Nearly six in 10 business leaders believe that without payments modernization, Canada's competitiveness as a country will continue to erode
TORONTO, July 31, 2025 /CNW/ - While recent public discourse around nation-building has focused on major infrastructure mega-projects, modernizing Canada's digital infrastructure is also an emerging priority, with new research showing nearly two-thirds of business leaders want Canada's payments system and open banking fast-tracked to boost productivity and competitiveness.
In a recent KPMG in Canada survey of 250 business leaders across Canada, 65 per cent of respondents said the infrastructure underpinning Canada's financial and payments system must be modernized immediately to enable open banking, digital identity and real-time payments. Nearly six in 10 (58 per cent) believe that without payments modernization, Canada's competitiveness will continue to erode.
"Canada is in the midst of a trade war, and it must do everything it can to insulate itself from outside economic threats. We have an opportunity to advance our competitive position by modernizing one of our largest industries – financial services. Digital infrastructure advancements like the real-time rail and open banking will foster more competition, enable innovation, promote financial inclusion, and drive more growth and investment in Canada. We must seize this opportunity now, or we will fall behind," says Geoff Rush, Partner and National Industry Leader for financial services at KPMG in Canada.
Canada is developing the Real-Time Rail (RTR), a national payment infrastructure that will allow Canadians to send and receive payments in real-time and enable around-the-clock instant payment clearing and settlement between financial institutions in real-time. Canada also plans to implement open banking (or consumer-driven banking), which allows consumers to easily share their financial data with third-party financial services providers such as app-based fintechs, allowing them to control and transport their information and see their entire financial picture across multiple accounts in one dashboard.
Both initiatives have faced years of delays but have taken on a renewed sense of urgency as the focus on nation building gathers momentum. The federal government plans to launch a framework for open banking next year after passing initial legislation in 2024, but further legislation is needed for a full rollout. Meanwhile, the real-time rail technical build is scheduled to be completed in July, with a year-long testing phase to follow, according to Payments Canada.
Mr. Rush says now is an opportune time to expedite both projects, given the strong push from governments, citizens and business leaders to boost Canadian productivity, competitiveness and economic self-sufficiency.
"Our survey shows that 64 per cent of business leaders agree that open banking, digital identity systems and real-time payment rails are not mere upgrades – they are the bedrock of a resilient, competitive, and inclusive economy, so it's imperative for those projects to move forward as quickly as possible," Mr. Rush says.
"Without a real-time rail, payments can take days to be processed, exposing organizations to increased credit, liquidity, operational and systemic risks. Without open banking, consumers who want to engage with fintechs are forced to share their financial data through 'screen scraping,' which creates serious privacy concerns and deters them from signing up for the innovative services that fintechs offer. We need to reduce these risks and competitive barriers for Canadian businesses and consumers," Mr. Rush says.
KPMG in Canada survey highlights
- 65 per cent say the infrastructure underpinning Canada's financial and payments system must be modernized immediately to enable open banking (consumer-driven banking), digital identity and real-time payments
- 58 per cent believe without payments modernization, Canada's competitiveness will continue to deteriorate
- 64 per cent agree that open banking, digital identity systems and real-time payment rails are not mere upgrades – they are the bedrock of a resilient, competitive, and inclusive economy
- 58 per cent have seen "a definite improvement" in business-to-business (B2B) banking services from the major banks even though opening banking and payments modernization have not yet been implemented
Despite the absence of opening banking and real-time rail in Canada, nearly six in 10 (58 per cent) respondents said they have seen "a definite improvement" in business-to-business (B2B) banking services from the major banks, according to the KPMG survey.
Edwin Isted, Executive Director and Payments Lead in KPMG in Canada's Financial Services Solutions practice says those improvements are likely the result of Canadian financial institutions' efforts to modernize their payments programs. "In absence of the real-time rail, financial services organizations are already doing their part to modernize Canada's payments ecosystem," notes Mr. Isted.
In a separate survey of global financial institutions by KPMG International, nearly all (94 per cent) Canadian respondents said they are either planning or actively engaged in payment modernization programs.
"Many financial institutions in Canada are still using outdated legacy technology systems, but our survey clearly shows that they are working to modernize their systems to facilitate faster, more efficient payments that are predictable, transparent and enhance the customer experience," he adds.
Mr. Isted says while the high number of financial institutions with payment modernization programs is encouraging, activating the real-time rail will accelerate the progress of those programs significantly.
"The real-time rail isn't just about faster payments, it's about enabling more data-rich transactions so organizations have more valuable context about payments. When organizations have a better understanding about why and how a payment was made, the parties involved in the payments, as well as the frequency and history of the payments, they can serve their customers and clients more effectively. Implementing the real-time rail is a win-win for Canadian businesses and consumers," he adds.
KPMG International survey highlights
- 94 percent of Canadian financial institutions are either planning or actively engaged in payment modernization programs
- Top benefits of modernization cited by respondents include faster transaction processing, improved customer experience and enhanced security.
- Payments modernization programs are expected to cost between US$10 million and US$25 million
KPMG in Canada surveyed 250 business leaders in all industry sectors across Canada between May 9 and May 20, 2025, on Sago's premier business panel, using Methodify's online research platform. Thirty-one per cent lead companies with annual gross revenue between $500 million and $1 billion, 25 per cent report revenue between $100 million and $300 million, 22 per cent have revenue between $300 million and $500 million, 12 per cent between $10 million and $100 million, and 10 per cent, over $1 billion. No companies under $10 million in annual revenue were surveyed. Over half (52 per cent) are privately held, 28 per cent are owned by private equity firms, 18 per cent are publicly traded with headquarters in Canada, and 2 per cent are foreign-owned subsidiaries.
KPMG International conducted quantitative research about payments modernizations programs in September 2024. 810 financial institutions took part, including 66 in Canada. Financial Institutions spanned four categories with respondents from: established mainstream banks, building societies, challenger banks, wholesale banks and private banks. 60 per cent of respondents reported revenue between US$500 million to US$1 billion; 36 per cent between US$1 billion to US$5 billion; and 3 per cent with more than US$5 billion.
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.
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SOURCE KPMG LLP
For media inquiries: Roula Meditskos, National Communications and Media Relations, KPMG in Canada, 416-549-7982, [email protected]
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