Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Budget 2025 Accelerates Fintech, AI, and Capital Growth
Federal Budget 2025 | Nov 5, 2025
Image courtesy of AI
Canada’s 2025 Budget Funds Open Banking, AI Infrastructure, and Venture Capital to Drive National Competitiveness
On November 4, 2025, the Government of Canada tabled Budget 2025, announcing targeted investments in several fintech and related sectors of interest including open banking, digital assets, artificial intelligence, and venture capital to strengthen national competitiveness and expand innovation.
NCFA welcomes these measures that taken together, form a coordinated strategy to modernize Canada’s financial system and accelerate technology adoption across sectors. While there are many parts to the 493 page PDF document designed to modernize government, stimulate investment and support key sectors of the economy (especially those being adversely impacted by the weight of Washington's tariff policy), this article focuses on 6 select areas of the budget.
1. Consumer-Driven Banking (Open Banking)
Budget 2025 confirms that Canada will move forward with the Consumer-Driven Banking Act to establish a national open banking framework. Oversight will rest with the Bank of Canada, which receives $19.3 million over two years to build and supervise the system. The $36.9 million previously allocated to the Financial Consumer Agency of Canada (FCAC) will be reprofiled to align with this transition. To support cybersecurity and national security functions, $25.7 million over five years and $5 million ongoing are provided to CSIS and the RCMP.
The government also commits that Canadians will not be subject to fees when accessing and sharing their financial data under the new regime. This right will be included in federal privacy legislation to protect consumers from banks charging for data portability.
Timeline:
- 2025: Legislation and technical standards established
- 2026: The Real Time Rail becomes operational and widely used
- 2027: Open banking with full consumer functionality, including payment initiation, is expected by mid-2027
See: Canada’s Payments Innovation Push Gains Speed
The data access fee ban effectively aligns Canada with the UK and Australia, where accredited fintechs can access user-permitted financial data without paying incumbent banks, creating a more level playing field for startups.
Firms should focus on accreditation, API readiness, and user consent ecosystems now, while anticipating the full rollout with data portability and write-access functionality expected in 2027. The Bank of Canada’s new role brings institutional authority to open banking, aligning Canada’s model with prudential oversight practices seen in advanced financial systems.
2. Stablecoins and Digital Payments
Budget 2025 introduces a federal framework for fiat-backed stablecoins to protect consumers and ensure financial stability. Issuers must maintain adequate reserves, provide redemption rights, and follow strict disclosure and audit rules. The Bank of Canada will oversee compliance and receive $10 million over two years starting in 2026–27, with ongoing costs of about $5 million annually recovered from issuers. The Retail Payment Activities Act will be amended to extend oversight to payment service providers dealing in prescribed stablecoins.
See: Quantum Safe Stablecoins Meet Real Time Finance Needs
This is Canada's first major step towards integrating digital assets within regulated finance. Fintechs and payment firms can soon align product design with national standards for reserve management and risk controls. The framework signals Canada’s preference for stablecoins backed by traditional assets and issued under domestic supervision, distinguishing it from more permissive global approaches.
3. Financial Integrity and Compliance Technology
Budget 2025 strengthens financial system integrity by modernizing the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Personal Information Protection and Electronic Documents Act. The updates ban cash transactions over $10,000, prohibit third-party cash deposits, and authorize real-time information sharing through the new Integrated Money Laundering Intelligence Partnership. FINTRAC is added to the Financial Institutions Supervisory Committee, expanding coordination with the Bank of Canada, OSFI, and the Department of Finance.
This overhaul moves compliance toward continuous data exchange rather than static reporting. For regtech and fintech firms, it expands the market for monitoring, analytics, and automation tools. By embedding FINTRAC directly within the supervisory structure, the government is creating a multi-agency model similar to the UK’s Joint Money Laundering Intelligence Taskforce. These measures are foundational to supporting open banking and payments modernization safely.
4. Innovation and AI Competitiveness
Budget 2025 commits $925.6 million over five years starting in 2025–26 to build sovereign public AI infrastructure, including a Canadian sovereign cloud for compute capacity. Of this, $800 million comes from reallocated funds. The new Minister of Artificial Intelligence and Digital Innovation will coordinate partnerships with industry and direct investments through the Canada Infrastructure Bank. Statistics Canada receives $25 million over six years and $4.5 million ongoing for AI and digital measurement programs.
See: Regulating for Growth by Understanding Innovation
The budget also reforms the Scientific Research and Experimental Development (SR&ED) tax incentive. The annual enhanced credit limit rises from $4.5 million to $6 million, and companies can elect pre-claim approval for faster reimbursements, reducing average processing from 180 days to 90 days by April 2026.
This is the largest coordinated investment in Canada’s digital productivity to date. Sovereign compute and AI infrastructure will help domestic firms train and deploy large models while maintaining data residency. The SR&ED reform improves liquidity during tight capital cycles for startups, software developers, and AI ventures by accelerating access to refundable credits. These changes directly respond to longstanding calls from the innovation community for faster turnaround and broader eligibility for digital R&D.
5. Venture Capital and Early-Stage Finance
To expand the growth capital ecosystem, Budget 2025 allocates $1 billion over three years starting in 2026–27 to the Business Development Bank of Canada (BDC) for the Venture and Growth Capital Catalyst Initiative. This fund will leverage pension and institutional investment to scale up Canadian venture capital and support new, diverse fund managers. Additional measures include:
- $84.4 million over four years ElevateIP
- $22.5 million over three years Innovation Asset Collective’s Patent Collective
- $75 million over three years for the National Research Council’s Industrial Research Assistance Program
These measures help close gaps between early-stage funding and commercialization. The Catalyst Initiative could attract more private capital into growth-stage companies, while IP and R&D supports strengthen Canada’s intangible economy. For fintechs, this capital mobilization aligns with efforts to improve scaling conditions, enabling firms to move beyond domestic pilots into global markets. By expanding the Canada Growth Fund Venture Program and the Venture Capital Catalyst Initiative, Ottawa is trying to fill the scale-up gap where private funding has been slow to follow through.
6. Consumer Banking Fees and Access Reforms
Budget 2025 targets long-standing consumer frustrations with high fees, slow transfers, and limited access to funds. The government will review ATM and Interac e-Transfer fees charged by federally regulated institutions and will report on corrective actions in 2026.
By spring 2026, the government will also ban investment and registered account transfer fees, which average $150 per account, and mandate faster, transparent transfers. Fintechs such as Wealthsimple and Questrade have supported these measures for years, arguing they will remove switching barriers and increase competition.
Consumer access to deposited funds will also improve. The Bank Act will be amended to raise immediate access for cheque deposits from $100 to $150, close the gap between in-person and digital deposits, and shorten cheque-hold times by raising the threshold for early release from $1,500 upward.
See: BoC’s Carolyn Rogers Calls Banks an Oligopoly
To strengthen competition, the public-holding threshold for smaller banks and credit unions will double from $2 billion to $4 billion, supported by a new voluntary code of conduct on brokered deposit access and fair distribution.
These reforms respond directly to public frustration with high account transfer costs, after firms like Wealthsimple and Questrade called for faster, cheaper asset portability. Lower fees, faster access to money, and easier account switching will force incumbents to compete on value. Fintech companies gain room to build better portability and payments solutions within a simpler and more open regulatory landscape.
Closing Thought
Budget 2025 delivers the clearest roadmap for a more competitive financial services sector and digital economy. Open banking, AI, and venture capital measures finally intersect within a national policy framework designed to increase innovation and resilience. The obvious challenge now is delivery and execution. Timelines must hold, interoperability standards must stay open, and public-private coordination must translate funding into outcomes. Canada has a window to jump-start competitiveness by executing on what has already been announced rather than starting new consultations. The need is there. The foundation is set. It's now time to build and execute Canada.
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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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