Home Policy & Governance Canadian government defends innovation policy record after fintechs’ criticism

Canadian government defends innovation policy record after fintechs’ criticism

Ottawa: the newly re-named association Fintechs Canada has hit out at ‘slow progress on innovation policy’ as well as the lobbying power of established financial institutions | Credit: Edna Rabago; Pixabay

Canada’s government has defended its commitment to innovation after criticism from a newly re-named industry association representing the fintech sector.

Fintechs Canada – formerly operating as Paytechs of Canada – marked its new identity by stating in an announcement that ‘with new regulation needed, slow progress on innovation policy and unbalanced representation in [capital city] Ottawa, a unified voice for fintech in Canada has never been more important.’

The association states that it is ‘launching to advance a whole-of-government approach to supporting Canada’s emerging fintech ecosystem’ and that it ‘will do this by working with policymakers, as well as educating the public and raising awareness of the benefits of Canada’s fintech sector’.

Department of Finance Canada’s deputy spokesperson told Global Government Fintech that the government was “committed to responsible innovation in the financial sector” and that it “welcomed the contribution of the fintech industry through the launch of Fintechs Canada”.

Caroline Thériault said in a statement (which can be found in full at the end of this article) that a “robust” innovation policy agenda had been laid out in Canada’s Digital Charter, presented in May 2019, with the government “work[ing] closely with all stakeholders to shape its implementation”.

Thériault referenced further policies and government-led initiatives relevant to fintech companies, most significantly emphasising progress towards establishing an open banking system. Canada’s first open banking lead was appointed nine months ago but the country is playing catch-up with nations including the UK (where the government itself is pioneering the use of open banking) and, more recently, Australia (where the relevant legislation has expanded from banking into the energy sector).

WATCH NOW ‘Open Banking and Open Finance: What Role – And Benefits – For Governments?’: a Global Government Fintech webinar (15 March 2022) that featured Michelle Beyo from Open Banking Initiative Canada (which recently rebranded to Open Finance Network Canada) among the panellists | WRITE-UP: ‘Open to possibilities: governments bank on opening up financial services data’

Fintechs Canada keen to ‘get word in’

Fintechs Canada lists more than 40 members on its website, including Mastercard, Trustly and Wise (formerly TransferWise).

‘Formerly operating as Paytechs of Canada, the new organisation and its members play a major role in the conversations that will define the future of financial services in Canada, including payments modernisation, open banking, the digitalisation of money, and the modernisation of anti-money laundering and terrorist financing law in Canada, among others,’ the association declares in the announcement of its new identity.

‘Fintechs Canada will continue to break down barriers to competition and innovation in this country’s financial services industry, enabling greater choice for Canadians, as well as supporting a thriving fintech sector that progresses at pace with its global peers. But Fintechs Canada will also work with government officials to promote responsible innovation, protecting the integrity, stability and security of Canada’s financial sector,’ it adds.

Asked by Global Government Fintech to explain and expand on the assertion of ‘unbalanced representation in Ottawa’, executive director Alex Vronces said: “It’s hard to deny that our major banks have an extraordinary level of access and influence in our halls of power. It’s an understatement to say they’re an effective lobby in Ottawa, although their lobbying records do say as much. It’s more accurate to say they’re an effective collaborator with Ottawa, working hand in hand with our government, from today to as far back as before Canada was even a country.”

“This makes for a level of coziness that few stakeholders in this country will ever have a chance of achieving,” Vronces continued. “That’s not to say the banks always get their way. But they always get their word in. The same can’t be said for the competition. That’s the pernicious problem we’re trying to fix.”

Bankers: fintech is ‘tremendous opportunity’

Global Government Fintech asked the Canadian Bankers Association (CBA), which represents more than 60 large and small financial institutions, about Fintechs Canada’s challenging appraisal of established banks’ lobbying presence and power.

“The Canadian Bankers Association and its member banks strongly support responsible innovation and competition in Canada’s financial services sector and developing technological solutions to improve the customer experience in a digital and data‑driven economy,” a spokesperson said.

“Several transformational initiatives are in flight concurrently in Canada. We are working collaboratively with all stakeholders in the financial services ecosystem to help those initiatives move ahead responsibly while carefully considering the interconnections and interdependences at play,” he said, referencing initiatives from payments modernisation and open banking, to privacy reform and the digitalisation of money.

“Banks in Canada are trusted custodians of data and will continue to put their customers at the centre of trusted innovation,” he continued. “Preserving the interests of customers in a digital environment and protecting the security and privacy of their data is paramount. Looking at payments in isolation, it is estimated that there are more than 2,000 non-bank payment services providers operating in Canada, none of which are subject to consumer protection regulations. This is the kind of issue we’re trying to solve in a collaborative manner with government and the fintech community.”

“Banks continue to embrace digital modernisation and transformation at pace and scale, driven by in-house tech talent and external partnerships with nimble fintech upstarts. The innovative financial technologies being introduced by banks and fintech businesses in Canada are increasing choice and improving convenience for customers. Indeed, fintech represents a tremendous opportunity for Canada’s financial industry – and banks are working together with fintech businesses to keep it that way.”

GOVERNMENT REACTION: Department of Finance Canada

Deputy spokesperson Caroline Thériault’s response to Fintechs Canada’s assertion of ‘slow progress’ on innovation policy:

“Responsible innovation is a key component of a stable, trustworthy and efficient financial sector that serves the need of consumers.

“The government has a robust innovation policy agenda laid out in Canada’s Digital Charter and works closely with all stakeholders to shape its implementation. The Government of Canada is also working closely with the financial sector, including the fintech industry, to establish an open banking system in Canada, as well as working together to modernise payments technology and expand access to it.

“The financial services landscape is changing and the pandemic has accelerated a trend towards digitalisation. Modernising financial services is a key component of the Government of Canada’s growth agenda. Fintech companies, credit unions, and banks are important partners in this vision as we move from a sector that competes on scale to one that is focused on specialised products, tailored to consumer needs. This shift has the potential to lead to financial services that are more inclusive and responsive to the evolving needs of consumers and businesses. 

“Significant steps have been taken since the launch of the Department of Finance Canada’s Advisory Committee on Open Banking and in regards to the recommendations in the Advisory Committee’s Final Report to select an ‘open banking lead’ to work with government and industry representations to develop an open banking system. The Minister of Tourism and Associate Minister of Finance, Randy Boissonnault, named Abraham Tachjian as Canada’s open banking lead in the spring and was tasked with developing a ‘made-in-Canada’ open banking regime based on the recommendations of the Advisory Committee.

 “Mr Tachjian and the Secretariat (officials from the Department of Finance) are currently engaging with industry, regulators and consumer representatives to design and implement key pillars of the open banking system, including an accreditation framework, a common set of rules and technical standards. This work is being convened through four stakeholder working groups that focus on: privacy, accreditation, security and liability. Representatives from consumer groups, regulators, fintechs, banks and credit unions participate in these groups, which meet regularly. In addition, a steering committee, which includes all members of the working groups, meet on an as-needed basis, as determined by the open banking lead, to discuss progress as well as topics outside the remit of the working groups.

“Governance and technical standards were also extensively discussed in previous consultations and in the Advisory Committee report, which provided a series of recommendations in relation to both topics. These recommendations and relevant discussions at the working groups inform our ongoing work.”

“The innovation agenda also includes a number of legislative proposals, including the Digital Charter Implementation Act, 2022 (also known as Bill C-27), which strengthens Canada’s private-sector privacy law and creates new rules for the responsible development and deployment of artificial intelligence (AI).

“The Government of Canada has also launched a comprehensive consultation on the future of competition policy in Canada.”


‘Canada legislative review to tackle challenges posed by digital money’ – a news story (13 April 2022) on Canada’s government announcing a financial sector legislative review focused on the digitalisation of money and maintaining financial stability and security (the plan was contained in the country’s federal Budget 2022)

‘Canada names PwC digital banking director as open banking lead’ – our news story (22 March 2022) on the government announcing the appointment of Abraham Tachjian, a director at professional services giant PwC, to lead the implementation of a system for open banking (often referred to in Canada using the term ‘consumer-directed finance’)

Canada and EU look to end “Wild West” atmosphere of digital credentials’ – our news story (1 Dec 2021) on Canada’s government and the European Commission announcing a partnership to examine the use of digital credentials (an important element in the development of many fintech products and services) following a series of technical workshops

‘Canada unveils “ambitious but achievable” open banking plan’ – our news story (13 Aug 2021) on the government’s release of the Advisory Committee report that proposed January 2023 as the ‘ambitious but achievable’ target date for launching an open banking system

Global Government Fintech’s sister title Global Government Forum runs an annual ‘AccelerateGOV’ conference in Canada, co-hosted by the Government of Canada. The event serves public service leaders and managers with an interest in transformation – exploring in panel discussions and audience Q&As how staff from different professions can best promote and deliver transformed public services. The next event will be on 3 October 2023.