Canada proposes wider bank fintech powers, with limits Canada is proposing to widen the technology activities and fintech investments available to federally regulated financial institutions. For banks, the change would remove certain prior ministerial approvals while imposing revenue and capital limits. The central question is how to make broader commercial freedom compatible with a business that remains predominantly financial.
The Department of Finance’s proposal, published in the Canada Gazette on October 17, would implement business and investment powers legislated in 2018. As of October 29, 2026, the regulations remain proposals and the relevant legislative amendments are not in force. The consultation closes on November 16. Implementation requires a separate commencement order and registration of the regulations; the consultation deadline is not a start date.
The package contains separate regulations for banks and bank holding companies, foreign banks, insurance entities, and trust and loan companies. The bank provisions discussed here should not be treated as a universal set of limits for all those institutions. Nor does the package give fintech companies a general permission to conduct banking business.
For banks, the expanded powers would provide three routes: undertaking permitted non-financial activities directly; investing in a new category of majority financial services entity; and investing in permitted entities that undertake specified nonfinancial activities. The removal of certain approval requirements for information processing and technology activities would not displace other statutory restrictions. The proposed majority test illustrates both the flexibility and the discipline of the framework. An investee would qualify where at least 60% of its business consists of the specified financial-services activities. The calculation uses whichever proportion is greatest: relevant revenue, operating expenses or assets. It is a test of the investee’s business, not a requirement for the bank to own 60% of its equity. Calculations use the four most recent quarterly financial statements or, where quarterly statements are not prepared, the latest annual statement. Banks would also have to measure their aggregate use of the powers.
Subject to exclusions, covered non-financial revenue would be capped at 15% of annual revenue for banks and bank holding companies with equity below C$12bn, and 10% for those with equity of C$12bn or more. A separate ceiling of 10% of regulatory capital would apply to specified ownership interests, loans and guarantees involving covered entities, excluding exposures to federal financial institutions. The revenue and capital tests measure different things; neither is a blanket allowance for fintech investment. Institutions at or above the C$12bn equity threshold would have to submit reports within 30 days of relevant acquisitions and annual reports within six months of yearend.
The draft provides exclusions for activities within the scope of certain existing ministerial approvals, alongside other exemptions and a two-year transition for specified activities. It does not exempt every existing technology business. 1 McCarthy Tétrault, in its October 23 analysis, identifies a practical consequence of the majority test: banks should consider financial information rights and covenants addressing material changes in an investee’s activities and business model. That interpretation follows from an eligibility test that can change as the underlying business changes. FTF’s assessment is that the proposal offers a more flexible basis for structuring eligible investments, but does not establish that investment will increase. Removing an approval requirement addresses one regulatory obstacle.
It does not settle the commercial case for a transaction or remove the need to monitor whether it continues to qualify. The practical issue is therefore the quality of measurement. Finance’s accompanying impact statement acknowledges the difficulty of separating intertwined financial and non-financial activities. The consultation should test whether institutions can apply those distinctions consistently and obtain the necessary information from investees. Additional revenue headroom for smaller institutions does not remove that task.
Competition also merits scrutiny. For acquisitions of control, the bank draft requires information about material products or services the acquired entity supplies to a competitor. This does not establish that a particular acquisition would harm competition. It does make continued access to those services a relevant question when assessing how the wider powers are used. The proposal deserves support for addressing specific restrictions on bank technology activity. Its effectiveness should be judged against equally specific tests: usable investment powers, credible measurement and oversight that keeps institutions primarily financial. Broader permissions are the proposed change. More investment, stronger competition and better customer outcomes remain results to be demonstrated.
