How much flexibility will be key

While the reference to the anticipated legislative changes is deep in the budget, in an appended annex, and details were not revealed, there is an explicit promise of “greater flexibility for financial institutions to undertake and leverage broader fintech activities” to deliver financial services in new and innovative ways.

“This could represent one of the most significant changes to the federal financial institution statutes since 2001,” said lawyers from Toronto-based law firm Torys LLP in a note to clients this month.

However, two advisers to Canada’s big banks cautioned that it remains to be seen how wide the door will be opened for the large financial institutions, whose “No. 1 ask” of government has been for more flexibility when it comes to fintechs and technology innovation.

“Are you going to blow the doors off, or are they going to open the doors in a narrow, more restricted (way)?” said one adviser, who spoke on condition that he would not be named.

“That is the policy question that will be debated,” said Stephen Clark, a partner at Fasken Martineau DuMoulin LLP, who said the government is likely to strike a balance between allowing the banks to invest in fintech and preserving the strong policy that banks are in the financial services business.

“The position I see coming is loosening up to permit downstream investment but keeping a string on that investment in that it must relate to a financial service or partnership arrangement that has financial overtones for the bank,” said Clark, who is also co-chair of the financial institutions practice at Faskens.