By: Doug Kreviazuk, Executive Director, Fintechs Canada
In late 2020, I had the opportunity to engage Canada’s Commissioner of Competition, Matthew Boswell in discussion to gain his perspective on the evolution of Canada’s payments system, and the importance of promoting a competitive marketplace for the benefit of Canadians and the Canadian economy. This is the second part of a two-part interview, originally released, January 20, 2021.
Question 4: The Department of Innovation, Science and Economic Development is charged with the development of Canada’s Digital Charter and the Consumer Directed Finance framework. Given the potential for these to impact emerging markets in Canada, how has/is your organization contributing to this critical policy development?
When the Digital Charter was first announced in May 2019, then Minister of Innovation, Science and Economic Development Bains asked me, as Commissioner of Competition, to work with policymakers to examine critical issues related to competition in the digital economy.
The Digital Charter is an important development for how Canada promotes competition, and highlights the importance of the Bureau in driving innovation in the Canadian economy. To me, three of the Digital Charter’s principles are central to the Bureau’s mandate. First, the need for real accountability and the application of strong enforcement measures against companies that try to prevent competition. Second, the importance of ensuring a level playing field for companies to compete. And third, the requirement of transparency, portability, and interoperability so Canadians can control their data and be empowered to make the decisions that are right for them and their families.
I am pleased to be working with our federal partners to ensure that the Bureau has the tools and resources it needs to successfully fulfil its mandate. We’ve been working closely with ISED’s Strategy and Innovation Policy Sector to better understand and leverage digital transformation to promote competition, and to identify emerging issues for competition in the areas of data accumulation, transparency, and control.
Question 5: The application against Interac’s practices in 1997 was, in part, about restricted access to a critical infrastructure, not unlike the current national clearing and settlement system. What important lessons could be drawn from this file/decision that may be applicable to today’s evolving financial services marketplace?
In today’s quickly evolving and highly digitized financial marketplace, innovation is key. We work to preserve and promote competition to ensure that the competitive process plays its central role in spurring innovation.
Markets perform at their best when there are opportunities for new and innovative business models to disrupt the industry status quo. Sometimes achieving these opportunities can require policymakers to implement forward-looking rules aimed at facilitating greater competition and innovation. We will remain vigilant in ensuring that all Canadians can benefit from innovative, world-class financial products and services.
Question 6: How might an expansion of access to the national payments system to regulated service providers (i.e., PayTech/FinTech) impact competition in the financial services sector, in terms of pricing, innovative services, and accessibility for Canadians?
Competition is a catalyst of growth and innovation in the Canadian economy. A competitive marketplace empowers consumers and drives businesses to become more productive, improve product quality, and decrease prices. This attracts new investment, stimulates the creation of high-skilled jobs, and fuels the competitiveness of Canadian businesses abroad.
When faced with intense competitive pressure, successful businesses will lower their prices, expand their product ranges, and invest in better ways of bringing their products to market. Every business in a competitive marketplace seeks to maintain a value proposition that is at least as attractive as that of its rivals; failing to do so will result in lost sales, a sinking market position, and potentially, that business’ ultimate exit from the market. For consumers, this means better products at more affordable prices.
Question 7: In 2017, the Bureau released its market study on the FinTech sector. How are you or will you advocate for further changes in this industry to better align with your mandate to reduce unnecessary barriers and enhance the level of competition in the financial services sector?
We have an important mandate, under the Competition Act, to assist policymakers at all levels of government across Canada on competition matters. Our 2017 FinTech Study is a great example of how we deliver on that mandate: by engaging with a broad range of industry stakeholders, performing rigorous analysis, and presenting evidence-based recommendations to policymakers.
We have a wide range of tools that we use in our work with policymakers. On the more formal end of the spectrum are market studies, like our 2017 FinTech Study. These are in-depth examinations of the state of competition and regulation in an industry, and we use these to both provide immediate recommendations to regulators and as a springboard for future work. We also participate in formal consultation processes, such as those related to the development of Canada’s open banking framework. And finally, we work with regulators in less formal settings, acting as an inside advisor on how to tailor regulations in order to maximize competition and innovation.
The financial services industry is fundamental to the well-being of Canadians and the Canadian economy. Few other industries underpin as much economic activity, or act as an input into so much of our daily lives. And accordingly, we will continue to use all of the tools available to us to protect and promote competition in this important industry.