Michael Binetti, a partner of Affleck Greene McMurtry LLP, contributed to a paper released by the Financial Data and Technology Association (FDATA) of North America on competition issues surrounding customer-directed finance and the financial data access competitive landscape in Canada. The paper was followed by a virtual presentation by FDATA North America Executive Director Steve Boms, Senator Colin Deacon, and Michael Binetti.
A replay of the webinar can be found here.
According to FDATA North America, consumers and small businesses in Canada have become increasingly reliant on financial services and products offered by financial technology ("fintech") providers. Today, as many as four million Canadians utilize fintech tools to improve their financial wellbeing. Regardless of the type of product or service offered by fintech firms, all rely on the ability of the consumer or small business to grant them access to their financial data, which is typically held at a financial institution.
The paper, "Competition Issues in Data-Driven Consumer and Small Business Financial Services in Canada," outlines how restrictions on consumer-directed access to individual financial data raise serious competition concerns in the market for data-driven financial services and underscores the need for the Canadian government to advance a customer-directed finance ecosystem.
"The financial impact from COVID-19 – and the government's refusal to allow fintech lenders to participate in its response – is the latest in a growing string of examples that underscore the need for Canada to have a customer-directed finance regime as soon as possible," said Senator Colin Deacon. "FDATA North America's paper makes clear that the absence of such a regime is actively thwarting competition in the financial marketplace. Accordingly, I urge the Department of Finance to expedite its consultation process and to submit to Parliament draft legislation as soon as possible that would allow Canada to join the growing number of innovative economies that provide consumers and small businesses choice and autonomy over their financial data."
Highlights from "Competition Issues in Data-Driven Consumer and Small Business Financial Services in Canada":
- The innovation in financial services is powered by consumers and small businesses granting permission for access and use of their data, often in conjunction with cutting edge machine learning and other data analytics technology.
- As consumers and businesses face a deteriorating economic landscape, it is critical to maintain competition in the market for these data-driven financial services.
- Competition issues cannot take a back seat as the regulatory and technological framework in data sharing continues to evolve. As open finance develops, competition laws provide a critical backstop to ensure that existing competition in the market for data-driven consumer financial services is not stifled.
Originally published 31 July, 2020