Fintechs Canada participated in the federal government’s pre-budget consultation in advance of the 2022 budget, which will contain the government’s plan for creating jobs and growing the economy. The association’s written submission recommended a number of ways Canada could make it’s financial sector more competitive and innovative, more inclusive, and more robust in the face of new and emerging companies.
The Canadian economy is made up of a broad and diverse range of sectors and companies. The country’s financial sector is an important one, since it’s home to some of the largest companies in Canada and the engine of other sectors that rely on financial services to power their growth. But, according to the C.D. Howe Institute, the contribution of financial services to the productivity growth of Canada has been “underwhelming.”
In Canada, it’s difficult to compete with the big six banks because of legal barriers to entry in the financial services ecosystem. These barriers are challenging for the competition, no matter its size, as evidenced by the recent departure of Revolut from the Canadian market.
“The challenging and uncertain Canadian market has forced many fintechs to pack it up and leave,” said Alex Vronces, executive director of Fintechs Canada. “If the Canadian market is inhospitable to international fintech giants worth billions of dollars, and active in many other jurisdictions, it’s even more inhospitable to fintech start-ups and scale-ups in Canada.”
Working with its members, Fintechs Canada has identified a number of impediments to productivity growth in financial services that the federal government could take down in the next year. The impediments are the results of outdated financial sector infrastructure and outdated financial sector policy.
Fintechs Canada is recommending that the federal government:
- Amend the Canadian Payments Act via Budget 2022 to let payment service providers regulated by the Bank of Canada access the payment systems our economy runs on
- Support Payments Canada’s consensus-building to secure the buy-in of its big bank members to launch a Real-Time Rail (RTR) system in 2023.
- Appoint an open banking lead in 2022 and clarify the government’s commitment to implementing both phases of the open banking advisory committee’s report.
- Commit in 2022 to doing a comprehensive review of Payments Canada’s governance in the near future.
For more, check out our full submission.