“We will introduce measures to increase competition across the economy – starting with the finance and telecommunications sectors,” Finance Minister François-Philippe Champagne said within the prepared text of his budget speech.
Fintech challengers are gaining ground on Canada’s major banks
The moves are expected to beef up fintech firms trying to challenge the dominance of Canada’s major banks, which command a dominant market share. Several firms have worked to supply alternatives.
Questrade Financial Group, best known for its online trading platform, announced this week that it had received regulatory approval to launch Questbank. Meanwhile, Wealthsimple, which has expanded its offerings to incorporate checking accounts, bank cards and mortgages, recently announced that its assets under management had grown to greater than $100 billion.
Michael Katchen, head of Wealthsimple, said the budget brought many advantages to Canadians, including the plan to ban transfer fees. “By standing up for ordinary investors and removing this barrier to choice, the government is taking exactly the bold action we need to enable real competition in financial services,” he said in an announcement.
Carolyn Rogers, deputy governor of the Bank of Canada, called for more competition within the banking sector in a speech last month. She said the concentration of Canada’s banking sector is commonly cited as one among the principal aspects contributing to its stability. However, she added that many argued that this level of concentration clearly had a negative impact on productivity, innovation, capital allocation, costs and consumer alternative.
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Ottawa promotes open banking to spice up competition
The Canadian Bankers Association said in an announcement that Canada has a highly competitive financial services sector with numerous competitors and product offerings across Canada.
Spokeswoman Nathalie Bergeron said the CBA looks forward to working with the federal government to work with industry on its budget initiatives. This includes advancing an open banking framework that would allow consumers to realize more control over their very own financial data, making it easier to modify banks.
While open banking has not yet rolled out in Canada, the federal government promised within the budget to further expand it by mid-2027 to enable payments to be sent through the system. And to make the system a reality, the federal government is shifting responsibility for implementing open banking from the Financial Consumer Agency of Canada to the Bank of Canada.
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Adriana Vega, head of industry group Fintechs Canada, said in an announcement the federal government has laid out a daring and clear path forward for the sector. “The financial sector is the heart of any modern economy,” Vega said. “That’s why we’re very pleased that the government has made this a focus to make life more affordable for Canadians and increase productivity.”
New measures aim to lower fees and faster deposits
Also in Tuesday’s budget, the federal government announced it could review fees charged by banks and other government-regulated financial institutions, including electronic transfer and ATM fees.
The government said it could also work with banks to supply greater transparency on fees for sending money abroad.
The budget also amends banking law to extend the quantity immediately available when someone deposits a check from $100 to $150 and to scale back the variety of days that banks can hold deposited check amounts before releasing them.
The changes within the financial sector come after Canadians enacted a discount within the income tax rate for the bottom tax bracket on July 1. The tax cut is anticipated to end in savings of as much as $420 per person per 12 months in 2026.
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