Thursday, February 2, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

Enable Fintech to Democratize Finance: Darren Gill in the Financial Post

August 15, 2019
in Columns, Domestic Policy Program, Economic policy, In the Media, Latest News
Reading Time: 3 mins read
A A

Canada’s fintech environment presents an opportunity not only to increase economic prosperity and efficiency but also to democratize how Canadians use financial services, writes Darren Gill.

By Darren Gill, August 15, 2019

Imagine the owner of a small but successful café in Prince George. She is seeking capital to finance a second location but is unable to access a loan from a bank. She is not sufficiently well-connected to seek out her own investors and doesn’t have a wealthy family to lend her the money. How can she access the capital she needs to open that second location?

Now imagine there were a safe online service for finding would-be capital investors. Our café owner could connect with a private individual who holds investible capital. The two parties could enter into a contract on their own terms, mediated by the service provider. This peer-to-peer (P2P) approach to lending would match ventures with investors who might not meet each other but for the online platform.

This is the emerging future of financial services delivered through financial technology (fintech). Sadly for our theoretical café owner, the current regulatory environment does not allow for this sort of open exchange.

Given current regulations, P2P loans qualify as securities and therefore require regulators’ approval of detailed informational prospectuses. This means the small café owner must hire lawyers and specialists to draft documents and disclosures even when simply seeking a loan – something she wouldn’t have to do had she gone to one of the banks. But if the banks won’t take her, what is she supposed to do?

Hurdles like this that lock small players out of capital markets are entirely unnecessary. The fintech service provider to our industrious Prince George café owner and her investor would manage risk on its platform to ensure that neither party ends up being short-changed.

P2P lending is just one example among many of strict regulation holding back the creative disruption of financial services. Fintech companies are subjected to the same strict regulations that apply to traditional financial service providers. They must also adhere to comprehensive regulations covering consumer protection, privacy, anti-money laundering, data security, and more. Financial regulations are clearly in the public interest, including with fintech. But governments need to modernize our financial regulations to better encourage innovation in the Canadian marketplace.

Government initiatives such as the 2019 modernization attempts to the Bank Act and Canadian Payments Act have been widely applauded by industry but these initiatives largely aim to increase the flexibility of established financial institutions. One size—the quadruple XL that suits our biggest financial institutions—doesn’t fit all. There is considerable room for innovative policy reforms for fintech, such as employing opportunity zones or creating regulatory exemptions for P2P lending involving small businesses, like our café owner in Prince George.

With artificial intelligence, new forms of competition, and greater efficiency, fintech could revolutionize how financial services are delivered, especially for Canadians under serviced by the traditional financial services industry.

Take Toronto-based WealthSimple, for example. It already provides high-quality investment advice and robo-advising via an online platform. Such services, traditionally only available to the economically privileged, are now being offered to the masses and at a fraction of the cost. Fintech also holds the promise of giving rural, remote, northern and Indigenous communities banking services similar to those of urban Canadians, and at reduced costs.

Less burdened by regulation, P2P lenders in the US have been facilitating loans between investors and entrepreneurs since 2005. Capital-seekers can now look beyond the big banks for more competitive rates and more convenient procedures for getting a loan.

Payments, money transfers, insurance, and other types of financial services are ripe for modernization and disruption. Even amongst the big banks, there is a push towards digitizing services and incorporating new technologies. The fintech revolution benefits players of all sizes.

While Canada’s fintech environment has been recognized as a leading global hub,  fintech adoption rates lag behind much of the world. According to the EY Fintech Adoption Index 2019, Canada’s adoption rate is at 50 percent, versus 64 percent globally. Part of the reason has to be restrictive regulation.

Canada’s fintech environment presents an opportunity not only to increase economic prosperity and efficiency but also to democratize how Canadians use financial services. But regulation has failed to keep up with the momentum of fintech. Policy-makers and regulators need to stop holding back the power of the fintech revolution.

Darren Gill is a law student at Dalhousie University’s Schulich School of Law and a Summer Policy Analyst at the Macdonald-Laurier Institute.

Tags: economic policyeconomy
Previous Post

Xi Jinping may want to rule the world, but he has problems at home, too: Charles Burton in the Globe and Mail

Next Post

Time for a new direction in Canada’s China Strategy: New MLI Report

Related Posts

Building the Free and Open Indo-Pacific with like-minded partners: A view from Japan – Akiko Fukushima for Inside Policy
Inside Policy

Building the Free and Open Indo-Pacific with like-minded partners: A view from Japan – Akiko Fukushima for Inside Policy

January 31, 2023
How pipelines went from villain to hero in Indigenous reconciliation: Heather Exner-Pirot in the Calgary Herald
Columns

Alberta must assert itself over oil and gas against unilateral emissions cuts: Jack Mintz and Janice MacKinnon in the National Post

January 30, 2023
Henry Dundas was an abolitionist. He deserves a street named after him: Patrice Dutil in the National Post
Columns

Henry Dundas was an abolitionist. He deserves a street named after him: Patrice Dutil in the National Post

January 30, 2023
Next Post
Time for a new direction in Canada’s China Strategy: New MLI Report

Time for a new direction in Canada's China Strategy: New MLI Report

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

First Name
Last Name
Email Address

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.