Interac’s innovation lab at Communitech building the future for digital payments

The future of digital payments may arrive sooner than most people might think, and the framework for tomorrow’s digital payment landscape is being built and tested in Waterloo Region.

In June 2018, Interac branched out into one of Canada’s technology hotbeds when they set up shop with an innovation outpost within the walls of The Tannery at Communitech. The lab serves as a pressure-cooker environment where Interac can research, develop and use hands-on experimentation for new products and features.

Debbie Gamble is the Chief Officer of Innovation Labs and New Ventures at Interac, and she reflected on the lab’s growth over the last two years.

“We’ve had a great experience,” Gamble said. “Being in that area, an incredible place with a wealth of tech insight and knowledge. We’re really enjoying being part of that community and being able to leverage the partnerships that we’ve made within the community to explore ways for us to think about the future of our business.”

Communitech serves as ground zero for Interac’s up-and-coming projects; a test centre where they bring concepts to fruition to see if they will become part of Interac’s infrastructure.

One of the biggest projects to stem from the innovation lab was Interac’s ability to develop a financial institution emulator to connect into the world of payments and financial institutions. This emulator allows them to plug into a payment ecosystem and simulate how it would look and act, and prototype money transfers.

“Our goal at the lab is to rapidly ideate so that we can test some ideas, test some proof of concepts, validate, and do some prototyping,” Gamble said. “We’ve had a number of students come through the ranks and we have our full-time staff there. I was just recapping how many proof of concepts we’ve done, and we’ve done 20-plus.”

With Interac’s footprint planted firmly within Waterloo region, their innovation lab has already benefited from being rooted in Southwestern Ontario’s tech hub. Not only has it been the ideal environment to bring proof of concepts to realization, through their co-op program, they’ve cultivated the next wave of Interac employees.

“We looked at the opportunity at the lab in three buckets,” Gamble said. “There’s opportunity for us to work with some very cool minds from a rapid ideation perspective. That would be the first bucket. The second would be working with partners in that community. The third bucket would be talent acquisition, which has been a fantastic opportunity for us.”

When the innovation lab first opened its doors, they only had a few hires. In five semesters since, they’d churned out many cohorts and expanded to employ three full-time staff. Farzeen Titina is the first full-time hire who began as a co-op student from the Interac innovation lab.

“The experience I’ve gained at the Interac Lab is unparalleled,” Titina said. “Working in a creative and fast-paced environment where we’re constantly innovating new products has really helped me grow and gain a new perspective on what the future holds for FinTech and digital ID.”

One of the biggest projects being developed and tested at the Interac innovation lab is the prospect of digital ID. Instead of a username and password, which is a less secure form of login, digital ID encrypts that data through tokens and is far less prone to security risks.

“Probably the one that has really helped us more toward a new strategic direction is we’ve been looking at digital ID as a way to augment our capabilities,” Gamble said. “Of course, we’re in business providing secure transactions, but we wanted to vet how could we digitize ID’s and the lab has helped us through a number of proof of concepts, allowed us to illustrate those ideas and those capabilities.”

As the payments landscape shifts amid the COVID-19 pandemic, the focus towards safe and payments has never been more paramount. With contactless payments and e-transfers at an all-time high, Interac was ahead of the curve when it came to offering safe and secure digital payment methods.

Interac processed a record-setting 61.3 million e-transfers in April 2020, they saw a 43 percent increase in first-time e-transfer users and a 5 percent increase in contactless Interac Flash transactions since mid-March.

“This is really about enabling the digital reality, isn’t it?” Gamble said. “Thank goodness, Canada had embraced contactless and Interac had been a leader in that for many years. When something like COVID happens, it makes sense when you’re thinking about the safety and wellness of people, you can still transact without having to interact with people in close proximity.”