On January 30, 2025, The Canadian Association of Financial Institutions in Insurance (CAFII) held its first webinar of 2025 – Insurance Innovation in Ontario: A Conversation on FSRA’s Innovation Office Partnership with Fintech Cadence to Support Fintech Innovation in Ontario. CAFII’s Executive Director, Keith Martin, moderated the webinar. He was joined by Stephanie Appave, Director of Innovation at the Financial Services Regulatory Authority of Ontario (FSRA), and Layial El-Hadi, Executive Director at Fintech Cadence. Many representatives from CAFII’s 15 member companies and 9 Associates attended the webinar, as did representatives from allied industry associations such as the Canadian Life and Health Insurance Association, or CLHIA; the Travel and Health Insurance Association, or THIA; and the Canadian Banker Association, or CBA; and the Canadian Association of Direct Relationship Insurers. Many insurance and financial services regulators and policy-making authorities attended as well, including the following government organizations:
The Insurance Council of British Columbia; The Government of Alberta; Québec’s Authorité des marchés financiers, or the AMF; and, The Financial Services Regulatory of Ontario, or FSRA.
K. Martin began the webinar by introducing the two speakers – Stephanie Appave and Layial El-Hadi. S. Appave (FSRA) has led FSRA’s Innovation Office since March 2023, where she has driven business development and engagement opportunities across the broader financial ecosystem. She has increased awareness and strengthened perceptions of FSRA as a regulator that supports innovation. L. El-Hadi is the Executive Director of Fintech Cadence, an organization that aims to create and support start-ups focused on solving Ontario’s financial industry’s problems through technology integration. Before turning the webinar over to the panellists for their respective presentations, K. Martin quickly introduced CAFII’s Research Analyst, Robyn Jennings, who prepared a few questions for the panellists.
S. Appave presented first, explaining FSRA’s innovation mandate, the Innovation office, and Ontario’s regulatory sandbox. Over the last few years, FSRA has been focused on a principles-based and outcomes-focused approach to regulation. Innovation is one of FSRA’s statutory objects. Encouraging and supporting innovation and experimentation is, thus, a foundational part of the regulator’s mandate. In fact, the Innovation Office was established to help FSRA deliver on this mandate. FSRA supports innovation across Ontario through exemptive authority granted to FSRA’s CEO by the Government of Ontario, which allows it to exercise discretionary powers, amongst other associated tools. Thanks to the Innovation Office, FSRA can facilitate innovation across regulated sectors by providing support, advice, and guidance to both regulated and unregulated entities.
In terms of public resources, FSRA released an Innovation Framework that outlines the strategy and guiding principles for how FSRA supports responsible innovation. The regulator also launched its Test and Learn Environment (TLE), otherwise known as a regulatory sandbox. TLEs are open to all market participants, including incumbents registered with FSRA and unregulated firms. FSRA’s TLEs provide a safe space for experimentation while ensuring consumer protection. TLEs, or regulatory sandboxes, are dedicated spaces that support the safe testing of innovative products, services, and business models in the real market. In short, TLEs provide companies with the opportunity to test activities that would be otherwise prohibited under the current regulatory framework. TLEs also act as a safeguard for consumer protection during testing. This allows regulators, like FSRA, to monitor potential impacts to the marketplace, businesses, and consumers these otherwise untested products, services, and business models could inflict. This kind of controlled testing provides insight into the viability and risks of the products or services in question. If risks do arise, FSRA then works with the company to mitigate and manage any issues. Currently, FSRA has two active TLE projects – Direct Access Model TLE and Territories TLE. The former, launched in August 2023, is testing a novel way to distribute commercial insurance products. The latter, which launched in 2024, allows auto insurers to propose and test territory rate changes within the Greater Toronto Area. There are currently 11 auto insurers participating in the Territories TLE.
TLEs should be viewed as an opportunity. It is a chance to test and refine an innovation in the real world while accessing resources like the Innovation Office or FSRA’s regulatory sector experts. Participating companies will have access to real-time insights into their innovation as well as guidance on regulatory expectations. Regulators also benefit. They can receive insight to inform future regulatory activities.
In relation to innovation, one of FSRA’s top priorities is collaboration. Because FSRA knows that innovation requires community, the Innovation Office is always looking for opportunities to work with others. It continuously engages with a wide range of stakeholders, partners, and industry experts. These engagements have resulted in three opportunity reports that reflect discussions about innovation within the insurance sector, mortgage broker sector, and the credit union sector. FSRA has also partnered with various innovation hubs to host pitch meetings, lunch-and-learns, and office hours. This includes FSRA’s partnership with Fintech Cadence.
L. El-Hadi began her presentation by quickly speaking about Fintech Cadence and its work in general. Fintech Cadence is the largest fintech incubator in Canada. Its mission and the core focus of its work is advancing the financial system to better serve all Canadians. To achieve this, Fintech Cadence works closely with the financial sector, entrepreneurs, regulators, government, and academia to ensure excellent products are available to Canada, Canadian consumers, small businesses, and businesses alike.
Fintech Cadence believes the financial ecosystem develops because of education, collaboration, and support. Education allows for talent to learn more about the industry. Fintech Cadence works with universities and academia on curriculum advocacy to ensure that fintech programs are being integrated into academic programs. Collaboration also focuses on research commercialization and integration within industry. Fintech Cadence collaborates with researchers, PhDs, and master students to see if their ideas can be commercialized and where they can bring value to the industry. Next, collaboration focuses on creating partnerships with stakeholders operating in the ecosystem to solve fintech challenges. Fintech Cadence identifies the challenges startups are having and asks how the innovation ecosystem can be complementary to the innovation rather than oppositional. Finally, support allows for the creation and care of early-stage fintech startups. As an incubator, these support efforts are focused entirely on early-stage fintech startups. To address gaps in the fintech ecosystem, Fintech Cadence developed a fine-tuned pipeline to allow fintech startups to thrive. The pipeline asks if talent, whether that’s university students or industry, knows that fintech solutions are needed in the market. Are they building those solutions? Are they working with industry to solve the challenges? Is the business growing and scaling? Is the business following an integrated model that can be scaled?
Fintech Cadence works with startups tackling problems across a number of verticals, including payments, Wealthtech, Insurtech, crowdfunding, blockchain, remittance, PFM, cybersecurity, ESG, and more. Canada’s strongest verticals are payment technology, lending tech, investment tech, and Wealthtech. For the purpose of today’s webinar, L. El-Hadi focused on Insurtech solutions. By nature of the industry, Insurtech is also another very strong fintech vertical in Canada, and it is only continuing to grow. Fintech Cadence believes that, if the industry continues to move in its current direction, Canada will be one of the strongest Insurtech countries globally.
What does the fintech sector look like in Canada? Fintech Cadence estimates that over 1,500 to 2,200 fintech companies are currently operating in Canada. Ontario is one of the leading provinces for fintech, with Quebec as a very strong second. There is also a lot of growth coming out of British Columbia. Alberta has also begun investing heavily in its fintech space, including insurtech. But what is it that makes an insurtech sector strong? Fintech Cadence believes it depends on the following variables and their interaction: Financial Institutions: Are the FIs engaged? Are they working with startups? Are they eager to engage in this work? Talent: Do we have talent? Canada is demonstrably strong in this area, as evidenced by its innovations in artificial intelligence and blockchain technologies. Support: Do the startups have the necessary support to succeed? Again, Canada is very strong in this area. Capital: Is there capital to enable startups? Canada has a strong venture capital investor and angel network that supports startups. Tech: Are there the appropriate and necessary technologies available to startups to enable their success?
L. El-Hadi concluded her presentation by noting how artificial intelligence will impact everything, including the ways in which traditional service providers will need to adapt to it and consumers’ changing expectations for products and services.
K. Martin asked the panellists if they could discuss further the partnership between FSRA and Fintech Cadence, which was launched in September 2024. S. Appave began, commenting that FSRA feels the partnership was a critical first step to supporting financial innovation in the fintech sector, thereby, making FSRA an active partner in the ecosystem. Furthermore, the partnership highlights the regulator’s approach to responsible innovation while utilizing Fintech Cadence’s innovation expertise and industry connections. L. El-Hadi added that the work each entity does – FSRA’s focus on regulation, and Fintech Cadence’s focus on innovation – is complimentary to one another, which makes for a strong partnership. S. Appave explained that FSRA hopes to achieve three key objectives with the partnership. They are: Establishing stronger connections between FSRA and the innovation ecosystem and fintech startups; Better understanding of the regulatory barriers and challenges to innovation; Bringing new and different insights and perspectives to inform FSRA’s approach to and activities within the innovation space; and, Increasing awareness of FSRA and its innovation mandate.
L. El-Hadi echoed S. Appave’s objectives, adding that, at times, founders and entrepreneurs don’t understand the regulatory components or how to build relationships with a regulatory agency. Fintech Cadence and this partnership aim to break down those barriers in knowledge so that startups can establish direct lines of communication and understand the regulatory environment and hurdles.
Two core features of the partnership are increasing awareness and engagement. Fintech Cadence has made great efforts to embed the innovation office into its programming and events to help increase the regulator’s awareness. It has also done a great job of curating educational and engagement opportunities. The partnership provides FSRA with new opportunities to share information on how the regulator supports innovation and experimentation through the TLEs and other regulatory tools. It also allows FSRA to identify companies that could be potential participants in the TLE environments. In short, this partnership makes interacting with a regulator less intimidating for startups.
Turning to the value proposition, K. Martin asked the panellists why the partnership is important, how it will help companies develop their innovative ideas, and how it is different from other partnerships. S. Appave replied that this partnership is a unique opportunity to showcase how a regulator and an innovation hub can work together to support responsible innovation. Identifying and understanding regulatory barriers and challenges is essential for FSRA to support fintech innovation and understand and track emerging trends. This partnership will provide important insights. S. Appave added that it is really uncommon to see regulators partnering with innovation hubs. Another way this partnership is unique is that it is not a one-off event; there is direct and ongoing engagement in a number of different ways, like the lunch-and-learns, office hours, FSRA’s presence at Fintech Cadence’s events, etc. L. El-Hadi jumped in to comment that one of the biggest challenges when it comes to launching a fintech startup is regulatory compliance. Many startups don’t know when they should speak to a regulator, thereby hindering their compliance and halting their deployment into the market. Thus, through this partnership, startups will now have a direct line of access to FSRA. Lastly, L. El-Hadi noted that not many regulators are willing to have these kinds of conversations, so the fact that FSRA is not only willing but actively integrating itself into the ecosystem and industry conversations is proof of the regulator’s commitment to building a stronger market.
K. Martin asked S. Appave if FSRA has received any pushback for the lighter regulatory oversight that comes with the TLEs, particularly from companies that are subject to full regulatory oversight. She explained that when working with a company to design a specific TLE for a specific product, innovation, or business model, it is for a very limited time. Plus, it depends on which angle you’re looking at the market from. Traditional insurers that are already regulated have some advantages in the market, like size, customer base, etc. On the flip side, startups face barriers when it comes to compliance or finding partnerships or customers. S. Appave explained that the TLEs are open to both incumbents and unregulated sectors. K. Martin asked both panellists to discuss Fintech Cadence’s programming and events, as well as target regulatory sandboxes and TLE participants. He inquired what the industry can expect to see over the next year. S. Appave explained how, for FSRA and the Innovation Office, regulatory sandboxes are about fostering collaboration. Thus, the regulator wants to encourage more firms to experiment and innovate without the fear of inadvertently breaching regulation. Sandboxes also allow regulators to see opportunities to adapt and adjust while maintaining consumer protection. L. El-Hadi commented that, across industry, all entities are increasingly interested in collaboration but don’t know where to begin. Plus, many entities are concerned about how data can be shared securely. Fintech Cadence provides its consumers with visibility so that they can understand how this collaboration will work, why it will help your product, and how it can be used to understand the potential harms or outcomes to consumers a product might have.
For those on the webinar wondering how my team can collaborate with or bring in fintechs, L. El-Hadi encouraged folks to simply begin the conversation. If your company has been discussing innovation but doesn’t know where to begin, contact FSRA and/or Fintech Cadence; they can and want to help.
K. Martin commented that many of the projects in question must be quite commercially or competitively sensitive. He asked how FSRA and Fintech Cadence manage confidentially to ensure the security of a company’s product or idea. S. Appave explained that confidentiality is built into the parameters of the TLEs and the TLE development process.
R. Jennings jumped in and asked the panellists if they could speak further about Ontario’s fintech innovation landscape, including the emerging trends and challenges. L. El-Hadi explained that, when looking at a fintech ecosystem, the easiest way to identify a thriving one is by looking at the financial sector. This means looking at insurance, all major banks, credit unions, etc. By nature of its size, economic development, and history, Ontario has many strong, established financial institutions. Quebec is also a strong region, especially when it comes to insurance. Western Canada has a strong credit union landscape. Atlantic Canada has very community-based financial systems. Because Ontario is strong in the financial sector, by default, its fintech sector is also strong thanks to the access and direct relationship between institutions. There is access to investment in capital. Plus, thanks to the population and number of universities, there is also a lot of talent. L. El-Hadi did put a caveat, though, that there are still other regions in Canada that are growing and strong in their respective segments, but, by and large, Ontario is one of the strongest.
Looking at trends and challenges within Ontario’s fintech sector, the following sectors have experienced considerable growth recently: the payment space, insurance, wealth tech and wealth management, neo-banks and neo-products, and prop tech (real estate and property management). One of Ontario’s most significant challenges has been and remains the amount of capital allocated to founders. Ontario investors are not adventurous. Investors are looking for investments with almost zero risk, especially when compared to American investors, who seem a bit more brazen and willing to incur some risk. Another challenge is the relationship between the financial sector and the fintech sector. While the two have a strong relationship, it can be challenging for fintechs to approach financial institutions (FIs) or break into the financial sector. Often, FIs will question the strength of fintech’s regulatory compliance or its value in terms of consumer retention. Finally, the last major challenge that many startups face is regulatory barriers. The partnership between Fintech Cadence and FSRA wants to address this. R. Jennings asked L. El-Hadi if there are any generational differences in interest in neo-banks and neo-products. L. El-Hadi replied that Canada tends to have conservative consumers; approximately 80% of consumers will stay with the same bank their whole lives. These newer products and innovations do tend to lean towards younger generations, but that isn’t to say that the wealth tech fintech sector is only for that cohort. There is a massive wave of solutions coming to market geared toward the baby boomers. These focus on wealth management and investment, wealth transitioning, retirement planning, etc.
The Ontario fintech ecosystem is clearly dynamic. Where does relationship building fit within this, and how important is it to the innovation landscape? L El-Hadi commented that there is a running joke at Fintech Cadence that you cannot build a fintech without some form of relationship with an FI or with the financial sector, whether this means building a sales relationship, a partnership, or a consumer testing relationship. Relationship building is, therefore, essential; fintechs will not be able to scale their businesses without it. That being said, the ecosystem is still trying to figure this out, given the challenges. FIs want to work with fintechs but don’t always know how or where to begin, and vice versa. S. Appave echoed what L. El-Hadi said, adding that a strong partnership like the one between Fintech Cadence and FSRA allows for a broader reach across industry.
R. Jennings then asked S. Appave if she could discuss FSRA’s relationship with other regulators across Canada. She replied that, generally, all regulators face similar challenges associated with the rapid rate of new and emerging technologies. All Canadian regulators are now trying to figure out and assess the impacts of this evolving tech on the financial sector while trying to stay current. S. Appave explained that FSRA does engage with its counterparts and peer regulators to share information, identify and share priorities, and maintain awareness of similar initiatives. For example, FSRA is aware that Alberta launched a regulatory sandbox in 2022 or that the AMF and OSC published a discussion paper on AI in 2023. FSRA can learn important things from other regulators, so sharing information is essential. What is important to remember that approaches and programming or initiatives are highly tailored to that environment; therefore, what occurs in one province may not be applicable to Ontario.
While FSRA maintains relationships with regulators across Canada, does it do so globally? The UK, Australia, and Singapore have all developed federal-level regulatory sandboxes for fintechs; do these international jurisdictions influence FSRA at all? S. Appave commented that, while all the aforementioned jurisdictions are more established regulators with national-level sandboxes, FSRA does learn from them regarding best practices. Considering that FSRA is comparatively early in its journey, looking at these more established jurisdictions can help to understand how sandboxes can act as a bridge between innovation and regulation.
K. Martin asked a few final questions before closing the webinar. He mentioned that one of the product features offered by CAFII members is that an insurer often underwrites them but actually offers them to the client through a distributor, like a bank or credit union. In many cases, a fintech innovation would require collaborating with two separate organizations that are partners but still wholly separate companies with different technologies and legacy systems. K. Martin asked if FSRA or Fintech Cadence had encountered this type of challenge and if either had any suggestions regarding moving forward with that slightly more complex business model. S. Appave commented that, from a TLE perspective, FSRA has not encountered that arrangement or any arrangement of that type yet. She added that nothing is out of the realm of possibility so that FSRA could encounter this opportunity in the future. If a fintech is thinking about something in that realm, she encouraged them to contact FSRA and the Innovation Office, who can provide sector experts and other people across the organization to create a path forward. L. El-Hadi added that if a fintech is servicing, as per K. Martin’s example, it needs to understand the whole lifecycle of that product and its service. When fintechs bring in other stakeholders as part of the process, issues around regulatory components or work navigation can arise. She also explained that one of the challenges in Canada is that insurance regulation is handled provincially, which means fintechs are not only building a product that needs to appeal to various stakeholders but also needs to comply with those stakeholders’ different regional regulations. Balancing this is a skill set entrepreneurs in this space need to have. This is why FSRA’s TLEs are so crucial because they provide support and safety for fintechs.
K. Martin remarked that this issue of provincial insurance regulation is one that CAFII often raises with regulators, mainly since many of its members operate across Canada. This is why harmonization, consistency, and collaboration are so important. L. El-Hadi agreed and added that complying with multiple regional regulations is expensive for a new company. For example, suppose a company is building and distributing its products in Ontario, where capital may already be limited, and wants to expand into Alberta. In that case, it will need more capital to scale the company, and it will have to hire a lawyer who understands Alberta’s regulatory compliance landscape. She remarked that if regulators want innovation, they need to think about how they can lower the cost barriers as much as possible to support startups. FSRA’s TLEs are an excellent way to do this.
On the topic of success, trying something new almost always comes with risk; it’s highly unlikely that 100% of the innovation projects FSRA takes on will be viable. This isn’t a bad thing, but rather a reality. K. Martin asked S. Appave if FSRA must articulate this to companies to stop them from using the wrong gauge to identify success. S. Appave replied that there are several different things companies need to consider when considering testing with FSRA’s TLE. First, companies will receive many insights into the viability of their product or business model. They will be able to see whether there’s the desired consumer uptake. These insights can, in a way, validate the potential for success. Secondly, companies will better understand the regulatory pieces impacting their products or technologies. L. El-Hadi mentioned that, as per FSRA’s findings, 8 or 9 out of 10 tech startups will not succeed. This can be an intimidating statistic for entrepreneurs. This is why we need more innovation and innovation monitoring to gauge whether this failure rate is declining each year. It is a tough sector to be in, no doubt about it; therefore, regulators and FIs need to do what they can to make it easier and more navigable.
The webinar concluded with a few final words from each panellist thanking CAFII and encouraging all audience members to contact FSRA or Fintech Cadence if they’d like to continue the discussion. K. Martin thanked the panellists and all attendees and terminated the webinar.
