Fintech to Canada

Trends and opportunities

The market

The fintech ecosystem in Canada spans the Greater Toronto Area-Kitchener Waterloo corridor, Vancouver and Montreal. Toronto is a growing and dynamic fintech hub due to its status as the epicentre of the financial services sector in Canada, as well as its strengths in the digital ICT sector. Toronto, Montreal and Vancouver are all home to Canada’s major banks, leading universities, a robust start-up culture and offer easy access to incubators and accelerators. These factors have solidified Canada as a founding member in the Global Fintech Hub Federation- an international network of cities that fosters innovation across the world’s financial services industry and aspires to facilitate trade and investment in Canadian Fintech (Source: LTP).

The Canadian and Australian financial system share many similarities, both have highly concentrated banking systems and both are commodity currencies dependant on strong commodity exports. Due to their geographic location, Canada shares strong ties with the United States (US) and Latin America through trade and financial links. While Australia is heavily reliant on commodity links to Asia, China, Japan, Korea and South-East Asia.

Both Canada and Australia are home to some of the world’s largest and most profitable banks. Canada’s big five - Royal Bank of Canada (RBC), Toronto Dominion Bank (TD Canada Trust), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC) are very similar to Australia’s big four - Commonwealth Bank, ANZ Bank, Westpac and National Australia Bank. Although banks in both systems have strong profitability and attractive shareholder returns, Canadian banks invest a greater proportion of their earnings in international operations, while Australian banks return more to shareholders (Source: Financial Post).  Canada also has a strong network of credit unions, there are currently 623 credit unions in Canada with approximately 3000 branches, holding combined assets of C$350 billion. Credit unions in Canada have been active in their adoption of fintech as they are smaller and more agile allowing them to quickly adopting new technologies.

Canadian banks have been active in not only including responses to fintech as part of their growth strategy; but also investing in ecosystems which will position them to better compete in the market. Building an environment that produces innovative offerings is essential for banks to remain competitive and profitable in the years to come (Source: PwC).

Toronto

Behind Silicon Valley, the Greater Toronto Area is home to the second largest and fastest growing financial services centre in North America, and is emerging as a financial technology hub (Source: Mars) .4 Toronto has over 12,000 financial services firms that employ over 350,000 people, Toronto accounts for 20 per cent of the country’s gross domestic product (GDP) growth, which is more than New York, Boston, Chicago, Miami and San Francisco combined. Toronto’s financial service industry ranks ninth globally and third in North America (Source: Toronto Financial Service Alliance (TFSA)).

  1. Wealthsimple, is an online investment management service focused on making investing easier for millennials. Founded in 2014, Wealthsimple currently has over C$1 billion under management.
  2. Northside Inc has developed VerbalAccess which provides plain English access to data. It searches for information in a database and can initiate transactions – all though a voice interface.

Vancouver

Vancouver has also emerged as a fintech hub with a vibrant start up culture a small size which allows for community development. Vancouver is home to a booming start up culture and is described as having a unique lifestyle appeal to talented professionals and its close proximity to Silicon Valley and the Asian markets. Some notable Canadian fintech firms, which are based in Vancouver and have recently benefited from VC funding include:

  • Trulioo, a leading provider of global identity verification for the online payment industry
  • Zafin, which developed a relationship banking platform that uses advanced analytics to enable banks to be less product-centric and more customer-centric.

Competitive environment

The Canadian fintech sector has experienced exponential growth over the last five years. Toronto is the headquarters of all five major banks, and home to 44 colleges and universities which produce more than 38,000 skilled graduates in science, technology, engineering and mathematics each year. According to the Toronto Financial Service Alliance (TFSA), “Fintech companies doing business in Toronto benefit from one of the lowest software development costs in the industrialised world. Running a software development centre in Toronto is much more affordable than in London and New York City”, (Source: Toronto Financial Service Alliance (TFSA)). The United Kingdom, the US, Singapore and Australia are often cited as competitive global fintech hubs with their sizable financial industries, access to capital and widespread adoption of digital technology.

Tariffs, regulations and customs

To conduct temporary business in Canada individuals need visitor visas ETA (electronic travel authorisation), this may include (but is not limited too): business meetings, consultations, attending conventions and conferences, or negotiating contracts. Find out more on the Canada ETA website.

Distribution Channels

There are many conferences in Canada (Toronto, Montreal and Vancouver) now focusing on fintech that may be invaluable to foreign companies looking to learn about the market, gauge the competitiveness of their offerings, find like-minded companies and individuals to collaborate with, and scope opportunities for customers and partners for commercialisation.

Conferences

Business Development Bank Canada
Canada Fintech Forum-Montreal
Digital Finance institute Fintech Canada Conference
SIBOS - held in Toronto, October 2017

Links and resources

Canadian Securities Exchange
Global Affairs Canada
MaRS Discovery District-Fintech
Toronto Financial Service Alliance

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.