Canada’s financial technology (fintech) sector has yet to reach its full potential, and for it to do so, regulators and industry leaders need to work together, according to Competition Bureau Canada.

The organization held a workshop on Feb. 21, 2017 for Canadian fintech leaders to discuss how the country “can improve its competitive environment and foster innovation in this new industry.”

“The right regulatory approach is about striking a balance between innovation, resilience and consumer protection,” John Pecman, commissioner of competition, says in a May 1 press 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.”

Participants highlighted five key reasons as to why the fintech sector hasn’t fully realized its potential: a lack of trust in new alternatives to the big banks; consumer complacency; challenges to 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.

Many of the approximately 130 workshop participants – which include representatives from Canadian start-ups, banks and other established financial services organizations, as well as domestic and international regulators, international experts and members of the academic and legal communities – pointed out that Canada has a unique, well-positioned brand of fintech due to the country’s robust banking system and talented tech sector.

However, the biggest red flag for most workshop attendees is the fact that “millions of Canadians routinely trust non-big bank financial services companies,” Andrew Graham, CEO of Borrowell, a Canadian company using technology to help consumers borrow money and check their credit scores, tells Canadian consumer adoption of alternatives to big banks sitting at just eight per cent, according to a recent Ernst & Young FinTech adoption survey.

He says that while brands like Intact Insurance and PC Financial have enjoyed success, it’s hard for new brands to break the ice and get the word out.

“Canadians need more exposure to [alternative financial services],” he continues. “In the UK, big banks are forced to refer to alternative lenders if they turn down a small business for a loan. In Europe, it will be mandatory for banks to allow customers to share data, such as transaction data, with fintech companies that meet various requirements. These are great examples of initiatives that other jurisdictions are putting in place that ultimately lead to more consumer choice.”

To combat this and the other factors limiting the fintech sector, financial regulators and industry members agreed that collaboration on rules and policies is necessary to take advantage of Canada’s place in the fintech sector.

“Canada has a complicated regulatory environment in financial services, with many regulators at different levels of government. What we need is a unified approach to fintech that can work across regulators to break down barriers and ensure coherence,” Graham explains.

For example, he adds, there’s lots of focus on regulatory “sandboxes,” or a set of rules for early stage companies to allow them to experiment and grow.

“A maximally effective regulatory sandbox might need to encompass multiple regulators. So I would love to see a coordinated push in support of fintech from government; this is what other countries have done,” he concludes.

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