Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
The Case for Better Banking Options for Canadian SMEs
Banking Competition | Oct 28, 2024
Image from BNN Bloomberg, The Close (Cato Pastoll, CEO) Loop Financial)
Canadian small to medium sized businesses (SMEs) show great interest in expanding operations globally to tap new markets and scale but they often encounter an unexpected challenges when they do so. According to Cato Pastoll, CEO of Loop Financial during an interview on a BNN Bloomberg show The Close "Why small business needs better international banking access", Canada's banking infrastructure lacks the necessary capabilities to facilitate their global aspirations. So why is this the case? Canada doesn't have a competitive banking system to support Canadian companies looking to expand globally given there are only a handful of incumbent banks that dominate the market, leaving consumers with minimal choices.
See: Can Fintechs Help Narrow Canada’s Prosperity Gap?
Canada's financial system is heavily concentrated making it harder and more costly for small businesses to access better financial solutions that are available elsewhere. This is especially bad at a time when Canada's productivity is dying on the vine and in major need of a boost. This lack of diversity has resulted in outcomes such as charges, complicated procedures and restricted assistance for cross border transactions.
During small business week, Cato Pastoll spoke to many business owners who were frustrated with Canada's current financial system that failed to support their growth ambitions (understandably so) saying:
"It’s time to switch from unfocused grant programs to a targeted regulatory overhaul to help Canadian businesses succeed."
Fostering Change to Help Canadian Businesses Grow
He highlights two approaches to foster change to help Canadian businesses expand globally without unnecessary barriers.
1. Prioritize Competition
It is time for Canadian policymakers to shift their focus towards prioritizing competition and innovation by backing fintech firms that have the potential to provide innovative solutions for various financial needs. Implementing changes could pave the way for new entrants in the banking industry to introduce services catering to SME requirements like reduced charges and simplified international transactions.
See: CFPB Finalizes Open Banking Rule: What it Means for Canada
By emphasizing innovation and fostering the growth of fintech industry players in Canadas landscape the country could establish accessible financial services aimed at promoting fair competition among businesses (level the playing field).
2. Prioritize Innovation in Banking Services
Canadian businesses require specialized banking services tailored to their challenges in order to stay competitive globally. Fintech firms such, as Loop Financial are actively crafting payment solutions to streamline trade for businesses by offering faster and more convenient options. These innovative financial tools cater specifically to the needs of businesses, and play an essential services role in filling the void left by conventional banks in the market.
See:
Small Step Forward As Feds Publish Straw-man Open Banking Framework
FCAC Embraces New Role in Canadian Consumer Banking
Canada’s Open Banking Framework 2024 Preview
Conclusion
When Canadian companies thrive overseas the positive effects are felt throughout the economy. Expanding internationally leads to job creation, higher economic productivity and nurtures development.. Canadian SMEs need financial services that cater to their growth aspirations. By modernizing our banking system Canada can facilitate the expansion of SMEs that play an underappreciated role in strengthening economic resilience.
Canada's businesses are prepared to face competition but our financial infrastructure needs to keep pace with them.
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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