Canada’s Fintech ecosystem stands at a critical juncture, teetering somewhere between immense potential and possible stagnation.
A recent interview by the Toronto Star with EQ Bank CEO Andrew Moor underscores a somewhat harsh reality: while global economic challenges like North America’s tariff and trade war dominate headlines, Canada’s fintech sector is grappling with a deeper crisis rooted in political inertia and a lack of competitive drive.
This moment demands resilience and innovation, yet systemic barriers threaten to negatively impact the country’s fintech sector.
The National Crowdfunding & Fintech Association (NCFA) has long highlighted Canada’s fintech ecosystem as a network of more than 800 high-potential startups, excelling in areas like blockchain technology / DLT, artificial intelligence, payments, and peer-to-peer lending.
With incubators, accelerators, and academic recognition enabling growth, Canada has the necessary elements for a thriving Fintech industry.
Notable Fintechs Wealthsimple and Koho demonstrate the sector’s ability to innovate and compete on a global scale.
However, as Moor’s interview reveals, this potential remains restricted due to a lack of political will and an uncompetitive financial sector.
One of the key challenges is regulatory fragmentation.
Canada’s relatively decentralized regulatory framework—split across federal and provincial jurisdictions—creates a confusing and maybe even overwhelming environment for fintechs.
Startups must navigate inconsistent rules, delaying product launches and increasing costs.
In contrast, countries like the United Kingdom have streamlined regulations through initiatives like the Financial Conduct Authority’s sandbox, fostering innovation in a responsible and more sustainable manner.
Canada’s failure to adopt a cohesive national strategy stifles its fintechs, leaving them at a disadvantage on the international stage.
Another hurdle is the dominance of Canada’s big banks.
The oligopolistic grip of the “Big Five” (RBC, TD, Scotiabank, BMO, and CIBC) limits competition, discouraging disruptive innovation.
Moor emphasized that this concentration of power entrenches traditional banking models, making it harder for fintechs to gain market traction and meaningful adoption.
Open banking—a system allowing consumers to share financial data with third-party providers—could level the playing field, but Canada lags behind or major jurisdictions.
While the federal government promised action in 2020, progress has stalled, with implementation delayed until at least 2026.
Meanwhile, nations like Australia and the EU have embraced open banking, empowering fintechs to challenge incumbents.
Funding also remains a bottleneck in Canada.
Despite the Business Development Bank of Canada (BDC) committing nearly $1 billion to scale-ups, Canadian fintechs struggle to secure venture capital compared to their U.S. counterparts.
The KPMG H1’24 report notes that while Canada’s fintech sector seems to be doing relatively well amid global consolidation, investment levels are not nearly that seen in Silicon Valley. But this is understandable considering that the Canadian economy, in terms of GDP (between $1 trillion and $2 trillion) is not even 5% that of the US. Moreover, Canada does not have nearly as much impact that US startups have due to the sheer size and influence of the US economy.
Nevertheless, this capital gap forces many startups into a “valley of death,” unable to bridge the divide between early-stage funding and sustainable growth.
Political will seems to be the linchpin.
The NCFA has reportedly urged collaboration between government, industry, and regulators to modernize policies and support SMEs during crises like the COVID-19 pandemic.
Yet, successive governments have prioritized stability over more aggressive reform, leaving fintechs to fend for themselves.
Moor’s call for resilience indicates a broader need for leadership to prioritize competitiveness, especially as economic uncertainty impacts businesses locally and internationally.
Canada’s fintech stagnation or paralysis is not inevitable.
With unified regulation, open banking, and robust investment, the ecosystem could thrive, driving jobs and boosting economic growth.
But without decisive action from key decision-makers, Canada risks wasting what may be considered a generational opportunity, ceding ground to more agile global players. While these challenges are significant, the broader economic challenges such as Trump administration tariffs and other geopolitical factors are leading to a decline in investor confidence.