The Office of the Superintendent of Financial Institutions (OSFI) should be paying more attention to possible risks arising in the emerging fintech sector and among shadow banks, says a report on a consultation with top bank executives.

OSFI published a report on Friday detailing the results of a consultation that it commissioned from The Gandalf Group, an independent research firm with deposit-taking institution senior executives. The aim was to assess their perception of OSFI’s effectiveness in discharging key elements of its mandate.

According to the report, executives’ views of OSFI’s work were generally positive, but they did identify a few areas for improvement including the conviction that OSFI should put more emphasis on certain risks, such as shadow banking and fintech.

“While OSFI is seen as focused largely on appropriate areas of risk, shadow banking, unregulated entities in the sector (e.g., credit unions), and fintech represent risk areas upon which many believe OSFI should be placing greater focus,” the report says.

“The perceived growth in shadow banking and fintech organizations, combined with the perception that such entities are held to far less onerous regulatory standards, are believed to be fostering an uneven playing field that disadvantages Canada’s federally regulated [banks] and introducing systemic risk into the financial sector,” the report adds.

Additionally, the consultation finds executives are calling for reduced regulatory compliance requirements for smaller institutions, and OSFI should seek more input from smaller institutions when consulting on guidance.

“OSFI appreciates the feedback provided by participants in this consultation and has developed action plans to address areas identified for improvement,” the regulator says in a statement.

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