Canada’s 2015 commitment to improve remittance services

Canada’s new fiscal budget was released this week. Being a federal election year, the Conservative Party of Canada has tried to sell the budget as being more centered than ever before. Within it they talk about tax free investing, large scale infrastructure investment, to income tax cuts and the balancing of the fiscal budget. Doesn’t this just seam all right, in the perfect world?

Despite having practically frozen investment to the health and education sector, the federal government is still providing large scale stimulus. Much of it in infrastructure. Like any traditional government budget, it is way over sold. Take the contributions to foreign remittance infrastructure for example. It was highlighted in the budget as being a sector of the economy that had to evolve as fees are generally high and service quality is generally low. The Conservative Party of Canada highlighted that they will be investing to this sector of the economy. How much, you may ask? $5 million over 5 years.

It is very much a positive contribution to understand that many immigrants to Canada remit back home to help their family and should have access to fair and adequate services. So $5 million over 5 years, what’s the deal?

I think that the size of the contribution is actually quite suitable as this sector has significant technological opportunities for businesses to thrive. At the moment, the environment in many developed countries is underdeveloped as it relates to money transfer businesses. In many cases, regulation has gotten in the way but with the advent of block-chain technologies, the entire industry has the opportunity to evolve to reduce fees and increase trust exponentially. Transferring value is something that should be practically free. The evolution of the internet is slowly (or rapidly in some cases) decentralizing our society and the exchange of value is following suit. Trading systems are opening up and more international competition is joining the marketplace. This is what is going to reduce fees and better service for foreign remitters.

Within this budget, the amount of money contributed to the industry was absolutely irrelevant in my opinion. Much of the Canadian media have been quick to point out that the budget contained plans to invest toward remittance infrastructure and this contribution, albeit a good thing for the sector, is not what it needs. Our financial and payment system requires finesse as it relates to regulation. At them moment, much regulation is designed for a none digital world and actually impedes innovation, as companies utilizing new digital systems for exchanging value and identification run into stiff KYC (Know-Your-Client) and AML (Anti-Money Laundering) regulation. This regulation needs to be revamped for our changing economy and that is when the remittance industry will evolve. To add, this issue is not just a Canadian issue but many developed countries have similarly archaic financial regulation.

I’m not saying I have all the answers to the issues presented as they are fairly complex. I am saying that many developed countries need to review their financial regulation to make sure it fits a digital world.