Innovations in Canada’s Financial Industry

Every category of the financial markets in Canada is being reimaged. Innovation is happening at the smallest levels as start-ups and venture capital firms reimagine the way that people and companies interact with money. The financial tech markets have harnessed emerging and reimagined technologies like Machine Learning and AI. Seasoned banks and global companies have begun following the influence of plucky young innovators and the entire financial market has been disrupted – in the best way possible.

What’s Hot in Canadian Fintech

Annually, more than $500 million is poured into Fintech venture investments. These funds cover a range of businesses within the industry, tapping into potential in all areas of business. Payment processing, mortgages, insurance and wealth technology, and lending are among the top areas of investment for Canadian Fintech, and not surprisingly showing some of the greatest strides in innovation.

More than 600 fintech companies are in Canada, although that number is changing daily. The majority of these companies are centered around city centers, with a majority of companies operating in or around Ontario. There are start-ups and established firms across Canada, serving all segments of the industry with even more advances coming in improving automation, adapting to regulation, and increasing collaboration among large, staid companies who are partnering with smaller start-ups to provide financial services.

The Fintech Focus Industries

While you’ll certainly find venture start-ups and innovative, nimble companies in every field of the industry, certain segments are seeing tremendous focus and subsequent growth.

  • Mobile Wallets and Banking – Cash may have once been king, but now consumers are moving money online in a heartbeat. Mobile wallets and new approaches to online banking make it possible for consumers to pay bills, track spending through apps, transfer money to friends or businesses, and have everything they need financially at their literal fingertips.
  • Credit Scoring – You’d be hard-pressed to find a consumer who doesn’t know his or her own credit score. What used to be top secret information, is now completely commonplace across multiple banking platforms and dedicated websites. Want to know your score? Get it instantly. Want to be monitor changes? Get text and email alerts the moment anything adjusts.
  • Consumer Lending – Point of sale lending has become a tremendous asset to companies and consumers. Chief among the innovations in consumer lending, alternative lending is capturing up a third of consumer who are ready for new, improved options of short-term lending. POS lending has also helped fuel the online marketplace, where customers can effectively buy now safely online and pay later, and companies have confidence in the customer’s ability to repay thanks to improved lending algorithms.

Challenges in Fintech

The Canadian Fintech scene is growing despite the economic struggles that affected most companies as Canada navigated COVID-19. But beyond a global pandemic, there are specific challenges unique to the industry. A recent industry snapshot by consulting firm Accenture uncovered evidence of “regrettable talent losses to American “Big Tech” companies.” American companies expanding into Canada are creating a competitive talent marketplace, and some industry leaders captured in the Accenture report believe that Canada might be on the losing end of that competition, at least for now. There is hope, however, that many of these sharp minds will return to Canadian companies after they hone their skills in the much-larger American marketplace.