The fintech sector in Canada is not reaching its full potential, in part because of consumer complacency and a lack of trust in new alternatives to the big banks, according to a new summary from the Competition Bureau of Canada.
The summary, published on Monday on the Bureau’s fintech portal, follows a workshop in late February from the Bureau in which Canadian fintech leaders were invited to discuss how Canada can improve its competitive environment and foster innovation in this new industry. The summary notes five key reasons cited by workshop participants on why the fintech sector is not realizing its full potential in Canada:
A lack of trust in new alternatives to the big banks;
Challenges for Canadian fintech companies in growing their business to a global scale;
Restrictions on access to data and banking infrastructure; and
A regulatory framework that is often “complex, fragmented, prescriptive and does not sufficiently account for changing technologies.”
“Financial regulators and industry agree that they must work together to get policy and regulations right for innovation to flourish in Canada’s emerging, technology-driven financial services (fintech) sector,” the Competition Bureau of Canada said in a press release.
The workshop brought together Canadian start-ups, banks, representatives from other established financial services organizations, domestic and international regulators, international experts and members of the academic and legal communities to provide input into the Bureau’s fintech study, to be released in late 2017, the release said. About 130 Canadian and international fintech stakeholders participated in the workshop in Ottawa on Feb. 21, and over 100 participants attended via webcast.
“In mapping a way forward for fintech, workshop participants commented that Canada has a unique brand with a comparative advantage in fintech, owing in part to our robust banking system and a talented technology sector,” the release said.
Participants at the workshop also heard that regulators need to better understand the innovations that are on the horizon and adopt a lighter and technology-neutral regulatory approach that is based on principles and function, focused on managing appropriate risks and harmonized as much as possible across jurisdictions within Canada and internationally.
“The right regulatory approach is about striking a balance between innovation, resilience and consumer protection,” John Pecman, Commissioner of Competition, said in the release. “It is about getting the principles right. We saw at the fintech workshop that Canadian regulators are paying attention: they are engaged and ready to collaborate.”
According to a recent Ernst & Young fintech adoption survey, Canada’s adoption of alternatives to incumbent financial services sits at just 8%, the Bureau reported.