Although Canada and the US are on the same continent, they’re often worlds apart when it comes to compliance within the financial services industry. More than ever before, Canada, like the US, is focusing on regulations that protect the customer. But the Great White North is also proving to be very open to Fintech and RegTech, something its US counterpart is showing itself less inclined to embracing.
Here are some updates on where Canada is now when it comes to regulations and innovations:
The Bank of Canada says thanks, but no thanks:
In May 2017, it chose not to deploy the Distributed Ledger Technology for an interbank payment system, citing “too many hurdles.” This came after working for a year on a trial with Payments Canada and the R3 consortium, an enterprise blockchain software firm.
The Ontario Securities Commission’s LaunchPad says, we’re still here:
It’s full steam ahead with its innovation initiative and international agreements. It went live in October 2016 and signed a cooperative agreement with the UK’s Financial Conduct Authority in 2017, to provide regulatory help and facilitate cross-border business.
CRM2 is in play:
This is Canada’s overhaul of how the investment industry reports and discloses information to clients, which also presents an opportunity for private banks to stand out from their competitors through digital innovation. As Andrea Buzzi, Head of Solutions at Appway, says in WealthBriefing’s Global Compliance and Innovation Trends in Wealth Management study, “…firms should equip themselves with digital tools that automate tracking and auditing processes, and offer enhanced reporting and profiling features with intelligent business rules by design.”
CRM2 is also an opportunity for wealth managers:
It’s not only private banks that have the chance to differentiate themselves. Wealth managers will also benefit from better digital tools that allow them to focus on more value-adding activities. The same WealthBriefing report shows that in 2016, “…only 54% of Canadian investors said their advisor had effectively helped them set goals and discuss risk, and just 27% completely understood their fees.” Before the banks bring in brand-new technology, they should first ensure that all processes are automated in order to be able to deliver their services at a more efficient and larger scale. For now, points out Joy Savage, Partner at Deloitte Canada, wealth managers are “…pursuing a tech-enabled human approach to providing wealth services.”
To Blockchain, or not to Blockchain:
Even though the country had concerns about privacy, resilience, and scalability, the Ontario Securities Commission finally approved its first blockchain ETF earlier in the year, listing Blockchain Technologies ETF on the Toronto Stock Exchange to provide Canadian investors access to the developing blockchain technology sector.
While not full speed ahead, Canada is making strides in innovation and digitalization nonetheless. Buzzi explains that within Canada, “FinTech has gained significant market traction, with the adoption rate expected to grow from 18% to 34%, and in many cases relationship managers are already using digital onboarding solutions to increase transparency and ensure compliance, all while advising clients in their best interest.”