With financial institutions updating their service offerings and new fintech in Canada businesses starting up every year, financial technology (fintech) has quickly expanded. Canada has experienced rapid expansion in the fintech industry; in 2019, $2.7 billion was invested.
Fintech adoption in Canada increased from 8% in 2015 to 50% of the total in 2019, according to Invest Ontario. Given that Canadian fintech attracted $4.8 billion in investment in the first half of 2021, growth is expected to continue.
The growth and investment that particular businesses have seen in this market, as well as the numerous services that are offered to clients, businesses, as well as startups that operate in or depend on the financial tech sector, will all be covered in the sections that follow.
Customers Now Have Access To Contemporary Financial Services
You have probably used apps as a consumer to handle your financial needs. Fintech apps have benefited the end user whether they are used for credit management and monitoring, insurance, investment, or budgeting.
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Early in 2021, Borrowell raised $25M in funding. In addition, financial institutions like banks & credit unions are spending cash on technology-driven products for their customers.
Fintech products and services are being developed by Canadian financial institutions for both consumer and business clients. Banks in Canada are now able to invest in or collaborate with fintech companies thanks to the Bank Act, which removed barriers to entry into the contemporary service offerings for banks in 2018.
- Fintech is beneficial to businesses
Though consumers use these applications, businesses rely on technology to operate now more than ever, as the global epidemic has compelled many companies to go digital and remote. There has been significant investment in business-to-business (B2B) financial technology.
In the last few years, Sensibill, Coconut Software, Notch, Cinchy, Q4 Inc., PureFacts Financial Solutions, Finn AI, FundThrough, and countless others have received double-digit raises. Fintech can help businesses with work schedules, receipts, and extra cost management, financial planning, and other services.
- The foundation of financial technology is data
We are observing similar patterns to the numerous consumer fintech applications built on Plaid in the United States. Fintech firms and financial institutions both use API access to data to create new services and products.
National Bank has just invested $103 million in Montreal-based Flinks, and earlier this year, Toronto-based Railz raised $12 million in a Series A round of funding. 16M customers in Canada and the United States are using the FDX API for open banking and open financial services data sharing, according to a report from the Financial Data Exchange (FDX) earlier in 2021.
- Canada has significant players and influence in the finance technology space.
Canada’s financial technology industry has seen significant investment, significant acquisitions, and even unicorns. H&R Block purchased Wave, the first significant Canadian-based financial technology acquisition, for $537 million CAD in 2019.
Wealthsimple announced a $610M raise at a $4B valuation earlier in 2021. Along with Wealthsimple, other Canadian startups like Freshbooks, Dapper, and others have achieved unicorn status, and organizations like Clearbanc have their sights set on it as well.
Shopify announced their ShopPay app in 2021, which marked their entry into the fintech space. Shopify had previously made it possible for customers to access Buy Now Pay Later (BNPL) options when making purchases on their online store.
- The fintech community and opportunities are expanding
Fintech in Canada is rapidly expanding. In 2019, employment in all technology jobs increased by nearly 60,000 positions, bringing the total to approximately 1.72 million individuals. The demand for talent is increasing as technology-driven financial services and fintech grow.
The University of Toronto established a fintech Bootcamp, and accelerators and incubators like Station FinTech, Fintech Cadence, and Holt Accelerator have sprung up across the country to help new companies enter this sector.
Whether you want to start the next great financial technology startup, work for a fintech company, or work in the software vertical of a financial company, Canada has plenty of opportunities and support
Fintech Growth in Canada
Since 2017, the number of deals closed in the Canadian FinTech sector has increased steadily, and the total investments made since 2018 have almost doubled. In 2019, it documented 241 fintech deals that attracted $2.7 billion in investment.
Despite a 62% decline in total funding raised by FinTech companies in 2020 compared to 2019, the first quarter of 2021 saw a significant increase. The total amount invested has already surpassed the total amount forecast for 2020 by 15%.
Financial institutions have begun to rely more heavily on Fintechs as the pandemic boosted more technology-backed business practices. Investors are thus supporting early-stage, smaller fintech companies that are tackling pandemic-related problems. 54% of all transactions in 2020 were for less than $1 million.
5 Top Canadian Fintech Companies To Watch Out For
Although Canada doesn’t really receive the same accolades for innovation and technology as the United States, it excels in the field of arising fintech firms. Payfirma, Quandl, Mogo, Shopify, and Cryptologic are the top five Canadian fintech businesses making a name for themselves by offering clients cutting-edge financial solutions.
Michael Gokturk established the Vancouver-based payment processing business Payfirma in 2010 with the goal of enabling customers to pay in any way, anywhere, and at any time. Under a single merchant account, it enables businesses to accept online credit and debit card payments for mobile, e-commerce, and in-store locations.
Payfirma uses a cloud-based platform to process transactions, making it simple to access business analytics like sales data. Numerous accolades and awards have been bestowed upon the business, including the ACT Canada Innovation Award in 2012, the CIX Top 20 Innovators of 2013, the BC Business Top Innovators of 2013, DigiBC’s Top 25 Most Creative Tech Companies in British Columbia in 2014, and Financial Technology Company of the Year at the Canadian Fintech Awards in 2015.
Between 2011 and 2013, Payfirma did receive C$5.5 million in angel investment. A C$13 million investment was made in Payfirma in 2015 by Dundee Securities, Ltd.’s division of Dundee Capital Markets.
Toronto-based Quandl runs a platform for alternative, financial, and economic data. Quandl, which was established in 2012 by Abraham Thomas and Tammer Kamel, gives users access to vast financial, economic, and social datasets from organizations like NASDAQ, Zacks Investment Research, and Zillow Group Inc. (Z).
Through an application program interface (API), Quandl makes it possible for users to access data in a way that best suits their needs. Many of the biggest American banks, consulting firms, and hedge funds are among its clients.
August Capital made a C$5.4 million investment in the company in 2015, and Nexus Venture Partners led a C$12 million funding round in 2016.
Shopify Inc. (SHOP) offers a multichannel cloud commerce platform for businesses of all sizes. Shopify, which was founded in 2004 in Ottawa by Daniel Weinand, Scott Lake, and Tobias Lütke, enables merchants to improve their overall customer satisfaction by managing multiple sales channels such as social media, web, and mobile.
The company had over 1.7 million customers in approximately 175 countries as of April 2021. Heinz (KHC), Budweiser (Anheuser-Busch InBev SA/NV (BUD), and Mondelez International are among the company’s notable customers.
Shopify went public in 2015 after raising C$100 million in Series C funding in 2013.
- Mogo Inc.
Founded in 2003, Mogo Fintech Inc. (MOGO) manages an online lending platform that offers millennials a range of credit solutions, including prepaid credit cards and short-term loans.
The business released MogoCrypto in 2018 to enable the buying and selling of Bitcoin. More than 1.6 million people had registered to use Mogo as of July 2021.
Because it offers quick access to a service at a reasonable price and prioritizes the user experience, Mogo is sometimes referred to as the Uber of finance. Greg and David Feller, the company’s founders, were inspired to help young Canadians pay debts more quickly after struggling to do so themselves while in college. In June 2015, the Vancouver-based business debuted on the Toronto r (FIG)
- Cryptologic Corp.
Since its founding by Rodney Stock Exchange (TSX), Fortress Investment Group LLC, a significant investor Since its founding by Thompson and Gordon in 2008, Vogogo Inc. has undergone a number of significant changes. In 2013, the business started concentrating on cryptocurrency and started to offer web-based business-to-business (B2B) risk management and payment solutions.
After going public in 2012, the business ceased operations in late 2016 after struggling to gain traction. After buying 14,000 mining machines and facilities in Quebec, Vogogo relaunched in April 2018 as a cryptocurrency miner and blockchain app development company.
The process by which transactions are validated and added to the blockchain’s public ledger, or public ledger, is known as cryptocurrency mining. It is also the method by which new cryptocurrency is created.
Fintech is expected to keep expanding and reach a $324 billion market value by 2026. Being a part of this rapidly expanding industry at this time is exciting. Financial technology investments, job opportunities, startups, and new services will continue to benefit Canadian companies and customers.