Financial Technology (Fintech Industry)

Fintech is an emerging financial industry that applies technology to improve financial activities through new applications, processes, products, or business models, composed of one or more complementary financial services and provided as an end-to-end process via the Internet. Fintech can also be described as any innovative ideas that improve, automate and streamline financial service processes using the latest technologies to addresses core business needs of financial activities and firms.

 

In 2018, there were over 600 fintech companies in Canada across all verticals. Compared to over 4000 fintechs in the US and over 1600 in the UK, Canada’s numbers are quite high on a per capita basis. Following population trends, the majority of companies are located in Ontario, with Quebec and BC in second and third place, respectively. The flow of funding follows similar patterns, with Ontario receiving a slightly higher proportion of all funding.

Major fintech companies with over $1M in funding by VCs and/or have a high CB Insights’ Mosaic score are shown in the market map below:

Fintech Sectors

Fintech is an umbrella term that encompasses many established (Payments, Finance and Accounting) and emerging sectors (Digital Banking, Decentralized and Alternative Finance):

Companies in this sector include companies using blockchain technology for the finance services industry, cryptocurrency trading companies and more. This space includes companies providing services or developing technology related to the exchange of cryptocurrency, the storage of cryptocurrency, the facilitation of payments using cryptocurrency, and securing cryptocurrency ledgers via mining activities.

 

It also includes companies involved in developing blockchain applications related to smart contracts, crowdfunding, supply chain auditing, cryptocurrency, identity management, intellectual property, and file storage.

New technologies from Big Data to AI along with digital business models and marketplaces are transforming the way equity/debt funding, securities issuance, trading, M&A, facilitation of trade and advisory services happen today resulting in reduced costs, improved transparency, increased inclusiveness and more product innovation.  Such advancements in capital markets innovation has spurred regulators to stay on top of fintech trends, and ultimately creating it’s own new fintech sector called RegTech (or regulatory technology).

Banks have a long history of using technology to deepen relationships with their customers, enhance products and services development, improve their operations and modernize legacy IT systems. The pace of technological change is accelerating, bringing new challenges, however banks will continue to meet evolving customer preferences while also bringing trust to the technology equation. Technology is only one part of the transformation taking place in banking. In the digital era, trust is also at the centre of change. It is trust that underpins the fundamentals of banking: a great customer experience, strong prudential oversight, and a dedication to protecting privacy and data. (source)

The accounting profession is rapidly transforming partially due to productivity optimization available through newer technologies. Today’s accountant is no longer burdened with task-oriented projects. Instead, thanks to the shift in dynamic accounting technology, accounting software programs are becoming more automated and the role of the accountant is changing to that of a business advisor. This includes innovations in tax software, mobile accounting and automation tools. (source)

Companies utilizing technology to increase the speed, efficiency, accuracy, and convenience of processes across the insurance value chain. This includes quote comparison websites, insurance telematics, insurance domotics (home automation), peer-to-peer insurance, corporate platforms, online brokers, cyber insurance, underwriting software, claims software, and digital sales enabling. (source)

Fintech lenders employ the latest financial technologies to streamline the traditionally out-of-date and non-transparent lending process. Not only has fintech given lenders the power to speed up their payment processing times and de-mystify their policies, but it has also given lenders the ability to offer personalized experiences based on each loan and mortgage seeker’s needs. (source)

Companies developing software intended to facilitate transactions between businesses. This technology is primarily intended to improve the speed, security, and affordability of existing B2B Payment solutions. This includes companies involved in accounts receivable and accounts payable software, electronic invoicing, international payments networks, blockchain B2B solutions, payments analytics, virtual payment cards, and supply chain and procurement software. This also includes people from all over being able to transfer funds securely to anyone in the world, participate in the global marketplace, accept payments without a bulky credit card terminal, receive real-time alerts, and check their bank accounts.

Technology to help people make better decisions for banking, budgeting, loans and credit, renting or buying, retirement, insurance, taxes, and more. These include apps and software to simplify your finances, save smarter, build an investment portfolio and streamline the way you organise your bills.

Companies developing and leveraging technology intended to help facilitate the purchase, management, maintenance, and investment into both residential and commercial real estate. This includes sub-sectors such as property management software, IoT home devices, property listing and rental services, mortgage and lending applications, data analysis tools, virtual reality modeling software, augmented reality design applications, marketplaces, mortgage technology, and crowdfunding websites.

Regtech is the management of regulatory processes within the financial industry through technology. The main functions of regtech include regulatory monitoring, reporting, and compliance. Regtech, or RegTech, consists of a group of companies that use cloud computing technology through software-as-a-service (SaaS) to help businesses comply with regulations efficiently and less expensively. Regtech is also known as regulatory technology.

Wealthtech refers to the use of cutting-edge technologies such as artificial intelligence and Big Data, to provide an alternative to traditional wealth management firms. Wealthtech companies are advancing the investment and wealth management profession and offer varied solutions and platforms ranging from full-service brokerage alternatives, automated and semi-automated robo-advisors, to self-service investment platforms, asset class specific marketplaces, and investing tools for both individual investors and advisors.

Ecosystem and Resources

Key ecosystem participants in Canada’s fintech industry include fintech companies, investors, associations and community organizations, government agencies and financial-service related regulatory bodies, financial institutions, incubators/accelerators, universities and other academic institutions. Below you’ll find a list of organizations, resources and links that provide more information about Canada’s fintech industry.

Are we missing a link? Email us at info@ncfacanada.org for any other useful links you think we should add.

  • Blockchain Research Institute
  • Canadian Lenders Association
  • Canadian Regulatory Technology Association
  • Digital Finance Institute
  • FDATA North America
  • Fintech Cadence
  • National Crowdfunding & Fintech Association of Canada
  • Payments Canada
  • Paytechs of Canada
  • Toronto Finance International
  • Bank of Canada
  • Competition Bureau
  • Canada Deposit Insurance Corporation
  • Department of Finance
  • FINTRAC (Financial Transactions and Reports Analysis Centre of Canada)
  • Office of the Privacy Commissioner
  • Senate of Canada
  • Aviva Insurance (OneEleven) Digital Garage and Insurtech
  • BMO DMZ Fintech Accelerator
  • CIBC Live Labs
  • Intact Ventures
  • Manulife RedLab
  • Mastercard
  • National Bank Ventures
  • PayPal
  • Power Corp / Portage / Diagram
  • RBC Ventures
  • Scotiabank Digital Factory
  • VISA
  • BDC IT Venture Fund*
  • Conconi Growth Partners*
  • Extreme Venture Partners*
  • Ferst Capital Partners
  • Finance Montreal
  • Framework Venture Partners
  • Golden Ventures*
  • Hedgewood*
  • HIGHLINE Beta*
  • Holt Accelerator
  • Hub & Company Venture Studio
  • Information Venture Partners
  • iNovia Capital*
  • Luge Capital
  • MaRS Fintech Cluster
  • Mistral Venture Partners*
  • OMERS Ventures*
  • Panache Ventures*
  • Portag3 Ventures
  • Real Ventures*
  • Rhino Ventures*
  • Round 13*
  • Scaleup Ventures*
  • hite Star Capital*
  • Whitecap Venture Partners*
  • Yaletown Ventures*

*Funds that are not fintech-specific, but have made investments into fintech companies

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Global Fintech Ecosystems

Fintech is transforming the way financial businesses operate, collaborate, and transact with customers, regulators, and others in the industry all over the world.

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