More teamwork needed to push fintech, panel says
Regulators, policy-makers identified as keys
Regulators and policy- makers say they need to work closely together if Canada is to push for innovation at fastdeveloping financial technology companies while ensuring consumers and the financial system are protected.
At a panel discussion convened by the federal Competition Bureau on Tuesday, representatives from the federal Department of Finance, the Ontario Securities Commission, the Financial Consumer Agency of Canada, Fintrac, and Payments Canada, said fintech crosses all their paths.
Yet those intersections serve to illustrate the wideranging nature of fintechs, which include startups doing simple money transfers to lenders and advisers handling large pools of capital. As a result, new firms that offer products and services that used to be the exclusive domain of banks can straddle regulators, come under the partial purview of one, or fall through the cracks entirely.
Even a question from an audience member about PacNet, a payment processing company with operations in Vancouver that was accused last year by the U. S. Treasury Department of laundering cash, prompted a brief discussion among the panellists about where the firm fell in Canada’s regulatory landscape.
Some fintechs, those classified as money services businesses, come under the purview of the Financial Transactions and Reports Analysis Centre of Canada, said Gérard Cossette, director of FINTRAC. But many other firms that use technology and data to offer traditional banking services such as lending and investment advisory do not.
FINTRAC’s job is to root out money laundering and terrorism financing, but Cossette said rapidly evolving technology combined with fewer bricks and mortar locations is making it harder to track where money trails begin and end. He said the agency is also worried about the proliferation of prepaid credit and debit cards, thousands of which were seized, in one case, with a person at an airport en route to Romania.
“We have to be in much closer ( contact with other agencies) than we have in the past,” Cossette told the audience at the Shaw Centre in Ottawa and those listening via webcast.
The panel discussion, moderated by Carolyn Wilkins, senior deputy governor of the Bank of Canada, was convened to assist the federal Competition Bureau, which is expected to publish its conclusions this spring on whether there is a need for a regulatory overhaul to manage the fintech sector.
Against that backdrop, Canada’s payments sector is undertaking its own modernization project to keep pace with technological development and consumer preferences to do more traditional banking services online and through smartphones and other mobile devices.
There are other changes underway as well, including a review of the legislative and regulatory framework of the financial services sector by the Department of Finance.
A policy paper laying out the next steps of that review is expected sometime this year.
Postmedia Network Inc., owner of the Financial Post, has a marketing and revenue sharing agreement with a fintech lender, Vancouver- based Mogo Financial Technology Inc.