faster payments, richer payment data, fraud and resilience considerations, and how Canada's evolving payments infrastructure fits within a broader global landscape.
Tim Pinnell:
Welcome to CIBC Mellon Industry Perspectives, a podcast series that brings you developments in the Canadian securities industry and explores potential impacts for CIBC Mellon clients and institutional investors active in the Canadian market. I'm your host. Tim Pinnell, Relationship Executive, Global Financial Institutions at CIBC Mellon, and I am pleased to be leading today's discussion. Canada's payments landscape is changing quickly, and not just because money can move faster.
What is really changing is the information that travels with a payment, how transactions are reconciled and monitored, and how institutions can design better experiences for clients. In this episode, we will take a look at how the Canadian payments industry continues to evolve through major modernization initiatives designed to enhance the speed, efficiency, and resiliency of the payments ecosystem. These are just some of the topics that will continue to be top of mind for market participants as the industry gathers soon at the Sibos conference in Miami. To unpack what these key themes mean in practical terms, I'm joined by Andre Blanchard, Managing Director and Head of North American Corporate Cash Management at CIBC Capital Markets.
In today's conversation, we will highlight areas of interest for global investment, servicing and sub-custody clients active in the Canadian market. Thanks for joining us today. Thank you. It’s a pleasure being here, Tim. Let's get into it. When people hear payments modernization, they often think faster payments. But Andre, speak to us about what is really changing in Canada's payments landscape and what that means for institutional investors in Canada.
Andre Blanchard:
It's a great question, Tim. I guess the simplest way that I could describe this is Canada's not only modernizing both the infrastructure so the plumbing, but also the information layer of payments. On the infrastructure side, LYNX is Canada's high value payment system and was fully implemented in 2023, replacing our legacy batch based platform for many years, designed with ISO 20022 in mind, the system promotes greater data inclusion and interoperability.
Not only does it support the irrevocable transfer of Canadian dollar wire payments between participating financial institutions, with settlements occurring on the central bank money, that matters because it underpins confidence. And finally for large time sensitive transactions. Alongside that, the planned real time rail or RTR is designed as Canada's new near instant payment infrastructure that will be available on a 24 seven basis.
Accordingly, it's currently scheduled for Q4 of this year, which is 2026. It'll support payment processing around the clock, immediate delivery of funds, and instant clearing and settlement for eligible participants.
Tim Pinnell:
Given that Q4 2026 timing, it sounds like this is not only a future state conversation. Clients should already be thinking about readiness. What readiness is going to look like?
Andre Blanchard:
Absolutely. That's correct Tim. We've had conversations with our clients now for years. And modernization isn't just a technology product. For institutional clients It actually begs a fundamental question, you know, how will I manage liquidity when payments can move at any time? You know, are our treasury and reconciliation processes ready for richer data? And can our fraud and controls environment operate in a real time speed?
And where can we redesign the client experience rather than simply moving an existing process onto a faster rail?
Tim Pinnell:
That is an important distinction, Andre. The shift is not just about moving money faster, it's also about changing how organizations operate around the payment.
Andre Blanchard:
Exactly. Today's speeds getting the attention. But the long term value lies. And combining that speed the finality data ultimately straight through processing and hopefully automation.
Tim Pinnell:
Let's put that into practical terms. If I'm an institutional client looking at links, the real time rail and other payment options, how should one decide which rail fits which need?
Andre Blanchard:
The real time rail is intended to open new possibilities for instant payments across a wider range of transactions, starting at a smaller dollar amount. Over time that could support use cases such as time critical disbursements just in time supplier payments, account to account transactions, digital commerce and other services built on instant always available 24 seven infrastructure.
Tim Pinnell:
So if clients start with the business need, what questions should they ask to determine the correct payment rail?
Andre Blanchard:
I usually like to coach my clients to ask themselves a few different questions. Firstly, how urgent is their transaction? Is finality important? What data needs to accompany the transaction? What are the approval and fraud controls and what does the beneficiary expect?
You know that'll help organizations avoid treating every payment the same. It can also identify where a faster payment creates genuine business value, and where existing payment methods just remain appropriate as it is today.
Tim Pinnell:
So it's less about asking what is the newest option and more about asking what problem are we trying to solve?
Andre Blanchard:
That's right. You know, the ultimate opportunity isn't to default to the newest rail or the shiny object. It's to select the right rail for that right transaction.
Tim Pinnell:
You mentioned data a few times so far today. Let's stay with that because for many clients this may be where the real value shows up. What does richer payment data including ISO 20022 make possible?
Andre Blanchard:
ISO 20022 provides a common structured language for payment information. Instead of relying on limited or unstructured fields, a payment can carry more consistent detail such as invoice references, purchase order information and identifiers that help explain who is paying, who's being paid, and what and why. Now that has practical, real life benefits, better structured data can support straight through processing, automated reconciliation, improve cash application with hopefully fewer manual exceptions or interventions. It could also help treasury teams see cash positions more clearly and give operational teams better information when investigating a transaction.
Tim Pinnell:
It seems like the upside is not just better messaging standards, but it's also about creating downstream processes more straight through. Correct?
Andre Blanchard:
Yes. The important point, though, is that the standard alone doesn't create the benefit or the value. Organizations need to capture the right data at the beginning, preserve it through the entire lifecycle of the transaction all the way to its downstream workflows. If that information is stripped out or never integrated into enterprise resource planners or treasury management systems, much of the value will be lost.
Tim Pinnell:
So, richer data only helps if organizations can actually use it end to end. What can clients do to help with the smoother transition to ISO 20022 requirements?
Andre Blanchard:
Absolutely. I think there's a bit of a mind shift here. Clients should be looking at data quality, field mapping, internal system capacity. You know, organizations that treat richer payment data as a business asset, not just like a compliance requirement will best position and get and gain the better benefits from this.
Tim Pinnell:
So turning to compliance. As you mentioned, that faster payments sound positive, but they also raise obvious risk and compliance questions. If money can move in real time, how should clients think about fraud, anti-money laundering and counterterrorist financing controls and resilience, given there is less time to do reviews within the payments window that come with links in the real time rail. It's great to be fast, but Andre, how would you balance speed with effective, robust risks and controls?
Andre Blanchard:
Yeah, that's on everyone's mind. You know, risk controls have to become faster as well in a real time environment. There is less opportunity to pause a transaction or recover funds after the fact. That shifts more of the focus upfront to prevention, detection and decisioning before a payment is released. For clients, that means examining internal process authentication, approval limits, account controls, beneficiary verification, transaction monitoring and how quickly unusual activity can be identified and escalated. Richer data can help by giving screening and monitoring tools more context, but only when the data is reliable and controls are designed to use it.
Tim Pinnell:
So the real challenge is not slowing payments down. It's making sure that controls can keep up. Is that fair?
Andre Blanchard:
Precisely. Operational resilience is equally important. 24 seven payments require 24 over seven processes. Clear incident playbooks, strong cyber controls, tested business continuity plans or arrangements, and defined decision rights across Treasury operations, compliance and technology. But there's also a human element. Employees in these roles need to understand that urgency can be used as a ploy in social engineering tactics from bad actors. Modern infrastructure cannot compensate for weak approval discipline or poor verification practices.
Tim Pinnell:
I like how you frame that. Andre. The answer is not to slow everything down, but to make sure the controls are smart enough to keep pace.
Andre Blanchard:
Precisely. Preparation will create trust and will allow speed to become useful and valuable.
Tim Pinnell:
Canada is not doing this in isolation. Many markets are also moving towards richer data, instant payments and more digital payment experiences. How should clients think about Canada in that global context?
Andre Blanchard:
That's a really good question, Tim. I'm glad you asked me that. Payments are increasingly global even when the transaction begins domestically. Corporates operate across borders, investors move liquidity across markets, and clients expect a more consistent experience wherever they do business. Canada's adoption of ISO 20022 helps align our high value payment environment with a standard being adopted globally, which creates a stronger foundation for interoperability, more consistent data, and, over time, improvements in cross-border payments. That being said, each jurisdiction has its own regulatory structure, access model, and pace of adoption. Clients should not assume that real time means exactly the same thing everywhere. Payment limits, settlement models, operating hours, data requirements, and recourse can differ for institutions operating across jurisdictions. The strategic opportunities to build common principles around data control, liquidity, and client experience, while allowing for local market flexibility that reduces fragmentation without ignoring important differences.
Tim Pinnell:
So clients can borrow ideas from global markets. But they really do need to understand the Canadian regulatory and operating environment as well.
Andre Blanchard:
Exactly. Standardization will help, but good execution still depends on local expertise, and I can't stress this enough, strong banking relationships.
Tim Pinnell:
Let's bring this back to what clients can do next. Over the next 12 months and beyond, what should institutional clients be watching for and what should they be doing now?
Andre Blanchard:
I would usually break it out into a few different priorities. Tim. First, and I'll follow the evolution of the real time rail ecosystem as the market moved towards Payments Canada current Q4 2026 target for the real time rail, its rollout participation, service offering, and the use cases that financial institution and payment service providers will bring to market. Secondly, and this one's really important is assess internal readiness. Identify where modern payment intersect with Treasury, your enterprise resource planning platforms, reconciliation, fraud, AML, customer service and operational resilience. This cannot sit with one team alone. Third, you know prioritize the use case. Start with small numbers where speed, finality, you know, requirement of richer data solves a real life problem rather than trying to transform every payment flow at once.
And fourth, and not least, you know, engage banking and technology partners early, the right conversation can help clients understand the options, you know, sequence investments and test assumptions before making large scale capital investments in change. Over the long term, I would watch how real time infrastructure converges with digital identity, digital assets, open banking, embedded payments and cross-border innovation. Those developments could change not only how payments are processed, but where and when a payment experience begins.
Tim Pinnell:
That is a really useful checklist. Andre. In closing, if we could sort of sum up all of that information, is there one message listeners to take away from this conversation and what would it be?
Andre Blanchard:
Yeah, and I'd say payment modernization isn't a single deadline or a technology upgrade. It's a combination of continuing shifts in how money, data and risk move together. Clients that begin with their business needs and bring treasury operations, technology and risk into the same conversation will be better prepared to capture the value in the near term in the long term as well.
Tim Pinnell:
Thank you for sharing your insights, Andre. That was a really helpful way to connect the infrastructure changes with the practical decisions institutions need to make.
Payment modernization will continue to evolve in the Canadian market, and I think today's conversation really helped us delve into some useful considerations on the fundamentals for our clients to keep in mind on the journey forward. Thank you to our listeners for joining us on CIBC Mellon Industry Perspectives. We hope this helps you think about where payments modernization could create value for you and your clients, and what questions to ask as the landscape continues to evolve.
I'm Tim Pinnell, and we look forward to having you back for more conversations exploring developments across the Canadian market and the areas that matter to institutional investors active in Canada.