The chief executive of Toronto-Dominion Bank is renewing his calls for regulations governing the financial technology sector, claiming that security breaches and solvency issues at a number of upstarts have put customers at risk.
Bharat Masrani first called on regulators to take a closer look at financial technology startups last year at the Toronto-based bank’s annual meeting.
Masrani repeated the sentiment Thursday morning in Montreal at this year’s annual meeting and added that the need for regulations is even more apparent now because of issues that he says have “plagued” a number of the new entrants.
He said that although competition is a good thing, newer technology-focused entrants in the financial services space are typically not subject to the same regulations as traditional banks.
The less onerous regulations could leave customers at risk of having their private information stolen or compromise the integrity of the financial system, Masrani said.
“Consumers must have the same assurances, regardless of who they deal with,” Masrani said.
However, Masrani declined to elaborate on what particular instances of solvency issues and data breaches he was referring to, saying only that there are “many examples” of such issues affecting new entrants.
Christian Lassonde of Impression Ventures, a venture capital firm focused on investing in the financial technology space, cast doubt on Masrani’s claims.
“Here at Impression Ventures we are tracking hundreds of fintech and related companies in Canada,” Lassonde said in an email.
“I’m pleased to say that currently we are not aware of a single instance of either a security breach or insolvency. While indeed there will always be isolated cases of both, declaring there to be a plague of them is a mischaracterization of what’s going on.”
Masrani also declined to specify which regulators or policy-makers he would like to see step in.
“It would all depend on what kind of player you are and what segment of the financial services you are after,” Masrani told reporters after the annual meeting.
Masrani noted that financial technology companies participate in various areas of the industry, from investments to lending and deposit-taking.
“When you have providers that are more bank-like, then I think it is important that they follow bank-like rules and standards that would make sure that their customers, or customers at large, are protected from issues such as solvency,” Masrani said.
He also noted that TD has struck up partnerships with certain financial technology upstarts and would consider acquiring such a company if the right opportunity presented itself.
“My shareholders would expect us to look at any proposition seriously, and we would, but lets put it this way, I’m not staying up at nights looking for an acquisition in the fintech space.”
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