Ontario is opening up some of its regulations to give financial startups more opportunities to test new products and services in a bid by the province to boost the fast-growing financial technology sector.
Finance Minister Charles Sousa laid out his strategy for the so-called fintech sector before a business crowd in Toronto on Tuesday. He said the government will create a "regulatory super sandbox" (a set of rules that exempts firms from some requirements so they can experiment with new business models and products). It will also launch an agency known as the Ontario FinTech Accelerator Office to help startups get established.
"We have the evolution, the convergence of IT and financial services. We see it happening all over the world, and Ontario has become an attraction for this because we have strong talent," Mr. Sousa said. "It's about seizing the opportunities."
With an increasing number of Ontarians moving away from bricks-and-mortar financial institutions to online services that offer everything from investing advice to cryptocurrencies such as Bitcoin, Mr. Sousa said government regulators will work with businesses to design regulations that best serve the emerging industry.
New rules, implemented quickly and tailored for fintech, could also protect consumers who are investing in unregulated products such as Bitcoin, the Finance Minister added. "We want to make sure it's at the forefront and it's transparent, that people can find security and comfort with what is being proposed," he said.
British and Australian regulators already allow businesses to apply for more flexible rules, said Jim Hinton, an intellectual property lawyer at Bereskin and Parr. "We're catching up, but nobody is too far ahead. The opportunity is still there," he said.
With Canada's financial sector dominated by a few companies, innovation is slow, Mr. Hinton said. "It's been a little bit stifling to innovation because they haven't had the need to innovate. Loosening regulatory power will allow new Canadian fintech to come up. It'll allow them to grow domestically and then go international with products tested in Ontario."
While many financial decisions in Ontario now need a customer to go to a bank and sign paperwork, a new approach to regulation could allow that to be done digitally, Mr. Hinton offered as an example of what startups might want. He expected companies might also want to test new investment products. Mr. Sousa promised regulators will adopt a more "nimble" approach to financial rules. The new fintech office will also help co-ordinate support for the industry.
The provincial Liberals, who are expected to call an election for early next June at the latest, are hoping that embracing fintech will create jobs at startups in Toronto and the Kitchener-Waterloo area.
In the spirit of these plans, Mr. Sousa said the fiscal update he will deliver next Tuesday will be more forward-looking than usual. He promised the budget will remain balanced this year and for the next two years, and confirmed that the update will include additional support for small businesses, which have complained in recent months about the impact of a minimum wage hike to $15 an hour in 2019.