Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Fintech’s Role in Canada’s Productivity Revival
Policy | Nov 11, 2025
Image: Relative labour productivity Canada vs US (Source: CSLS 2025)
Canada’s Productivity Problem is Structural, Not Cyclical and Fintechs Can Help Align Policy and Firm Level Investment to Rebuild Growth
The Centre for the Study of Living Standards released a November 2025 report titled, "Can a Lack of Pro-Productivity Policies Explain the Secular Decline in Canada’s Productivity Growth?", outlining why Canada’s productivity growth has stalled even as macroeconomic policy remains stable. The study finds that steps in the 2025 federal budget while positive, will not by themselves reverse the long slowdown. The authors argue that deeper structural change is needed to rebuild the foundations of business investment and innovation in Canada.
What the Research Found
The report traces much of the post 2015 slowdown to long term structural and global factors that are as a result of how past policy choices influenced business behaviour. Verified causes that reduced the total investment per worker and limited productivity even as macro conditions stayed the same include:
See: Canada’s Productivity Depends on Intangible Tech Adoption
- Sharp fall in energy sector capital spending after the 2014 oil price collapse
- Persistent weakness in private sector investment outside resources
- Slower technology adoption among smaller firms
- Rising weight of service industries that rely less on physical capital
Evidence from major institutions supports this view. The analysis in the OECD 2025 Economic Survey of Canada and the IMF 2024 Article IV consultation finds that Canada’s productivity gap reflects long standing frameworks that influence how firms invest and compete. These findings show that the challenge is structural, a long term misalignment between national policy intent and firm level behaviour.
What Budget 2025 Adds to the Plan
The recently announced Budget 2025 aims to address parts of Canada's productivity, innovation and competition gaps. It includes improvements to the Scientific Research and Experimental Development program by increasing the annual expenditure limit for the enhanced credit to $6 million, restoring eligibility for capital expenditures, and extending eligibility to Canadian public corporations. These measures target investment in intangible assets and innovation, the areas identified as weak.
See: How Competition Powers Canada’s Economic Growth
The budget also commits over $1 billion in resources over five years for AI compute and quantum computing while proposing a TechStat program to track technology adoption, as described in the digital infrastructure plan.
Finally, the budget also advances open banking and stablecoin rules that can improve competition and trust.
Incentivizing Investment to Unlock Firm Level Innovation
Productivity growth depends on what happens inside firms, how they invest, adopt technology, and organize production. Canada’s frameworks have been stable but haven't created strong enough conditions for private reinvestment in digital and intangible assets.
When policy creates the right incentives and financial infrastructure removes friction, investment decisions shift. That alignment between public objectives and private behaviour is where lasting productivity growth emerges.
Canada’s weakness lies in underinvestment in intangible assets such as software, data, intellectual property, and organizational know how. Past tools have not reversed this pattern and Canada needs to reward reinvestment in intangible and digital assets. NCFA has argued for tax credits that mobilize private capital for innovation for years including in an open letter to government during the COVID 19 pandemic, urging government to collaborate with fintechs while proposing investment tax credits to crowd in private capital.
The United Kingdom’s Enterprise Investment Scheme (EIS) offers a clear example of how targeted tax relief can mobilize private capital into early-stage ventures. Since its launch in 1994, the EIS has attracted over £30 billion of private investment into more than 53,000 small and growing companies, according to HM Revenue & Customs.
See: Regulating for Growth by Understanding Innovation
The EIS program provides individual investors with income tax relief of up to 30% on investments in qualifying startups, along with capital gains deferrals. Analysts credit it with strengthening the UK’s innovation ecosystem and building one of the world’s most active early-stage funding markets.
Closing Thought
Reducing interprovincial barriers and boosting competition are valuable but not sufficient on their own. The next step is to modernize how policy and firm level decisions connect. Fintechs can help turn policy into practice by improving access to capital, ensuring reliable and interoperable data, and scaling innovation across the economy. That's how Canada can turn structural reform into more practical and realized productivity gains.
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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