John Landry is a seasoned banking executive and former CEO of Peoples Group and Citibank Fund Services.
For FinTechs and challenger banks in Canada—or a foreign institution eyeing entry into the country’s lucrative, underserved market—options have materially expanded. If the new Office of the Superintendent of Financial Institutions (OSFI) framework meets its stated intent, the path to scale and profitability just accelerated.
The OSFI is Canada’s federal prudential regulator for banks, insurance companies, and federally regulated pension plans. It ensures these institutions remain well-capitalized, manage risk responsibly, and operate safely within the financial system. By setting capital and liquidity standards, conducting supervisory reviews and stress tests, and intervening early when risks emerge, OSFI plays a central role in safeguarding financial stability.
“For Canadian banks lightly supporting FinTechs, this is a wake-up call.”
Its newly evolved “Fast-Track Framework for New Entrants” marks a meaningful policy shift. The framework promises to materially change the competitive landscape for FinTechs, credit unions, and banks in Canada by creating a clearer, more attainable path to bringing their offerings to market.
The framework outlined clearer expectations—and a more structured review process—for companies seeking to conduct bank or “bank-like” activities, including deposit-taking, credit card and mortgage issuance, and access to major payment networks such as Visa, Mastercard, EFT, Lynx, and Interac.
For Canadian banks lightly supporting FinTechs, this is a wake-up call. Your clients will soon have greater access to payment infrastructure, deposit-taking, and lending capabilities. And even if they don’t build it themselves, they’ll have far more partnership options—and leverage—in the new regime.
Canada’s banking market is highly concentrated. A small group of dominant national banks, pursuing a blanket strategy across retail and institutional markets, benefits from significant economic and structural advantages. Chief among them is the friction facing new banks, FinTechs, and infrastructure participants seeking entry. The result is what even the regulator has publicly called an “oligopoly.”
For FinTechs aiming to offer Canadians greater choice or innovation, the barriers are clear: limited access to core payment infrastructure and legal constraints that restrict new entrants from taking deposits, issuing credit cards, or providing mortgages and other bank-like services.
Incumbents have little incentive to enable new competition, leaving FinTechs dependent on a highly concentrated market of just two providers for core banking access.
Cautiously optimistic
Between 2012 and 2014, regulators—including the Bank of Canada, the Department of Finance, OSFI, and the Financial Transactions and Reports Analysis Centre of Canada—worked to clarify a pathway for new entrants into Canada’s banking system. The intent was constructive, and in my experience, has recently become more so. But progress has lagged the pace of innovation, falling short of meeting the growing wave of domestic and international companies seeking to offer Canadians better experiences, more choice, and greater price competitiveness.
Foreign banks seeking to launch in Canada often face three years or more of regulatory approvals—if approval comes at all. The same is true for domestic startup banks. FinTechs, including challenger banks and even relatively simple SME payments or lending platforms, can spend years in regulatory limbo or scrambling for workarounds. At best, they may secure a bespoke bank partnership—typically constrained in scope, operationally limiting, and economically expensive.
Without timely, commercially viable access to core infrastructure—EFT, Interac, Visa, Mastercard, Lynx, ACSS and related rails—many of these firms never launch, scale back their ambitions, leave Canada, or fail outright.
That is the status quo today.
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FinTechs, prospective banks, and other firms prepared to operate under OSFI oversight now have a clearer, more structured path forward and are explicitly encouraged to engage ahead of the framework’s June 2026 launch. Provincial credit unions are likewise being offered a revised route to federal oversight.
No legislative changes are contemplated. Instead, OSFI is driving progress through better sequencing, greater procedural transparency, and clearer supervisory expectations—without diluting prudential or risk management standards.
It’s the hopium that kills you.
Whenever signals of enhanced competition emerge from Ottawa—formally or informally—they trigger a predictable cycle: initial optimism, followed by frustration over slow progress, and eventually the familiar refrain: “remember when they promised that?”
I remain cautiously optimistic.
The reality of Canada’s constrained competitive landscape in banking and FinTech is now widely acknowledged. Two core stakeholders, OSFI and the Bank of Canada, have both taken tangible steps and made clear overtures toward a more open and competitive financial system.
The key is disciplined expectations. Progress will not be linear; delays and detours are inevitable. It’s unmanaged optimism, not incremental reform, that ultimately disappoints.
The opinions and analysis expressed in the above article are those of its author, and do not necessarily reflect the position of BetaKit or its editorial staff. It has been edited for clarity, length, and style.
Feature image courtesy Canada Fintech Forum.