Wealthsimple CCO says FinTech startups are a “second-class citizen” when it comes to accessing key infrastructure.
Why are things the way they are in Canada?
It’s a question I’ve been asking myself more and more, and not just as we’ve seen our social institutions stretch and sway in response to World Historical Events. There has been dramatic, rapid change we’ve discussed on this podcast this year, either due to new technologies, or our government’s response to those technologies and the problems that have ensued.
But there is also a lot of stagnancy in Canada. Why is that?
Recently, Wealthsimple signed an agreement with Interac to utilize its e-transfer system. It’s a big deal for the once-upstart FinTech startup that now has 3 million customers in Canada and $20 billion in assets under management. What did Hanna Zaidi, VP, of Payments Strategy & Chief Compliance Officer at Wealthsimple, say about the announcement on the Elevate FinTech stage (that was programmed by BetaKit): essentially, good but not enough.
“When you’re a FinTech you’re a second-class citizen when it comes to accessing infrastructure, and so you’re spending a lot of time trying to innovate on table stakes, which takes away from the actual innovation that you want to offer.”
Why?
Well, Canada is the only G7 country without Real-Time Rail (RTR), which Hanna likens to broadband internet. Our current system? Dial-up.
Who is supposed to be Canada’s RTR provider, by the way? Which has been delayed multiple times, by the way? Interac.
Recently, a coalition of Canadian FinTech companies launched an open banking public action campaign to put pressure on the public to put pressure on our institutions to get things rolling. It won’t work, but it speaks to the current state of play.
Zaidi believes that what is preventing financial change in Canada is “a lack of political will.” Let’s parse that a bit. Because she’s referring to two different bodies (and wills): our financial institutions and our political institutions.
For the financial incumbents: as Zaidi says on the podcast, “When you’re a FinTech you’re a second-class citizen when it comes to accessing infrastructure” because “your competitors enable the infrastructure.” They have no interest in undercutting their business. Wealthsimple might have a seat at the table, but few other FinTechs do, and what they’re looking to order is not on the menu.
This is not just a Canadian thing: the US Consumer Financial Protection Bureau is proposing financial data rights for citizens because they acknowledge change will not be driven by the financial incumbents.
But what about the will of our political institutions? RTR is supposed to be here already. Canada has been exploring open banking since 2018. The committee recommendation report was released in 2021. Implementing phase one of open banking was an election promise by our current government and part of the previous associate finance minister’s mandate letter.
Our open banking lead delivered his recommendation report to Finance this fall, and—only after we asked Finance about it—announced that he was sticking on past his term to the end of the year.
Why is Abraham Tachjian still there after submitting his report? Why haven’t participants like Wealthsimple seen the recommendations? Where is the political will to move forward with something this government promised to deliver?
Why are things the way they are in Canada?
I get it. This is another open banking podcast. But it’s not. This is about access, competition, and innovation. This is about who has a seat at the table to decide what’s best for Canadians.
Senator Deacon and Matt Boswell aside, I could not think of a better person to talk about this with than Hanna Zaidi, and she does an amazing job parsing really complex and seemingly boring subjects in a way that should make it accessible to all Canadians.
Canadians who don’t know what they’re missing because they’ve never had it.
Why are things the way they are in Canada?
Let’s dig in.
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The BetaKit Podcast is hosted by Douglas Soltys & Rob Kenedi. Produced & edited by Kattie Laur. Sponsored by Float and SAAS NORTH (use the code ‘betakit25’ to get your tickets).
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