Researcher works to help 'underbanked' Canadians who fall between the cracks

Walking into a bank to withdraw money, or logging into an online banking site to pay a bill, are second nature for most of us. But for some Canadians who are “underbanked” or “un-banked,” these simple tasks are not so easy. Many people rely on the alternative or “fringe” banking sector such as payday lenders and cheque cashing services, often paying extremely high fees.

These same individuals, some of whom are new to Canada, often have difficulty obtaining basic credit products from traditional banks to start businesses or navigate short-term financial difficulties, and may incur steep costs when sending and receiving money internationally.

Finding a solution to this problem is one of the projects that associate professor Ryan Clements is working on, in his new role as the chair in business regulation law with the University of Calgary's Faculty of Law.

As a member of a research team led by Dr. Lindsay Tedds, PhD, Clements is looking at ways financial technologies can be used to provide low-cost financial products and services to the underbanked and un-banked, and to explore why these groups are often excluded from the traditional banking system.

“What is compelling right now is both the promise that technology is offering in banking and financial services, and understanding whether regulatory frameworks need to be adjusted to reduce barriers to entry for competition, and mitigate emerging systemic risk,” explains Clements.

Clements joined the law school this past summer. Much of his research focuses on innovation and technology, particularly as it applies to financial markets, regulatory frameworks and business processes, including blockchain, artificial intelligence and other innovative technologies.

“There are exciting opportunities in this area such as the ability to democratize finance, through innovations like open banking, peer-to-peer lending, using crypto-assets to transfer money internationally, and wealth management through A.I. driven robo-advisers, and to take financial products and services that were previously only available to people with high net worth and make them widely accessible from our phones,” says Clements.

How did a boy from southern Alberta become interested in financial innovation?

“When I was doing my economics degree at the University of Alberta, I started reading books about hostile takeovers and insider trading scandals,” he says. “I got a part-time job at Nesbitt Burns (an investment management company) doing research for investment advisers on structured finance products. I started getting really interested in financial engineering and innovation and went to law school knowing that I wanted to pursue work in financial markets and sophisticated business processes.”

In addition to his research mandate, Clements is excited to teach students about financial technology law and policy, and to hopefully inspire them the same way he was.

“I hope to give students the chance to be curious about how technology interacts with business and financial markets, and how regulators can also benefit from the same technology to protect investors and consumers, and maintain stable, competitive and efficient markets. I want to give students exposure to the law and the industry before they start practicing, because it is a really exciting time for the sector right now.”