Canadians slow to adopt fintech

For Canadian financial technology (fintech) firms to flourish, policymakers must pay special attention to open data and ensuring access to payment systems to drive domestic growth while also securing patents and engaging with the international counterparts to facilitate global expansion, argues a new paper from the Centre for International Governance Innovation (CIGI).

The Waterloo, Ont.-based think tank’s paper calls for a national strategy on fintech that encourages both domestic growth and global expansion. According to the paper, domestic fintech innovation should be facilitated through open data and payment systems while global expansion can be fostered through international agreements between regulators and comprehensive intellectual property (IP) strategies.

On the domestic front, “Access to data for development, testing and compliance is vital for fintechs, and requires an industry-wide effort. Canadian banks enjoy a balance of power in their stockpile of financial and user data, which is held as confidential information or protected by copyright,” CIGI’s paper says. “Where banks are unwilling or unmotivated to collaborate, implementing rules on open data can remove barriers to innovation.”

At the same time, the paper also argues that for Canadian fintechs to thrive on the global stage, policymakers must help firms secure their IP while also gaining access to foreign markets.

“The government needs to develop fintech IP infrastructure that enables the creation, acquisition and licensing of key technology assets, as through a patent collective or sovereign patent fund devoted to fintech,” the paper says. “Encouraging patent collectives can help companies commercialize and provide freedom to operate for Canadian companies in key international markets.”

In addition, CIGI’s paper argues that Canadian fintech “must be strategically included in fintech standards; inclusion of Canadian IP in standards encourages adoption of Canadian innovations, and the ownership of standard-essential patents decreases Canadian reliance on foreign patent holders.”

“This is an opportunity for the Standards Council of Canada to play a strategic role. Patenting in general is essential if Canadian fintech firms wish to expand internationally,” it says.

Finally, the paper suggests that regulators should expand their efforts at facilitating global expansion through cross-border agreements to share information and refer fintech firms for expansion into each other’s markets. So far, within Canada, only the Ontario Securities Commission (OSC) has taken this approach by signing deals with regulators in the U.K. and Australia.

“Regulatory hurdles and the need for industry connections make it difficult for smaller start-ups to accomplish this on their own,” the paper notes, “without active involvement by policy makers and regulators, Canadian fintech is unlikely to cross borders at the same pace as fintech in other countries.”

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