Why digital transformation is critical for the smooth transition of newcomers to Canada

By Hamed Arbabi, VoPay

Special to Financial Independence Hub

Canada welcomed over 400,000 new immigrants in 2022, and that number is only expected to increase in 2023 with up to 505,000 new permanent residents.

These record immigration goals require critical planning from a workforce management perspective and should prompt employers to consider how digital transformation and embedded payment processing services can support the transition.

Organizations that intend to set new employees up for success must understand the responsibility to create a structure that supports financial inclusion: a vital consideration, especially amidst ongoing concerns of recession and inflation. If you are unfamiliar with the term financial inclusion, think of it as ensuring individuals have access to the tools and resources which enable them to have control over their financial health: a passion of mine as both a company founder and advocate for easy, affordable and accessible financial services.

Understanding the payment gap

For some of us, we have forgotten (or never experienced) the days of manually paying bills and waiting in line to cash a bi-weekly pay cheque; we’ve discounted the luxuries we have adapted to over the years thanks to automated technology. However, there is a disproportionate number of individuals in Canada, including newcomers, who still need faster and easier access to funds.

It is estimated that 10 to 20 per cent of Canadians are “unbanked” or “underbanked,” meaning they are not accessing the banking services available to them. These Canadians are often from low-income households, specifically those living in remote communities, including Indigenous peoples, people with disabilities and newcomers to Canada.

This means that some newcomers are still relying on cheque-cashing services and payday loans to fund purchases, minimize time gaps between pay periods, and manage their finances. While this is a short-term solution, it poses long-term challenges as cheques are sometimes difficult to deposit, easy to lose and prone to theft. Further, funds are not available immediately, do not allow for online purchases and are heavily reliant on slow payment processing practices such as mail delivery.

How organizations are advancing payments

Across all sectors and businesses, the goal is to ensure all Canadians have control over their financial health. Savvy employers recognize that outdated payment methods, such as cheques, are slowing down economic operations and can cause challenges for the unbanked and the underbanked. In response to this, these organizations are ensuring they welcome new immigrants with real-time payments to help newcomers get “banked” and join the economic ecosystem in Canada.

While there is no turnkey solution to eliminate financial exclusion, evolving digital solutions are giving us more opportunities than ever to lessen the barriers to financial products and services. These three pillars will continue to be critical in driving more accessible financial support:

• Financial literacy: As a community, we must place an emphasis on education and making financial management less confusing for the financially vulnerable.

• Access to products and services: Digital solutions are enabling anyone with a smartphone to access online banking, investment tools and loan services, however, we must go further to cater to these products and services with financial literacy in mind.

• Automating payments: Digital payment solutions are making on-demand pay possible and ensuring bills can be paid promptly to avoid late feeds. This established technology should become a standard practice for everyone receiving and making payments.

The future of financial inclusion and mitigating gaps for newcomers

This is an exciting but pivotal time for advancing financial inclusion in Canada, specifically for the newcomers we are expecting in coming years. Digital solutions are constantly evolving and have the capability to make a strong impact on vulnerable communities. By making financial services, including payments and investments, more convenient and accessible, we can create new opportunities for Canadian individuals and the economy to thrive.

As employers and colleagues, we must advance financial products and services that are tailored to the specific needs of newcomers to Canada and ensure the financially vulnerable have access to low or no-cost options. By understanding the challenge and implementing these starting tactics, we can better bridge the divide in the financial ecosystem and ensure the newcomers, the unbanked and the underbanked are not left behind.