Wealthsimple CEO Michael Katchen spoke at a company event called 'The End of Banking' on June 11, where it unveiled new financial services offerings.The Globe and Mail
Wealthsimple Technologies Inc. chief executive officer Michael Katchen says Canada’s banking industry has fallen behind its global peers at a critical time for the country.
Canadians pay some of the highest banking fees in the world and moving money is a slow process, Mr. Katchen said Wednesday during a company event to unveil the company’s new banking products. Canada’s financial sector regulators have been grappling with balancing the need to protect the stability of the financial sector with encouraging competition among stalwarts and newer entrants.
Mr. Katchen said the current system puts Canadian consumers at a disadvantage.
“There’s too much red tape when you want to put your money to work,” he said.
“Money sits in accounts no one is earning interest on except for the banks themselves. The way I see it, the banks are a tax on all of us – on Canada – and it’s time we learn it is okay to demand more.”
The Toronto-based online financial services provider – which has more than 3 million clients and oversees $70-billion in assets under administration – is the largest financial institution built in Canada in the past 25 years, Mr. Katchen said.
In recent years, Canada’s biggest banks have been under greater scrutiny by Ottawa. Under the previous Liberal government, the government pushed for lower certain fees for bank customers and levied taxes that extracted billions of dollars from the industry.
The federal Finance Ministry also launched a competition review in late 2023 as Royal Bank of Canada, the country’s largest lender, was preparing to close its takeover of HSBC Bank Canada.
But promises to launch an open banking regime, which would allow consumers to securely share their banking data with financial-services providers, as well as a new system called Real-Time-Rail that would allow payments to be sent and received instantly, have hit lengthy delays.
Prime Minister Mark Carney has yet to outline his government’s plan for launching open banking.
“Canada’s financial services industry is behind the rest of the world,” Mr. Katchen said. “We have a solid banking system and that is a good thing. But the biggest banks are from a different century, and they were built for a different time.”
Competition in Canada’s banking sector has also drawn the ire of U.S. President Donald Trump, who has incorrectly claimed that U.S. banks are not allowed to operate in Canada. While there is no such rule, it has been more difficult for foreign banks to enter and compete in Canada’s insulated retail banking market.
During a Monday event hosted by The Globe and Mail, Ontario Premier Doug Ford questioned why large Canadian banks have developed large retail operations in the U.S., but foreign banks have not managed to do the same in Canada.
“I’m all for open and free banking,” Mr. Ford said. “Bring the banks in. Wouldn’t that be great, making the banks more competitive? RBC is down in the U.S., BMO is down in the U.S., TD has more branches down there than they do up here.”