Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Accelerating Financial Innovation and Access in Canada
Canadian Innovation | Nov 13, 2024
Image: Freepik/www.slon.pics
How Canada Can Speed Up Financial Innovation and Serve More People
At Elevate FinTech Stage 2024, BetaKit hosted two conversations that highlight both the challenges and opportunities Canada faces in its financial sector. Together, these sessions reveal an urgent need for Canada to catch up on financial innovation. Here’s a look at what was discussed and some fresh ideas Canada can look to adopt if interested in driving real progress.
- The first session with Koho’s Daniel Eberhard and Peter Aceto focused on the obstacles of becoming a licensed bank and balancing speed with regulation.
- In the second, Josh Scott from BetaKit discussed barriers to financial inclusion with Eva Wong of Borrowell, Manzil’s Mohammed Sawwaf, and Julien Brazeau from the Department of Finance.
Session 1: Koho’s Banking License Journey and Balancing Product Innovation
Koho CEO Daniel Eberhard and Chief Banking Officer Peter Aceto shared how becoming a licensed bank would help Koho to lower costs, control its financial products, and offer benefits directly to its customers. But the process has been long and complicated with the Office of the Superintendent of Financial Institutions (OSFI) imposing unpredictable timelines and criteria.
See: Canada Post Expands into Financial Services with KOHO
To protect their ability to innovate quickly Koho split off into two divisions: one for tech and one for banking. This setup allows them continue building new features while managing the regulatory demands of becoming a bank.
Daniel Eberhard, CEO Koho:
“We’d be really foolish to bet the business on something as unpredictable as the bank license process.”
He stressed that Koho would pivot if the banking license path became too restrictive, doubling down on Koho's commitment to innovation.
Panel Takeaways:
- Securing a bank license comes with significant regulatory hurdles and compliance requirements. Koho is carefully weighing the costs/risks with the benefits.
- Koho is continuing to innovate without waiting on regulatory approval by cleverly separating tech and banking into separate divisions.
- Koho’s story highlights how difficult it is for Canadian fintechs to break into the traditional banking sector. Without a clear path, companies like Koho must decide how much time and money they’re willing to risk.
Session 2: Financial Inclusion and Barriers to Access
In the second panel, Josh Scott led a conversation on financial inclusion with Eva Wong (Borrowell), Mohammed Sawwaf (Manzil), and Julien Brazeau (Department of Finance). The discussion focused on why many Canadians, especially those in niche communities, remain underserved by the traditional banking system. Wong pointed out that, although most Canadians have a bank account, many are “underbanked”—lacking access to the range of services they need. Sawwaf explained that for Canada’s 2 million Muslim citizens, the absence of halal banking options has excluded a large group from mainstream financial services.
Julien Brazeau commenting on Canada's slow approach to open banking:
“Six years is far too long for anyone to consider fast.”
Panel Takeaways:
- There’s a growing need for financial services that address the needs of specific groups like new Canadians, remote communities, and religious groups.
- Brazeau admitted that the government has been slow to work directly with fintechs, a gap that has delayed innovation and frustrated financial startups. There's a lack of collaboration.
See: Canada’s SMBs Deserve Better Banking. Lessons from US Fintechs
- After 6 years, Canada’s open banking implementation is still incomplete and the delays are stifling competition and are making it harder for Canadians to get the services they need.
Image: Freepik/Canada day
Ways Canada Can Drive Financial Innovation in Canada
Here are just a few innovative approaches that could propel Canada's financial ecosystem forward.
1. Fast track the implementation of open banking and enable the sharing of credit data from the start
For open banking to have an impact right from the start in Canada, credit data portability should be possible from the initial launch. This would enable customers to transfer their credit history between institutions smoothly thus minimizing obstacles and simplifying the process of changing service providers.
See: Open Banking: Revolutionizing Financial Data Sharing
Such an approach would establish a best practice where fintech companies could provide services to individuals encountering difficulties in accessing credit, such as those with unconventional or limited credit backgrounds (that are underserved by the banks).
2. Make it necessary for government financial programs to be compatible with Open Banking standards
When open banking is fully implemented in Canada the government could promote its usage by making it a requirement for government initiatives like business loans and housing support to be compatible with open banking standards. By enforcing this rule, banks and financial technology companies would have to follow banking protocols making it easier for Canadians to access these services no matter which institution they are with. This approach aims to increase collaboration within the industry without relying on voluntary adoption by private entities.
3. Create a "Digital Financial Inclusion Fund" to broaden access, for interest groups
Canada could establish a "Digital Financial Inclusion Fund" similar to initiatives in Singapore and the EU to address the financial needs of marginalized communities by supporting fintech companies in developing specialized products for groups such as rural residents and underserved populations with limited access to traditional banking services. This would be a collaborative effort involving the government of Canada and the private sector and its partners.
4. Tiered licensing system could help smaller fintech companies enter the market more smoothly
Canada could consider implementing a strategy like in Australia with a restricted banking license regime which permits fintech firms to offer services as they grow. This approach would enable startups to connect with customers on and gradually meet full qualifications without sacrificing security or consumer safety.
5. Establishing a Unified Digital Identification System for financial services
Influenced by India's Aadhaar and Estonia's e-residency initiatives a government supported digital identification system could enhance Know Your Customer (KYC) procedures within Canada's institutions. With a digital identity Canadian citizens could safely use financial services reducing the time consuming and frequently repetitive account setup processes.
See: The Trifecta of India’s Digital Transformation is Turning Heads Globally
The government management of a digital ID system would streamline access for Canadians living in underprivileged areas and potentially link with open banking to ensure secure data sharing practices. Data privacy may be a concern however.
6. Establish a program for fostering partnerships between Fintechs and Banks to offer financial solutions
Canada could create a program to encourage partnerships between banks and fintech companies to focus on financial inclusion projects. Inspired by Brazil where banks and fintechs have teamed up to serve underserved communities, this program would encourage similar collaboration in Canada for initiatives like microloans, financial education, and better digital banking services in remote areas. Rather than mandating these partnerships, the government could offer incentives, such as tax benefits or lighter regulatory requirements to banks and fintechs that meet goals for reaching underbanked populations. This would allow both sectors to work together to create practical solutions that benefit consumers and support Canada’s financial inclusion goals.
Closing Thought
Creating a faster, more competitive, and more accessible financial ecosystem requires bold action, a risk-taking mindset (with the benefits in sight) and proactive partnerships between the government, banks, and fintechs.
See: Canada’s Innovation Paradox – Strong Start, Missing Impact
By embracing innovative approaches and learning from global successes, Canada can move beyond slow timelines and limited access and work towards becoming a leader in financial inclusion.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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