Last year, the United Kingdom commissioned a strategic study of the broader future of fintech, known as the Kalifa Review. The final report, released last week, outlined five recommendations its authors believe will create a U.K. “digital big bang.” Some of that advice will sound familiar to Canadian readers. From skills retraining to global visa strategies, and from R&D tax credits and even (gulp!) superclusters, the document is an impressive 106 pages on what the U.K. needs to become a fintech leader in a post-Brexit, post-pandemic world.
It’s the urgency and clarity of purpose that make this report stand out. Take the very first sentence: “Fintech is not a niche within financial services. Nor is it a sub-sector. It is a permanent, technological revolution, that is changing the way we do finance.” Or the call to arms shortly after: “If the U.K. is to retain its position as a global leader in financial services, then we must lead this technological revolution.”
If fintech is a global arms race, then the U.K. is amassing its arsenal.
Why am I telling you this? Well, Canada commissioned its equivalent of the Kalifa Review not one, not two, but soon to be three budgets ago. In February 2018, the federal government announced a review into the merits of open banking, a regulatory framework that gives consumers control and ownership over their financial data. It is the foundation upon which a fintech industry can be built.
The review kicked off seven months later with the appointment of a four-person advisory committee. It took another two years, after the committee held roundtable discussions with banking and fintech leaders, for then-finance minister Bill Morneau to release an initial report on its findings. He also announced further consultations, scheduled for spring 2020. COVID-19 delayed those, and Ottawa’s offered no public update since.
If you’re still with me, that makes more than three years since the review was announced, and we still don’t have a final report. The Kalifa Review was published last Friday, seven months after its formal relaunch last July following COVID-19 delays. Seven months versus three years and counting.
A Department of Finance official confirmed to me this week that the second phase of Canada’s open banking review is still ongoing, and that while the pandemic delayed things, the committee held stakeholder consultations on the foundational elements of open banking—including scope, governance, privacy, cybersecurity and consumer protection—in late 2020.
According to documents obtained by The Logic, those consultations took place over five days from Nov. 30 to Dec. 17, 2020, with representatives in attendance from 82 organizations running the gamut of Canadian banking and fintech.
So what’s taking so long, and when can we expect findings from the report? Your guess is as good as the ones offered by some of those taking part. Three people I spoke with this week who were represented in those meetings told me they were incredibly frustrated by the slow pace of the review and the lack of clarity on timelines. I’ve agreed not to name them because of their concern they would face consequences for speaking out publicly.
In fairness to the open banking committee, this project is stakeholder soup. There are major institutional players—including Canada’s big banks, insurance and credit-card companies—seeking to maintain their market share, and there are startups and credit unions—some even propped up by the big players—looking to steal market share.
Like telcos before it (remember Wind Mobile?), nothing better represents the nexus between what Canada is and what Canada wants to be than fintech. At some point, the country needs to define what kind of innovation it wants to support: will it be incumbents trying to transform their businesses, or will it be the little guys seeking to disrupt them? Trying to please everyone pleases no one. And throwing more federal money around isn’t the solution. This, I’m afraid, is a more difficult existential question.
On page seven of the Kalifa Review, the authors single out Canada as an overseas centre seeking to emulate the U.K’s success. They consider this country’s emerging fintech sector a direct competitive threat. And whether through the Kalifa recommendations or through other attempts to woo the tech sector—like a newly announced £375-million fund targeting fast-growing U.K. tech companies—they’re coming for us.
I’ll leave you to draw your own conclusions about why the Canadian open banking review is dragging on into its fourth year. But if there’s anything we should take away from the U.K. report it’s that whatever Ottawa decides, it needs to decide soon—or Canada is going to get left behind.