Canada’s fintech sector has, no doubt, showed significant growth in the last five years. Deloitte calculates that over $183 million was invested in fintech in Canada in 2016. Meanwhile, Payments Canada reveals that more than 80 fintech companies across Canada have attracted nearly $1 billion in investment since 2010.
However, despite the increasing adoption of fintech principles and indeed entire firms into the envelope of Canada’s “Big Five” banks, the industry is still isolated from the support and endorsement of the Federal government – despite that government’s commitment to furthering technology innovation.
Canada’s fintech ecosystem is not getting the support and attention directed at other crucial sectors, despite financial services accounting for 7 per cent of GDP and 4.4 per cent of all Canadian jobs.
Countries like Australia and the United States have made commitments to this kind of support, helping to democratize access to financial resources for consumers as well as for their large populations of small businesses (a trait shared with Canada.)
Federal studies have noted that Canada is a laggard relative to global growth in fintech, yet have not come out openly in favour of the potential for new job and income growth, as well as business development, offered by financial technology firms on their home soil.
What can the government do to help the fintech sector? For one, identifying the sector as a strategic priority would pave the way for policy decisions that would make the cost of doing business – and the end user cost of using fintech services – significantly lower. Furthermore, experts have noted the government’s unwillingness to streamline a system that exposes new financial firms to as many as two dozen regulators. Creating an industry association for fintech would allow firms to advocate for change more effectively.
There are numerous provincial-level “sandboxes” and incubator environments designed for fintech firms in Canada, but none at the federal level. A body such as this could allow for greater experimentation potential in a controlled environment where existing regulations could be relaxed.
Finally, global engagement with other fintech hubs around the world is important as it promotes learning from both the experience and the success of other countries. Canada has been criticized for the lack of global interest that its technology ecosystem generates. This is a weakness that must be addressed in any effort to make our nation an attractive fintech destination for global firms.