Central 1 gets ready for the launch of Lynx, Canada’s new high-value payments system

Published: August 26, 2020

As the central credit union for British Columbia and Ontario, and manager of the Group Clearer (comprised of Central 1 Credit Union, Credit Union Central of Alberta, SaskCentral and Credit Union Central Manitoba), Central 1 settles billions of dollars in Canadian wires every month. Underpinning this activity is Canada’s Large Value Transfer System

With the launch of Lynx, Canada’s new high-value payments system, on the horizon we caught up with Steve Faust, Associate Vice President of Payments Modernization at Central 1, to ask him about the work he and his team are doing in support.

How is Central 1 preparing for the launch of Lynx? 

With Central 1 being one of the 16 go-live Lynx participants*, my job — with the help of my team — is to ensure that our internal systems are ready for migration from Canada’s Large Value Transfer System to Lynx in 2021. This includes participating in pre go-live Lynx industry testing and enhancing our business processes to account for real-time settlement within Lynx. We’re also updating our liquidity processes and credit risk management to manage risk for our member credit unions and financial institution (FI) clients during Lynx implementation.The latter entails working closely with various provincial regulators to make certain that settlement and risk obligations — on behalf of our members and clients — are being properly addressed. Further, I’m responsible for ensuring that our high-value payments products and services, among our other products and services, are compliant with Payments Canada and Bank of Canada requirements.

What is Central 1 doing to help its members and clients get ready for the new high-value payments system? 

Our team is taking a leadership role for our members and clients, as well as for the Group Clearer, making certain that Canada’s new high-value payments system addresses their technology, data, regulatory and treasury requirements. 

Recognizing that our members need to build their own Lynx business strategies, we’ve been updating them regularly on key planning milestones. In parallel, we’re focused on enhancing our services for our members and clients to best support their ongoing needs. A key aspect of these services is providing liquidity and credit risk management capabilities to our distributed client base, consistent with the new risk model requirements for Lynx.

In what other ways is Central 1 advancing on its overall payments modernization strategy?

We’ve always taken great pride at Central 1 to be a leader in introducing innovation to our members and their clients. In the past this has included being the first Canadian financial institution to offer Interac e-Transfer® and cheque imaging. Building on this commitment, we developed a new current account system, which safeguards our member and client transactions with other FIs in Canada. This new system will allow us to provide real-time credit decisions across our products. It will also ensure we’re prepared for the changes in the risk models brought on by Payments Canada’s Modernization program, and being put forward by regulators. 

We’re also actively preparing for release two of Lynx, which will support the ISO 20022 global messaging standard that allows for more data to travel with payments. Right now there are a number of Central 1 efforts underway to ensure that our members will be in a position to receive data-rich payments, and to support them in harnessing the value of that new data.  

When it comes to the end benefit realizations of Payments Canada’s Modernization program what are you most looking forward to? 

I’m most excited about the fast, flexible and secure payments platforms that Canada will have at its foundation.The payments systems that are being put in place — Lynx included — will be globally interoperable and enable new and innovative payment solutions. They will simplify the user experience, allow for data-rich payments and advanced analytics to help drive businesses efficiencies. All of these elements combined will help position Canadians for success in their financial future. Personally, it’s an exciting time to be involved in an organization that is at the forefront of the implementation of Canada’s new payments landscape; and delivering value to Canadians who’ve chosen to bank at credit unions across the country.

*Lynx participants consist of financial institutions that meet certain requirements as outlined in the CPA rules and by-laws, including maintaining a settlement account at the Bank of Canada. Other financial institutions will be able to make arrangements for wire payments through Lynx participants