Canada’s sluggish productivity growth has become a central challenge for policymakers. In recent remarks, Senior Deputy Governor Carolyn Rogers of the Bank of Canada argued that increasing competition in Canada’s financial sector could be one of the most effective levers to restore dynamism and capacity in the economy. As Canada confronts trade headwinds and global pressures, financial sector reform may be a critical piece of the puzzle.
The Problem: Concentration and Productivity Slump
Rogers emphasized that Canada’s banking system is highly concentrated: six major banks control over 90% of total banking assets. Such concentration, while often credited with financial stability, can stifle innovation, raise costs, and discourage new entrants.
Canada’s productivity record has been weak: labor productivity has fallen in multiple recent quarters, and overall growth in output per worker lags behind many peer nations. In this context, Rogers argues that reforms that promote contestability and reduce barriers to entry are essential to unlocking latent growth.
Proposed Reforms: Real-Time Rail and Open Banking
To promote competition, Rogers highlighted two structural reforms nearing implementation:
- Real-Time Rail: A modern payments infrastructure that would allow instant, direct transfers and open up access to non-bank participants, reducing the control of incumbent banks over payments pathways.
- Open Banking: Granting consumers control over their financial data, enabling easier switching between institutions and better price transparency. This would lower switching costs and raise competitive pressure.
Rogers cautioned that these changes aren’t risk-free. Excessive competition in critical network sectors must be balanced with consumer protection, stability, and investment incentives.
Implications for CCCH & Hungarian-Canadian Relations
For Hungarian companies and investors engaged with Canada, or exploring entry into Canada’s financial or fintech sectors, some key takeaways:
- Opportunity in fintech & services: As Canada relaxes entry for non-bank participants (through real-time payments and open banking), fintech firms may find openings to partner, provide infrastructure, or offer niche services.
- Capital & investment flows: A more competitive banking sector can improve capital allocation and reduce borrowing costs in the mid to long term, which matters for joint ventures, exports, and investment projects.
For the latest updates and insights on Canadian-Hungarian economic relations and merely Canadian economic news, follow the Canadian Chamber of Commerce in Hungary accross our platforms.
Written for the Canadian Chamber of Commerce in Hungary News Section as part of our ongoing coverage of developments affecting Canadian trade, economy and international partnerships, October 2025