There’s something about Canada that inspires images of size and grandeur; whether it’s the expanses of beautiful lakes, the vista of stunning mountain ranges, or the jaw-dropping emptiness of its national parks.
“Big” is also word that comes to mind with the Finance and Insurance (F&I) sector. Payments Canada, who operate the banking ‘clearing houses,’ calculated business transactions in 2020 at over $10 trillion. It’s a sector that has shown robust resilience throughout the Covid crisis, and is now poised to grow further.
In the ‘traditional’ Finance and Insurance arena, Canada has one of the strongest financial services sectors in the world, comprised of banks, trust and loan companies, insurance companies, credit unions, securities dealers, finance and leasing companies, pension fund managers, mutual-fund companies and independent insurance agents and brokers. However, it’s in the emerging world of Fintech where the country is also making a name.
|Canadian Financial Services At A Glance|
|Canada’s banking system is one of the soundest in the world: it ranks second in the G20 and sixth among 141 countries according to the World Economic Forum, Global Competitiveness Index 2019-2020.|
While COVID-19 has radically changed the economic growth outlook around the world, Canada’s economy is expected to rebound to 5.2% growth in 2021 (source: GAC).
Canada’s 5 largest banks are all ranked in the global top 100 largest banks (source:TFI March 2021); 3 of Canada’s life and health insurers rank among top 15 largest in the world (source: TFI March 2021); $10 trillion in assets held by CDN financial institutions and pension funds (source: TFI March 2021).
Among OECD countries, Canada ranks 2nd globally in total venture capital funding (source: TFI March 2021). Accenture’s benchmarking model ranks 4 Canadian cities against 16 leading and emerging fintech hubs around the world, with Toronto and Montreal recognized as amongst the fastest growing globally (Accenture, March 15 2021).
While it may have started as a Silicon Valley buzzword (it only reached the dictionary in 2018) in response to the big banks in the wake of the 2008 crisis, ‘fintech’ has become an integral part of front and backend operations for any firm, in any sector, anywhere in the world, that handles money. Now standing at the intersection of finance, AI and data, the global fintech market is predicted to reach $324 billion by 2025.
The growth is being driven by disruptive new players; but then Canada is no stranger to technology and innovative startups. With the pandemic driving strong growth in almost all digital financial services, the Canadian market presents an exciting opportunity for the FinTech sector. Canada has won an ever-increasing across the country, with large fintech hubs in Toronto, Montréal, Calgary and Vancouver.
Those new companies need cash, so new Venture Capital (VC) firms are appearing from coast-to-coast. Toronto is now home to Radical Ventures, a C$471m fund with present investments in Sensibill and Drop, aimed at supporting startups with exponential disruptive potential. BDC Capital spinoff Framework Venture Partners also closed their first C$100m fund in early 2019, with offices in both Vancouver and Toronto and investments in the likes of TouchBistro and Wave. On the corporate side, Montreal-based Desjardins Capital announced the launch of a C$45m fintech-specific fund to better ground the institution, and its members, in the digital ecosystem.
But the success is being shared across the nation. British Columbia is currently home to over 120 Fintech companies. According to a 2021 report from Accenture 2021 report on Fintech in Canada, Vancouver is fast becoming a well-rounded technology hub. Building on 2016 analysis from the Conference Board of Canada which identified Vancouver as a stand-out centre for wealth management activities, the city’s key strengths include facilitating foreign direct investment; trade finance and settlement; and retail and corporate banking. Since then the city, rated one of the top 5 globally to live in by Mercer, has continued to attract the big players; in 2020 MasterCard opened its sixth global technology centre in the city, whilst both Amazon and Microsoft announced significant expansions northward into Vancouver, with the former planning to add 3,000 jobs to the city.
Finance and Insurance, along with Real Estate, account for about one-quarter of B.C.’s total GDP, and the government has made it clear that it is hungry to attract more businesses in this sector. The US challenger bank Chime established their first international office in the city in 2020, emphasising the importance of the availability of local talent in their decision.
Other notable success stories in recent years include the likes of Hyperwallet, part of the PayPal Group, Trulioo, leaders in identification solutions for financial organisations and FISPAN, delivering cloud-based solutions for banks providing commercial services.
In neighbouring Alberta, Calgary’s reputation as a fintech hub is growing fast. Calgary Economic Development emphasise the city is appealing to fintech firms due to ‘due to the concentration of capital-intensive companies, high-deal velocity, large deal size, foreign investments and individual wealth,’ a claim supported by Accenture, who pointed to the region’s well-rounded base of technology talent. Although Calgary has one of the lower concentrations of “digital” workers among Canadian cities, it has among the highest for overall technology employment, buoyed by the engineering talent working in the resources industry.
Major sector leaders include ZayZoon, a financial technology company on a mission to improve employee health through the use of responsible financial products. The company enables employees to instantly access their earned wages on-demand, delivering improved productivity, employee retention and recruitment, and ticks all the boxes for corporate social responsibility tool and financial wellness programme. Meanwhile, Symen, founded in 2016, aims to scientifically transform the debt recovery industry by combining behavioural science with data-driven insights to empower customers to resolve past due bills. Their client portfolio includes service providers, financial institutions, and utilities that use its technology to ‘digitally interact with their at-risk customers with compassion.’
And watch out for Helcim, who launched a proprietary payments stack in June 2020 to take on the likes of Stripe and Square in the debit and credit card processing space.
Calgary’s reputation as a supporter of start-ups received a major boost when Morgan Stanley paid more than $1 billion for Solium Capital. The company provides technology and services to support stock-based incentive plans. Its 3,000 corporate clients employ one million workers. Morgan Stanley stated that Solium’s connection to younger workers through the start-up economy was a key driver for the purchase.
Not to be outdone, Toronto lays claim to being the largest financial centre in Canada and second largest in North America, with nearly 210,000 workers, or three-quarters of the entire region’s Financial Services workforce. About 60% of these fintechs reside in the province of Ontario, with many of those occupying Toronto and the Kitchener-Waterloo corridor. Toronto is also headquarters to the country’s largest financial institutions, and is the banking and stock exchange centre of Canada. Toronto Finance International (TFI) is a public-private partnership created by the City of Toronto in 2001 to enhance and promote the competitiveness of Toronto as a premier global financial services centre. TFI works with the leading sectoral players, government and academia on collective initiatives and actions which drive innovation in the financial services industry. CBRE Research recently ranked Toronto fourth in ‘tech talent’ among 50 North American cities
In the increasingly important digital currency sector Toronto is home to Coinsquare , a leading secure digital asset trading platform for trading Bitcoin, Ethereum, and other digital currencies. The company proudly boats ‘since our founding in 2014 we’ve never lost a coin.’ The firm is on a mission to create a regulated and open financial platform for the world by leveraging blockchain technology.
In the same year Borrowell was launched with the mission to ‘help people make great decisions about credit’. It empowers Canadians to improve their financial well-being with free credit score/report monitoring, credit coaching tools & AI-driven product recommendations. The FinTech has partnerships with major names including CapitalOne, Scotiabank, EQ Bank and American Express. Borrowell was named one of the Top 50 Best Small Workplaces in Canada , as well as one of the Best Workplaces for Mental Wellness, Women and Millennials.
In a similar vein, Wealthsimple’s mission is to ‘democratise wealth, giving financial tools of the rich to everyone. The FinTech is known for its client-centric approach to financial products, including automated investing, commission-free stock and crypto trading, a savings account, and a tax filing software.
The city also hosts KOHO Financial Inc aimed at giving Canadians a new approach to spending and saving. It offers a full-service chequing account that comes with a reloadable prepaid Visa card that earns cash back on every purchase and integrated app that helps users spend smart and save more.
However, the regions of Canada are jostling for fintech dominance; until the 1970s it was Montreal that laid claim to being Canada’s commercial capital. The city’s finance sector still employs 100,000 people and is rated a creditable 12th in the Global Financial Centres Index and numerous foreign subsidiaries operating in the financial sector – names such as HSBC, AXA, Aon and BNP Paribas – also have offices in the city.
But amongst the giants of the past come the new generation. Since 2016 Flinks has helped businesses connect users with financial service. The FinTech enables businesses to connect users’ bank accounts, enrich their data, and utilize it to deliver better products. It provides the data layer needed to power the next generation of connected financial experiences. Flinks has become the leader in financial data connectivity in Canada and is well on its way to becoming a global leader.
With around 15% of Canadian fintechs located in the province of Québec, the Montreal area has become one of the country’s leading fintech hubs. A driver of Montreal’s track record has been the hub’s growing slate of fintech-specific venture capital firms and accelerators. Investors Luge Capital, Diagram Ventures, Real Ventures, Ferst Capital Partners and the Holt Accelerator are among the most active in the industry. With corporate-backed interest on the rise, National Bank continues to actively invest through its NAventures arm while Desjardins Capital announced the launch of a C$45 million fintech-specific fund in mid-2019. Several major Canadian fintechs, such as Lightspeed and Nuvei, are headquartered in the city, which also benefits from academic and technical research institutions such as CDL-Montreal.
There is also the well-established annual Canada Fintech Forum, run by the city’s industry association, Finance Montréal.
Montreal also benefits from being just 200km – a stroll, in Canadian terms – from the capital of Ottawa. Despite having the largest rural economy of any Canadian city, Ottawa is also home to a some future fintech giants. Mindbridge builds revolutionary new solutions to analyse financial data. Through the application of machine learning and artificial intelligence technologies, the FinTech’s platform detects anomalous patterns of activities, which could be genuine mistakes or serious fraud. Meanwhile, Salt Edge enables businesses to connect with end-customers’ bank accounts from across the globe. The financial technology company was found with the aim to create stable and secure interoperability channels between financial providers and end-consumers, bringing benefits to all the involved parties.
Until the impact of Covid, Canada’s events sector delivered high profile financial conferences and exhibitions which are now planning their in-person comebacks with a vengeance. Calgary hosts the International Trade Fair, Business and Investors Summit, a five day financial extravaganza, whilst Quebec University is host to the International Conference on Management Finance and Economics.’ Not to be left out, Toronto has the 5th ‘Global Achievers Entrepreneurship Finance conference.’
But there’s another element to Canada’s remarkable fintech success story. Thanks to Canada’s conference-friendly visa requirements and direct flights from across Europe, coupled with the depth of intellectual capital and some outstanding venues, organisations continue to look to Canadian cities as the ideal host destinations for their future events.
And when there’s a time for a break from moving and making money, a playground awaits.
Vancouver provides access to Whistler, offering some of the best skiing and snow-based activities in the world; and even to Yukon, Canada’s westernmost territory, offering everything from luxury igloo ‘glamping’ to dog sledding in some of the world’s most beautiful natural parks.
Or when you’ve finished changing the world in Calgary, pop up to Banff for a taste of ‘cowboy culture,’ although this can include swopping horses for helicopters for a taste of ‘heli-hiking.’ Whilst Toronto can offer everything from a walk around the top of the CN Tower to flights over or trips beneath Niagara Falls.
Fintech may be offering a new dimension to business in Canada, but for those in the know, there are some things that never change.
The Destination Canada Business Events team assists planners in bringing meaningful corporate, association and incentive events to Canada. Contact our team for connection to local expertize, impartial insights and bid assistance, or learn more about hosting your next business event in Canada here.