Highlights
Canada is rapidly becoming one of the leading FinTech hubs in the world. This is mainly due to the Canadian big six banks and financial institutionsʼ adoption of innovative technologies, and extensive collaboration with emerging FinTech firms that has seen improved efficiencies and product offerings over the past two decades.
According to PwC, the Canadian financial services industry spends over US$10billion per year in information technology alone and invests heavily in innovation and incubators focused on services including mentorship, funding, networking, and training.
The number of financial institutions and FinTech partnerships in Canada is substantially higher than in most other countries, with 62% of financial institutions actively involved in partnerships with FinTech companies. This is 15% higher than the worldwide average of 47%, and 9% and 18% higher than the average for the US and the UK, respectively.
The rates of partnerships between banks and FinTech are projected to increase exponentially over the coming period. Canadian market structure by category is dominated by payments, ecommerce and billing which makes up 25% of all FinTech companies in Canada currently. With 90% of remittances taking place offline globally, this represents a sizeable market opportunity for Canadian companies providing online solutions and reducing transaction costs. One leading Canadian market player is the ecommerce platform Shopify whose stockprice (Can$1350 at the time of writing), has tripled over a 12-month period due to its ongoing global expansion and new international partnerships, such as becoming Walmartʼs first ever ecommerce platform partner.
Personal finance and wealth management represent 13% of the FinTech market. Wealthsimple, Canadaʼs largest robo-advisor, is currently a global leader in its group with over Can$1billion in assets under administration. Lending companies represent 12% of the market with Borrowell being a frontrunner in the field. In late 2016, Borrowell began a partnership with CIBC Bank, the first partnership between a major Canadian bank and a digital lending FinTech. Since then Borrowell has seen consistent growth. In February 2021 it completed the acquisition of Refresh Financial, a leader in providing underserved Canadians with long-term access to affordable and sustainable credit, and raised Can$25 million in funding for the acquisition and to support future growth.
Recently, VC funding for InsurTech in Canada has been on the rise, an indicator of future investment trends. Examples include health insurance start-up League Inc. raising Can$25 million in Series A funding from high-profile, Canadian investors. The top two InsurTech companies in Canada are Mojio and League. Mojio, with total funding of US$80.7 million, a cloud platform of carapps and services. With growing teams in Canada, the US, and Bulgaria, the company employs a machine learning-powered big data analytics framework that helps businesses explore new revenue streams.
League has total funding of US$76.1 million. It is a data-driven digital health platform that provides a single access hub for employees to engage with their health, lifestyle, and benefit programs. It is North Americaʼs leading enterprise health OS which integrates ecosystems of more than 100 insurance carriers, healthcare partners, and HRIS systems. Customers use the platform to improve employee experience and reduce costs.
About 11% of Canada’s FinTech companies deal with security including award-winning start-up successes: BioConnect, APrivac and eSentire.
