Published: April 26, 2021
We connected with Peter Morris, Senior Director, Payments Innovation Center of Excellence at CIBC, about how he and his team are working with Payments Canada and the broader ecosystem to bring Lynx, Canada’s new high-value payments system, to life in 2021. Peter also talks about his role as co-chair of the Lynx Management Committee (LMC) in partnership with Lori Bunt, Director, Modernization. The committee is responsible for providing leadership and oversight to support the design and delivery of Lynx.
How is CIBC preparing for Lynx?
CIBC is ensuring its internal systems and supporting teams are in sync for the upcoming migration. We have promoted active participation internally to help drive technical and operational changes to safeguard CIBC for go-live. This includes CIBC’s participation in industry testing as well as enhancing internal business processes to account for Lynx. With support from Treasury Cash Management and Payments Operations functions, CIBC has also contributed to the development of Lynx’s contingency solution that will ensure another layer of post-go live system resiliency.
What value will Lynx deliver to our member financial institutions and Canadians more broadly? How will ISO 20022 support those benefits?
Financial institutions will enjoy an ease of operation with the move from deferred netting to a real-time gross settlement system. The same-day settlement solution will further reduce the risk involved with providing provisional credit by the Bank of Canada. In addition, a greater reliance on pre-funded settlement in real time will also result in financial institutions optimizing liquidity usage beyond collateralization. To top it all off, Lynx will be backed by ISO 20022, a richer data solution, in November 2022, and will enable access to new data-related software offerings using APIs (application programming interface). Enriched data will now travel with payments’ messages that will support new use cases that will boost competitive customer-specific offerings.
What value do you feel the Lynx Management Committee brings to the delivery of Lynx? What has been the most rewarding part of being co-chair?
The Lynx Management Committee brings industry coordination, direction and consensus to the Lynx project. The committee has been on a journey and has evolved over time and only for the better. More and more specialized individuals from the financial institutions joined the committee as the project progressed. For the first half of the journey, I had significant input into the direction the project needed to take. For the last half, it has really been input from many of the talented Lynx Management Committee members that have guided the committee, and Lori Bunt, my co-chair, has done an excellent job at listening to the financial institutions and keeping the industry moving forward throughout the project. It has truly been an industry effort with all on board.
How does Lynx compare to modern high-value payments systems globally?
Lynx will soon be Canada’s modern market infrastructure and will satisfy principles set by the Bank of International Settlement (BIS) that govern financial market infrastructures globally. It addresses credit and liquidity management risk as well as the provision of settlement finality. Like CHAPS, which previously operated under a deferred netting system, it too was converted to a Real-Time Gross Settlement System (RTGS). The European Monetary Union also chose a RTGS solution for its large-value funds transfer system, TARGET. It’s evident that other countries also see the need to modify their settlement procedures with an aim of reducing the settlement risk and delivering payments commitment effectively to meet international standards for modern payments systems.
What are you excited about for the future of modern payments?
I’m looking forward to the launch of a robust, faster and data-rich payment systems and services that meet the evolving expectations of clients, and the competitive needs of today’s global payment ecosystem.
With client needs at the centre of Canadian financial institution strategies, this modernization journey will significantly enhance the client experience – from everyday people, small businesses, large corporations and government agencies. It is indeed history in the making as all players in the payments ecosystem collaborate to drive business effectiveness for our clients.