Canada is One of the Best Markets to Build and Test Innovative FinTech Solutions
By Elena Mesropyan for LTP
Being on the verge of tech-powered evolution, Canada’s FinTech landscape has been a hotbed of activity with over 100 Canadian FinTech startups raising over $1 billion since 2010. A progressive traditional sector, supportive government and international interest serve as the foundation for the strong performance of Canada’s FinTech industry – the six most powerful banks in Canada recognize that innovations are inevitable, so the banks have an incentive to be active participants, rather than facing challenges from powerful outsiders. By 2018, technology spending by Canadian financial sector is expected to hit almost $15 billion.
Just in 2016, venture capital financing in Canadian FinTech reached ~$138 million, up more than 35% on the year. While the total funding of its US colleagues has been much more generous, Canada’s FinTech witnessed an acceleration in comparison to the decline in the US. In fact, investments declined at least 30% in the US in 2016, while in the UK they fell nearly 25% and Singaporean FinTech investment sank 65%, according to some estimates.
“From a global stage, Canada is a relatively small market,” said Adam Nanjee to Reuters, who heads the FinTech group in Toronto’s MaRS research hub. “But it’s one of the best markets to build a company around innovation because we have a great test market, great infrastructure for financial services.”
Reuters also emphasizes that the province of Ontario has among the highest concentrations of tech firms outside Silicon Valley, according to the provincial government, thanks in part to cheaper costs and the cluster of Toronto and Waterloo area universities producing engineers and developers. In fact, Toronto hosts ~12,000 financial firms and 360,000 finance workers and makes up 37% of Canada’s total GDP, which makes the province a strong economic driver for the nation. Toronto has also been noted as North America’s second largest financial services hub after New York.
A strong collaborative culture among entrepreneurs is also contributing to the accelerated development and implementation of innovative solutions – Canada’s FinTech ecosystem has a unique lifestyle appeal to talented professionals and strategically important proximity to the world’s hottest FinTech hubs – Silicon Valley and abundant with opportunities Asian markets. National FinTech hub – Vancouver – is also known to be home to a variety of successful startups, including Trulioo, Zafin, Payfirma, FrontFundr and many more.
The uniqueness of Canada’s FinTech industry is in its enabling role in the national ecosystem – FinTech in Canada is an enabler first, rather than a disruptor. The traditional financial sector in Canada has been accepting to technology startups as it appeared to be the most productive course of development in the financial services industry. Understanding that the threat is more likely to come from the likes of Facebook, Google, Apple, Tencent, Alibaba and other international technology giants rather than the young counterparts, led to an unconventionally fertile ground for innovators.
Outlining expectations of Canada’s FinTech explosive growth, Christine Duhaime, Executive Director at Digital Finance Institute, shared in the report on Canada’s FinTech, “The FinTech space in Canada and in Vancouver faces an exciting opportunity ahead, including our founding membership in the Global FinTech Hubs Federation – an international network of cities that fosters innovation across the world’s financial services industry and aspires to facilitate trade and investment in Canada in FinTech.”
In the report on global FinTech hubs, the Global FinTech Hubs Federation notes that the FinTech industry in Canada has been gaining considerable momentum in recent years. Toronto boasts the largest financial services sector in Canada, followed by Montreal and Vancouver. Canadian FinTech companies are attracting increasing attention on both a local and international stage, as waves of investment capital are constantly reinvigorating the organic growth of the industry.
First appeared at LTP