Just days after we featured Canada in our weekly Finovate Global column, we can now add to our understanding of what is driving fintech innovation in Canada with a look at the country’s recently unveiled federal budget.
“Don’t tell me what you value. Show me your budget—and I’ll tell you what you value,” former US President Joe Biden liked to say. In this regard, Canada’s budget—with CAD $141 billion in new spending and CAD $51 billion in cuts and other savings—reflects a commitment to investing in the most transformative technologies of our time for the benefit of Canadian businesses and citizens, as well as for the wellbeing, defense, and even sovereignty of the country itself.
“The world is undergoing a series of fundamental shifts at a speed, scale, and scope not seen since the fall of the Berlin Wall,” the budget document begins. “The rules-based international order and the trading system that powered Canada’s prosperity for decades are being reshaped—threatening our sovereignty, our prosperity, and our values.”
“This is not a transition. It is a rupture—a generational shift taking place over a short period of time.”
Against this backdrop, here are four takeaways for fintech and financial services from Canada’s newly released budget.
Open Banking on Track for 2027 Implementation
The Canadian government will commit to introducing the last remaining pieces of legislation needed to complete the Consumer-Driven Banking Framework, advancing the country’s open banking system. The budget indicates that process will take place in two phases: data sharing (“read access”) followed by transaction initiation (“write access”), with full implementation set for the middle of 2027.
Oversight of open banking will remain with the Financial Consumer Agency of Canada (FCAC), which will ensure strong consumer protection and compliance. The country’s Department of Finance will continue coordinating the framework’s policy and legislative rollout. Meanwhile, the Bank of Canada, the country’s central bank, will oversee the broader payments ecosystem as new participants—from fintechs to non-bank Payment Service Providers (PSPs)—and new instruments such as stablecoins become a part of the country’s real-time payment infrastructure.
Stablecoin Regulation Framework Unveiled
Canada will introduce federal legislation to regulate fiat-backed stablecoins. Stablecoin issuers will be required to maintain asset reserves and meet consumer protection standards. These entities will also be mandated to establish and implement redemption policies and risk-management frameworks. The government also will amend its Retail Payment Activities Act, first passed in 2021, to enable payment service providers to use approved stablecoins for transactions.
Per the new budget, the Bank of Canada will receive CAD$10 million over two years (2026-2027) to administer the new framework and receive funding of approximately CAD$5 million a year afterwards. This sum will be offset by fees collected from regulated stablecoin issuers.
The move to embrace stablecoins is a major part of the country’s effort to modernize its payment systems and create new efficiencies. But, as with efforts in Europe and elsewhere, the initiative is also designed to avoid what some Canadian observers worry could be excessive and undue use of foreign-issued stablecoins, including those from the country’s larger neighbor to the south.
Real-Time Payment Rail Infrastructure on Track
The new budget also confirms that Canada’s Real-Time Rail (RTR) system will be operational in 2026. RTR will provide instant, cheaper payments for a broad range of transactions including payroll, expense reimbursements, and other business-related fund transfers. There will also be further updates to the Retail Payment Activities Act to enable new entities, such as non-bank PSPs, to apply for membership in Payments Canada and participate directly in national payment systems including RTR. Payments Canada is the public, non-profit entity that owns and operates Canada’s national payment clearing and settlement infrastructure.
Canada’s RTR project is very much intertwined with other fintech-based initiatives in the budget, such as open banking and stablecoins. For example, the budget notes that the combination of write access and RTR by mid-2027 will help usher in the “next phase of consumer-driven banking” characterized by safer, faster payments and greater choice for Canadian businesses and consumers.
A Billion-Plus Investment in AI and Quantum Computing
The budget allocates CAD $1.26 billion for AI and quantum computing technologies. The inclusion of quantum computing technology is especially interesting, affirming Canada’s determination that investment in quantum computing is key to ensuring the country remains on the cutting edge in terms of innovation-enabling technologies.
The allocation for AI represents the lion’s share of the sum at just over CAD $925 million. The funding will support the construction of a large-scale, publicly-accessible AI infrastructure. It also provides for investments in data center infrastructure and domestic compute capacity. The budget endorses a “Sovereign Canadian Cloud” to help ensure sufficient compute capacity as well as data sovereignty. Notably, there is also funding specifically focused on tracking AI technology adoption, a major concern for many decision-makers when it comes to investing in AI. Over six years, CAD $25 million will be allocated for a Statistics Canada program to implement the Artificial Intelligence and Technology Measurement Program, also known as TechStat.
With regard to quantum computing, the budget earmarks more than CAD $334 million over the next five years to bolster the country’s quantum ecosystem via the Defense Industrial Strategy introduced in the budget. The budget places quantum computing technology alongside AI in Canada’s broader innovation plan, describing it as “similarly transformative,” with promising use cases in finance and cybersecurity.
Photo by Guillaume Jaillet on Unsplash