Financial technology (fintech) has scaled up fast with financial institutions modernizing their service offerings and new fintech companies launching annually. Canada has seen exponential growth across the fintech sector – in 2019 there was $2.7 billion of investment. According to Invest Ontario, Canadian fintech adoption has increased from 8% in 2015 to 50% in 2019. In 2021, we continue to see growth as Canadian fintech attracted $4.8B in the first half of the year. Below, we will explore the growth and investment individual companies have experienced in this space as well as the different services that are offered to support customers, businesses, and startups that are in or relying on the financial technology space.
Customers are getting access to modern financial services
As a customer, you’ve probably relied on apps for your financial needs. Whether you’re relying on budgeting apps, investment apps, insurance, or credit monitoring and management, fintech applications have benefited the end user. Borrowell raised $25M in funding in early 2021. Beyond that, financial services such as banks and credit unions are investing in technology-driven products to offer their end users.
Financial institutions in Canada are also engaged in building fintech services and products for their customers – whether consumer or commercial. In 2018, the Bank Act removed barriers to entry into modern service offerings for banks, and now banks in Canada are able to invest in or partner with financial technology companies. Financial technology improves accessibility and inclusivity in banking and beyond. Venture and technology arms of banks, such as RBC Ventures, are building new technology in the finance sector – RBC Ventures released money management and cards earlier this year.
Businesses are benefiting from fintech
Though consumers are using these applications, businesses are also relying on technology now more than ever to operate, given that the pandemic forced many businesses to go digital and remote. There has been huge investment in the business-to-business (B2B) financial technology space. Double-digit raises across B2B fintech have happened with Sensibill, Coconut Software, Notch, Cinchy, Q4 Inc., PureFacts Financial Solutions, Finn AI, FundThrough, and countless others in the past couple years alone. Whether businesses need scheduling, receipt and expense management, financial planning, or similar services – fintech has them covered.
Data is underlying financial technology
Much like how many consumer financial technology applications in the United States are built on Plaid, we are seeing similar patterns here. Both financial institutions and fintech companies are building their new services and products off of API access to data. Montreal-based Flinks recently announced a $103M investment from National Bank and Toronto-headquartered Railz raised $12M USD in Series A earlier this year. The Financial Data Exchange (FDX) reported earlier in 2021 that 16M customers across Canada and the United States are using FDX API for open banking and open finance data sharing.
Canada has large players and impact in the financial technology space
Canada has experienced high investment, large acquisition, and even unicorns in its financial technology sector. Wave was the first large financial technology acquisition based in Canada, acquired by H&R Block for $537M CAD in 2019. Earlier in 2021, Wealthsimple announced a raise of $610M at a $4B valuation. Canadian companies like Freshbooks, Dapper and others have reached unicorn status alongside Wealthsimple, with companies like Clearbanc having their sights set on it, too. Also in 2021, Shopify entered the fintech game by announcing their ShopPay app. Prior to, Shopify had enabled customers to access Buy Now Pay Later (BNPL) options when purchasing on their ecommerce shop
The community and opportunities in fintech continue to grow
Fintech in Canada is hiring fast. Employment across all technology jobs experienced an increase by almost 60,000 positions in 2019, which now totals approximately 1.72M individual employees. With the growth in fintech and technology-driven financial services, the demand for talent continues. The University of Toronto launched a fintech bootcamp, and accelerators and incubators, such as Fintech Cadence, Station FinTech, and Holt Accelerator have popped up across the country to support new companies launching in this sector. Whether you’re looking to launch the next great startup in financial technology, work for a fintech company, or work in the tech vertical of a financial services company, Canada has a lot of opportunities and support available.
Financial technology sector will have a lasting impact
Fintech will continue to grow and is predicted, globally, to grow to a $324B market value by 2026. It’s an exciting time to be part of this fast-scaling sector. Investment, job opportunities, startups, and new services across financial technology will continue to positively impact Canadian businesses and customers.
