Opening statement by Superintendent Peter Routledge - Panel on Digital Innovation and the Financial Safety Net at the 2022 Payments Canada Summit

The risk environment in which we operate has become more volatile, complex, interrelated, and existential than ever before. All of us will need to be agile and to work together to create continued resilience in Canada’s financial system - and these are great conversations to have to ensure this.

I have spent a lot of time throughout my career in the private and public sectors looking at risks. My experience tells me that what has been successful in the past may not be sufficient in addressing risks that are more volatile, complex, interrelated, and existential than those previously faced.

We recently released publicly our first Annual Risk Outlook. It outlines the risks we see, our regulatory response, our supervisory response, and our workplan to address them over the upcoming year.

While there are a number of risks we have identified such as climate change, housing market down turn, cyber attacks the risk I would like to use my time to speak to you today about is the digitalization of finance.

The digitalization of finance has been underway since we moved from pen and paper. Each time technology has been adapted to finance it has resulted in more efficiency, convenience and opportunities for institutions, customers and other businesses. Digitalization, more often than not, results in more value and competition in the sector.

We’ve seen development and growth of using aggregation apps, and credit apps and more Canadians than ever are turning to digital banking rather than visiting a brick-and-mortar branch. These are welcome developments, but they are not without risk. The issues of consumer protection, tracking illicit activities, and financial stability are sometimes undermanaged.

In short, digitalization is innovating faster than the framework legislation that oversees the stability of the financial system in Canada. It is on all of us here are on the panel to contribute to accelerating our efforts.

You will have seen some of the work planned for the federal oversight framework in federal budget tabled a few weeks ago. Modernizing payments, consumer protection, deposit insurance and Open Banking are all on the agenda.

It is clear to me that the financial system is not an island unto itself and material risks outside the traditional players are part of the real and future economy. Where Canadians rely on and expect financial services to be efficient, safe, and credible, expanding the current regulatory perimeter is a simple choice.  We cannot stay where we are now and expect continued resilience while unregulated players grow outside of protections that Canadians expect and deserve.

That means that we at OSFI and the Government more generally are looking at ways to encourage innovation and competition and ease the entry of new players while providing a framework for ongoing confidence in the financial system.

I am pleased that my colleagues on this panel are all engaged in finding the right balance. These conversations set us all up for success when engaging with those in regulated sector, those looking to enter it and all those that rely on it.