Competition | March 18, 2025

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A Win for Competition in Canada, But the Fight Isn’t Over

It's pretty safe to say that every fintech at one point of their journey from start-up to scale-up has experienced the adverse impacts of the lack of competition in Canada.  Whether it’s access to payment systems, customer financial data, fair lending opportunities, or lack of harmonized rules that create interprovincial barriers, fintechs have faced an uphill battle in Canada compared to comparable international jurisdictions like the UK, Australia or the U.S.  The Competition Bureau spent years pushing for stronger competition laws to make markets fairer and limit incumbent businesses from controlling everything.  New rules have now become law, but the real test is whether they’ll actually be enforced and make a difference for fintech and other sector challengers, during a trade war when Canada needs more competition and economic resilience the most.

See:  Canada’s AI Competition Report Faces Big Tech Challenges

While the Competition Bureau has been successful in securing long overdue reforms to the Competition Act, the fact that a federal agency had to fight this hard to get them passed says a lot about how much power big business holds. If regulators had this much trouble getting change through, what chance do fintechs, associations and advocates have?    The Competition Bureau recently shared their story to lift the veil on their fight for more competition in Canada.  Bottom line to fintechs, you have to keep pushing because the fight isn't over.

Big Business Will Fight Against Change

“Historically, competition policy in Canada has been predominantly shaped by the business community, at a plodding pace, and not always transparently.”

That’s a polite way of saying corporate lobbyists and incumbent associations have controlled the rules for decades. The financial sector in Canada is highly concentrated with the big six banks controlling 90% of the country's banking assets, and as a result they get to decide who gets access to financial services, under what conditions, and at what cost.  Unlike in countries where fintech has been encouraged to challenge traditional banking, Canada’s system has delayed competition for as long as possible. Whether it’s the slow rollout of open banking, restrictive access to payments systems, or regulations designed to favour the big players, fintech startups have faced unnecessary barriers to growth.

Canada’s Competition Laws Were Designed to Be Weak

“No merger has been permanently blocked or dissolved in Canada… Mergers to monopoly could not be presumed to be anti-competitive.”

Big financial institutions haven’t faced serious pushback when they’ve bought out potential competitors, even if those deals reduce consumer choice. While there have been numerous of bank-fintech acquisitions and partnerships, it seems one of the best ways to reduce competition is to control access to payment systems, resist changes to open banking innovation, and slow down fintech progress where possible, all while regulators and policymakers sit on the sidelines.  The real issue for fintech isn't just mergers, it's exclusion.

It Took Years of Public Pressure to Get Here

"We started speaking publicly and plainly about the Competition Bureau’s resource pressures and what we viewed as shortcomings of the Act.”

The Competition Bureau went public and made competition a national issue. That’s a lesson fintech companies should take seriously. Big banks and corporate interests benefit when competition policy is decided in private meetings, on their terms. If fintechs want fair opportunity, they need to keep the public and policymakers engaged like the Bureau did.

Monopolies Hurt Innovation and Growth

“We pushed back publicly on boogeyman arguments that competition law reform would stifle business investment.”

Big banks like telecos often claim that stronger competition laws will “hurt investment”. The reality is it's Canada's Monopolies that hurt innovation, not competition. Every time fintech startups push for open banking, fairer lending rules, or access to financial infrastructure, they hear that “it will disrupt the market.”   Yes, that’s the point.  Get used to it.  Canada needs it more than ever.

What Will These Reforms Change?

No more 'efficiencies defence' for big companies that for years have claimed that regulators should allow these takeovers because it saves money while eliminating competition.  Wage fixing is now illegal so banks and other employers (remember the bread scandal) can't secretly agree to keep wages low or stop employees from switching jobs.  The government now has stronger rules to stop monopolies by blocking mergers that reduce competition before they happen.  These changes should help challengers compete but the real test is whether the government will enforce them.

See:  UK Overhauls Payment Oversight – Should Canada Follow?

And then it's a question of the Canadian government's political will.  Canada still has huge regulatory barriers that protect incumbents in banking, telecom, and agriculture.  The government needs to stay aggressive and build upon this competitive momentum.  If they lose steam, large companies will find ways to block competition and these reforms will become meaningless.  For fintech, small businesses, and consumers, the fight isn’t over. The government has shown it can act but only when forced.  We need to make sure they don't stop here.

How Consumers, Businesses, and Fintechs Can Keep the Pressure On

Even with new competition laws, big businesses won’t give up their power easily. If Canada is going to become a truly competitive economy, consumers, small businesses, and fintech startups must keep pushing for change.

Consumers should demand more choice and support fintech alternatives instead of defaulting to the status quo.  They should tell the Competition Bureau if they spot or experience anti-competitive behaviour from unfair fees to deceptive practices.  Consumers need to get informed in the various ways monopolies can hurt them and press politicians to address the problem, not ignore it.

See:  The Crisis Canada and Fintech Can’t Afford to Waste

Companies need to speak up, join fintech associations and business coalitions/groups who have more power together than going at it alone.  Remember, big firms control the conversation by lobbying behind closed doors and leveraging their resources.  Fintechs should work with policymakers and push for open banking implementation and payments reform and help educate the public that monopolies limit their financial options and drive up their costs.

The Fight Isn’t Over

Competition can only get better if people keep pushing for it.  If consumers, businesses, and fintechs keep demanding fair rules, it will be harder for incumbent corporations to unravel progress.  While the new laws are a step forward, real change depends on all of us, so keep battling because this fight isn't done.  Read the backstory to How a New Era of Competition Law in Canada Came To Be for some insight and motivation.

The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with fintech, alternative finance, blockchain, cryptocurrency, crowdfunding and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. 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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