xx Market is generally stable and very conservative amongst the big banks. The biggest shift over the last 20 years lies within international banking crises and the growth in regulatory impacts designed to ensure Canadas financial system maintained stability, despite the increasingly international character of the crises. This is particularly true between Canadian and US Banks.The US has a uniquely diverse group of banks ranging from “Too Big to Fail” to smaller regional player. The US uniqueness has been preserved through Government intervention and support for “Too Big to Fail” to become de-facto lender of last resort.
The Basel framework brings standardised and increased focus on Capital, Liquidity, Resilience and Stress Tests. OSFI through its focus on resilience watches source of bank funding closely being a driver of Liquidity. The best example is the typical mid-sized mortgage lender using wholesale GIC as their primary funding. OSFI have singled the group out and one outcome has been new digital banks designed to source deposits in savings and GIC direct to consumer online. Other examples are on asset side where auto lenders are taken over by banks with diverse mix of assets and liabilities.

Major types of Financial Institutions

1. Big Six Banks
2. Mid Size Banks
3. Small Banks – generally specialised (mortgages, auto, wealth)
4. Credit Unions
5. Caisse Populaires
6. Online-only Banks and Fintechs (Digital Banks or "Neo Banks")

Regulatory Framework

• Banks (~ all Schedule I): Federal regulation OSFI (Risk, Resilience, Basel framework)
• Credit Unions: Primarily regulated provincially, some federally
• Fintechs: some of the largest Canadian are fintech companies have one to three areas of focus, , payments, deposits, or wealth, The Canadian fintech landscape is rapidly evolving, with over 900 fintech companies many in payments or crypto.

The burning platform for banks is a systemic threat to the banking model comes from consumer preference. Societal change has been largely driven by technology shifts that see personal technology in the consumers hands. This took on new broad based acceptance and interest in 2007 with the introduction of the iPhone.
This has unearthed otherwise hidden gaps in core banking technology systems which have collective similarities across all banks. Their system are fractured, centered on product, rather than on the consumer. This is a product of bank mergers, takeovers and new system additions, and no driver to solve fractured customer design. Customer A can be found in as many systems as the bank maintains. But there remains one customer A and when A expects toes some as innocuous as online banking they expect everything in one place.
These drivers have resulted in many pain points with data the largest problem coming for a wide range of diverse systems and difficulty wth associating customers definitively between systems. There are many pain points for banks including, cultural, system structure and data frameworks to name a few. Data remains the largest pain point.
Despite the obvious need to address the pain point the headwinds are so costly that the banks’ collectively keep their heads firmly in the sand and so long as no bank goes against the status quo this area is largely not addressed and the status quo is maintained. Transformation hesitation begins with fear of breaking the current model and upsetting the status quo and living with the pain points, primarily data and data frameworks.

Here is a summary of the analysis on maintenance of status quo problems


• Transformation hesitation begins with fear of breaking the current model
• reducing profits
• cultural impacts and
• re-training costs.

Banks rely on changes in Canada driven by Government through regulation for equally shared services such as Symcor, Payments Canada and Interac.

• Fintechs are not taken seriouslly in a market share sense.
• The case for “Open Banking” was addressed in the 2024 Federal Budget yet stymied by the Banks as a risk to their market share equilibrium
• Transformation is resisted unless both regulated and protected by non interference with competition.

Next Steps – some early thoughts on breaking the logjam of transformation
• What acceptable opportunities exist through Symcor, Payments Canada and Interac

• Temenos Payments offering an opportunity as a shared, regulated and regulated service
• Cybersecurity through Temenos Cloud offerring a common secure service under an Enterprise Firewall.
• How can Temenos address Zero Trust to lower or eliminate the growing threat of Ransomeware and foreign government bad actor phishing activity and flawed employee processes in password managemen

t.
XXXXX XXXXX PROGRESS

APPENDIX
Briefing: Canada Banking system transformation progress – draft
Introduction
Market is generally stable and very conservaitive amonst the big banks. The biggest driver over last 20 years lies within international banking crises and the growth in regulatory impacts designed to ensure Canadas fiancial system maintained stability, despite the increasingly international character of the crises. This is particularly true between Canadian and US Banks.The US has a uniquely diverse group of banks ranging from “Too Big to Fail” to smaller regional player. The US uniqueness has been preserved through Government intervention and support for “Too Big to Fail” to become de-facto lender of last resort.
The Basel framework brings standardised and increased focus on Capital, Liquidity, Resilience and Stress Tests. OSFI through its focus on resilience watches source of bank funding closely being a driver of Liquidity. The best example is the typical mid-sized mortgage lender using wholesale GIC as their primary funding. OSFI have singled the group out and one outcome has been new digital banks designed to source deposits in savings and GIC direct to consumer online. Other examples are on asset side where auto lenders are taken over by banks with diverse mix of assets and liabilities.

Backgrounder on Canadian Financial framework
Major types of Financial Institutions
1. Big Six Banks
2. Mid Size Banks
3. Small Banks – generally specialised (mortgages, auto, wealth)
4. Credit Unions
5. Caisse Populaires
6. Online-only Banks and Fintechs (Digital Banks or "Neo Banks")
Regulatory Framework
• Banks (~ all Schedule I): Federal regulation OSFI (Risk, Resilience, Basel framework)
• Credit Unions: Primarily regulated provincially, some federally
Special mention – Fintechs
Some of the largest Canadian fintech companies:
1. Wealthsimple
2. Nuvei
3. Clearco (formerly Clearbanc
4. Koho
5. Neo Financial
6. EQ Bank
7. Tangerine
8. Black Banx
9. Blockstream
10. Flexiti
The Canadian fintech landscape is rapidly evolving, with over 900 fintech companies.
Analysis
Larger banks are broadly financially sound and focus has turned to share of market measurements. This results in internal focus and resistance to change lest they lose out on share.They are very conservative and internally focussed.
The Fintech market place sees primary activity but the diverse mix covers private companies, payments and crypto.Opportunities for core banking systems will require further analysis.
Pain points
Data remains the largest problem coming for a wide range of diverse systems and difficulty wth assosicating customers definitively between systems. For exsmple old systems did not have consistent use of Social Insurance Number, email, or even nsme. This introduces risk with large migration between systems.
Transformation
Transformation hisitataion begins with fear of breaking the current model and reducing profits, cultural impacts and re-training costs.
Big banks are also fearful of government re-action to job elimination and producing new political pressures amongst a generally conservative population and commensurate reputation loss.

————————
Appendix

Canada's banking system is characterized by a diverse range of financial institutions, each serving different needs and operating under specific regulations. Here's an overview of the types of banks and their key differences:

Major Types of Financial Institutions

Big Six Banks

The Canadian banking landscape is dominated by the "Big Six" banks, which are Schedule I banks (domestic banks) regulated by the federal government:

1. Royal Bank of Canada (RBC)
2. Toronto-Dominion Bank (TD)
3. Bank of Nova Scotia (Scotiabank)
4. Bank of Montreal (BMO)
5. Canadian Imperial Bank of Commerce (CIBC)
6. National Bank of Canada

These banks offer a wide range of services including personal and business banking, investments, mortgages, and insurance[2]. They are publicly traded companies and have extensive branch networks across Canada.

Credit Unions

Credit unions are financial cooperatives that operate on a not-for-profit basis. Key features include:

• Member-owned and democratically controlled
• Profits distributed back to members
• Often involved in community initiatives
• Regulated primarily at the provincial level
• Offer similar services to banks, including savings accounts, loans, and mortgages[2]

Caisses Populaires

Similar to credit unions, caisses populaires are:

• Located primarily in francophone regions of Canada
• Operate on a not-for-profit basis
• Offer a full range of financial products and services
• Members can vote in annual general meetings and elect the board of directors[2]

Online-only Banks (Digital Banks or "Neo Banks")

These banks operate without physical branches and offer services primarily through digital platforms. Examples include:

• Tangerine Bank (owned by Scotiabank)
• Simplii Financial (owned by CIBC)
• EQ Bank (owned by Equitable Bank)

They often provide lower or no-fee account options and competitive interest rates on savings accounts[2].

Key Differences

Ownership Structure
• Big Six Banks: Publicly traded companies
• Credit Unions and Caisses Populaires: Member-owned cooperatives
• Online Banks: Often subsidiaries of larger financial institutions

Regulatory Framework
• Schedule I Banks (including Big Six): Federally regulated by the Office of the Superintendent of Financial Institutions (OSFI)
• Credit Unions: Primarily regulated at the provincial level
• Some Credit Unions: Federally regulated (e.g., Coast Capital Savings Federal Credit Union)[3]

Service Focus
• Big Six Banks: Comprehensive services for individuals and businesses
• Credit Unions: Often focus on local communities and specific member needs
• Online Banks: Typically offer a more limited range of services with a focus on everyday banking and savings products

Profit Distribution
• Banks: Profits distributed to shareholders
• Credit Unions: Profits returned to members through dividends or improved services

Physical Presence
• Traditional Banks: Extensive branch and ATM networks
• Credit Unions: Varying levels of physical presence, often more localized
• Online Banks: Primarily digital, with limited or no physical branches

The Canadian banking system is known for its stability and strong regulatory oversight, providing consumers with a range of options to meet their financial needs. Whether choosing a major bank, a local credit union, or an online-only institution, Canadians have access to diverse financial services tailored to their preferences and requirements.

Citations:
[1] https://www.bis.org/statistics/locbankstatsguide/canada.htm
[2] https://www.nerdwallet.com/ca/banking/types-of-financial-institutions-in-canada
[3] https://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada
[4] https://settlement.org/ontario/daily-life/personal-finance/banks/what-kinds-of-financial-institutions-are-there/
[5] https://www.thecanadianencyclopedia.ca/en/article/banking
[6] https://www.canada.ca/en/financial-consumer-agency/services/banking/choosing-financial-institution.html
[7] https://www.rbcroyalbank.com/en-ca/my-money-matters/life-events/new-to-canada/banking-in-canada/what-newcomers-should-know-about-canadas-financial-ecosystem/
[8] https://www.osfi-bsif.gc.ca/en/supervision/financial-institutions/banks

Basel III
The 2007-2009 global financial crisis had a profound impact on banking regulations worldwide, leading to significant reforms aimed at strengthening the financial system and preventing future crises. Here are the key ways the crisis affected global banking regulations:

Enhanced Capital Requirements

The crisis revealed that many banks had insufficient capital buffers to absorb losses. In response:

• The Basel III framework was introduced, significantly increasing capital requirements for banks[1].
• Banks were required to hold higher quality capital, with a greater emphasis on Common Equity Tier 1 (CET1) capital[1].
• A capital conservation buffer was implemented to ensure banks maintain capital above the minimum requirements[1].

Improved Liquidity Standards

The crisis exposed weaknesses in banks' liquidity management. As a result:

• The Liquidity Coverage Ratio (LCR) was introduced, requiring banks to hold sufficient high-quality liquid assets to survive a 30-day stress scenario[1].
• The Net Stable Funding Ratio (NSFR) was implemented to ensure banks have stable funding sources over a one-year horizon[1].

Enhanced Supervision and Stress Testing

Regulators recognized the need for more rigorous oversight:

• Supervisory processes became more intensive and forward-looking[1].
• Regular stress testing of banks became mandatory in many jurisdictions to assess their resilience to adverse economic scenarios[4].

Systemic Risk Mitigation

The crisis highlighted the interconnectedness of the global financial system:

• Systemically important financial institutions (SIFIs) were identified and subjected to additional regulatory requirements[3].
• The Financial Stability Board (FSB) was established to monitor and make recommendations about the global financial system[3].

Market Discipline and Transparency

To improve market discipline:

• Enhanced disclosure requirements were implemented to increase transparency of banks' risk profiles and capital adequacy[1].
• Credit rating agencies came under increased scrutiny and regulation[2].

Resolution Frameworks

To address the "too big to fail" problem:

• New resolution regimes were developed to allow for the orderly resolution of failing banks without taxpayer support[3].
• Banks were required to develop recovery and resolution plans ("living wills")[3].

Regulatory Structure Changes

Many countries reformed their regulatory structures:

• In the U.S., the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted, introducing sweeping changes to financial regulation[4].
• The Financial Stability Oversight Council was created to identify and monitor systemic risks[4].

International Coordination

The crisis underscored the need for global cooperation:

• International bodies like the Basel Committee on Banking Supervision and the Financial Stability Board gained prominence in coordinating regulatory efforts[1].
• There was a push for greater consistency in the implementation of global standards across jurisdictions[1].

These regulatory changes aimed to create a more resilient banking sector, improve risk management practices, and enhance the ability of regulators to identify and address potential threats to financial stability. While the reforms have generally strengthened the global financial system, debates continue about their effectiveness and potential unintended consequences.
The Basel III framework is a central element of the Basel Committee's response to the global financial crisis. It addresses a number of shortcomings in the pre-crisis regulatory framework and provides a foundation for a resilient banking system that will help avoid the build-up of systemic vulnerabilities. The framework will allow the banking system to support the real economy through the economic cycle. 
This document, originally published in December 2010 and updated in June 2011 (to reflect a minor modification to the credit valuation adjustments applied to address counterparty credit risk in bilateral trades) represents the initial phase of Basel III reforms, which focused on strengthening the following components of the regulatory framework: 
• improving the quality of bank regulatory capital by placing a greater focus on going-concern loss-absorbing capital in the form of Common Equity Tier 1 (CET1) capital;
• increasing the level of capital requirements to ensure that banks are sufficiently resilient to withstand losses in times of stress;
• enhancing risk capture by revising areas of the risk-weighted capital framework that proved to be acutely miscalibrated, including the global standards for market risk, counterparty credit risk and securitisation;
• adding macroprudential elements to the regulatory framework, by: (i) introducing capital buffers that are built up in good times and can be drawn down in times of stress to limit procyclicality; (ii) establishing a large exposures regime that mitigates systemic risks arising from interlinkages across financial institutions and concentrated exposures; and (iii) putting in place a capital buffer to address the externalities created by systemically important banks; and
• specifying a minimum leverage ratio requirement to constrain excess leverage in the banking system and complement the risk-weighted capital requirements.

Fintechs
Based on the search results and available information, here is a list of some of the largest Canadian fintech companies:

1. Wealthsimple
Founded in 2014 and based in Toronto, Wealthsimple is one of Canada's leading online investment management services. It offers various investment options including crypto, with no minimum investment amounts or commissions[3].

2. Nuvei
Nuvei is a major Canadian payments company that serves over 200 markets worldwide. It supports 150 currencies and offers 580+ alternative payment methods. The company has raised $830 million in total funding[3].

3. Clearco (formerly Clearbanc)
While specific funding details aren't provided, Clearco is mentioned as one of the top Canadian fintechs[3].

4. Koho
Koho offers a free spending and savings account with prepaid Mastercard and a mobile app. It provides cashback on purchases and various plans to choose from[4].

5. Neo Financial
Based in Calgary, Neo Financial offers credit cards, savings accounts, investments, and mortgages[4].

6. EQ Bank
An online banking platform based in Toronto, EQ Bank was named the #1 Bank in Canada on the Forbes 2023 list[4].

7. Tangerine
Owned by Scotiabank, Tangerine offers a wide range of financial products including savings and checking accounts, investments, credit cards, and mortgages[4].

8. Black Banx
Based in Toronto, Black Banx is a digital bank that has raised $382 million in total funding and serves customers from 180 countries[3].

9. Blockstream
A crypto and blockchain company, Blockstream has raised $424 million in total funding[3].

10. Flexiti
A point-of-sale fintech lender founded in 2013, Flexiti has raised $530 million in total funding[3].

It's worth noting that the Canadian fintech landscape is dynamic and rapidly evolving, with over 900 fintech companies currently operating in the Canadian market[4]. The relative sizes and rankings of these companies may change over time as the industry continues to grow and evolve.

Citations:
[1] https://kpmg.com/ca/en/home/media/press-releases/2024/08/canadian-fintech-investment-hit-high-in-h1-2024.html
[2] https://www.innreg.com/blog/top-10-small-fintech-companies-in-canada
[3] https://fintechmagazine.com/articles/top-10-fintechs-based-in-canada
[4] https://www.springfinancial.ca/blog/lifestyle/best-fintech-companies-canada
[5] https://www.pwc.com/ca/en/industries/technology/canadian-fintech-market-map.html
[6] https://www.fool.ca/investing/top-canadian-fintech-stocks/
[7] https://www.fintech.coffee/research/canada
[8] https://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada