OSFI to Fast-Track New Entry Regime for FinTechs and Credit Unions
OSFI Speeds Up Federal Banking Entry for New Players
Canada’s prudential regulator Office of the Superintendent of Financial Institutions (OSFI) has outlined changes to accelerate the process for FinTechs and provincial credit unions seeking a federal banking licence, with a pilot framework expected in June 2026. The initiative aims to shorten approval timelines, introduce clearer expectations, and enable institutions to compete nationally, addressing long-standing delays that have limited new entrants.
Key Highlights of the News
Approval timelines to be significantly reduced: The current licensing process, which can take 3–5 years or longer, is being redesigned with targeted timelines, including faster feedback cycles and a goal to move applications toward approval within 12 months.
Introduction of faster early-stage feedback: Regulators plan to provide preliminary observations on business models within a four-week window, enabling applicants to understand expectations earlier and avoid prolonged pre-application delays.
Shift to a risk-based supervisory approach: Regulatory expectations will be aligned with the risk profile of each applicant, with different requirements applied depending on business models, such as deposit-taking or asset allocation strategies.
Mandatory exit planning for new entrants: Applicants, particularly FinTechs, will need to demonstrate a clear exit strategy that ensures an orderly wind-down with minimal disruption if the business model does not succeed.
Streamlined transition to operational readiness: After incorporation approval, the final stage to commence operations is expected to be completed within three months, with possible restrictions and supervisory milestones applied during early operations.
Increased transparency through application tracking: A public dashboard is proposed to monitor application progress, improving visibility for both regulators and applicants throughout the approval process.
Focus on governance and security readiness: Early identification and clearance of senior management and board members will be critical, as security checks can take several months and may impact overall timelines.
Policy support for increased competition: The initiative aligns with federal policy priorities to strengthen competition by enabling smaller banks and credit unions to expand nationally and diversify their operations.
What Should Potential Applicants Do?
Potential applicants should begin preparation early by defining a clear business model, governance structure, and risk profile aligned with regulatory expectations. Engaging experienced advisors, preparing for security clearances, and developing a credible exit plan will be essential to meet accelerated timelines and secure a position in the application pipeline.
