Currently there are no laws which require banks to allow Fintechs to access bank data, but certain regulators are looking into the issue. We are also unaware of any strong push to relax the requirements to set up or operate a bank which might make it easier for Fintechs to offer BaaS or BaaP services.
While we are not aware of any Fintechs offering API-banking in Canada at this time, no special license would currently be required to offer such services.
To offer Bank as a Service or Bank as a Platform services, a Fintech would currently be required to establish a bank under the federal Bank Act. This is a complex and lengthy process which requires the approval of the Office of the Superintendent of Financial Services, the issuance of Letters Patent by the Minister of Finance and the issuance of an order by the Superintendent of Financial Services which allows the bank to begin carrying on business. There is a $32,000 fee to obtain the letters patent of incorporation and substantial ongoing compliance obligations to maintain bank operations, including minimum capital requirements.
According to the Canadian Banker’s Association, 72% of Canadians use online and mobile sources as their primary means of banking. This is up from 52% in 2012.
17% of those Canadians bank primarily on mobile devices (up from 9% in 2015).
We are seeing a lot of collaboration with Fintech companies and the big Canadian Banks to provide services and products but also some traditional financial institutions have developed their own in-house fintech expertise through organic growth or direct acquisitions.
Nora F. Osbaldeston
William L Northcote