Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Collaborating to
win in Canada’s
Fintech ecosystem
Accenture 2021 Canadian Fintech report
Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report

Introduction                                                    3
Executive Summary                                               4
Part 1: Canadian Fintech Ecosystem Analysis                     5
Part 2: Financial Services Industry Outlook and Trends          34
Part 3: Global Fintech Ecosystem Benchmarking                   46
Part 4: The Canadian Fintech Ecosystem: Looking Ahead           54
Appendix A: Global Fintech Ecosystem Benchmarking Methodology   58
Appendix B: Definition of Funding Types                         61
References                                                      62

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
As the pace of change continues to accelerate, industry boundaries blur;
financial institutions, now more than ever, are adopting the mindset of
technology companies. As both market and regulatory forces push these
Canadian companies into the spotlight, the financial services ecosystem may
be poised to deliver the most personalized and seamless digital experiences
Canadians have ever seen. This report offers insights into this ecosystem for
2020 in four parts:

Part 1: Canadian Fintech Ecosystem Analysis      Part 3: Global Fintech Ecosystem
We examine the current state of the Canadian     Benchmarking
fintech ecosystem - at both the national and     Using our benchmarking model, we rank
city level - in terms of growth, talent, and     four Canadian cities (Calgary, Montreal,
investment. We also discuss how incumbent        Toronto and Vancouver) against 16 leading
financial institutions (FI) are responding and   and emerging fintech hubs around the
collaborating, the importance of incubators      world. This quantitative model draws on 46
and accelerators, and the government’s role in   individual data points from various public
supporting even further innovation.              and proprietary sources, distilled into five key
Part 2: Financial Services Industry Outlook
and Trends                                       Part 4: The Canadian Fintech Ecosystem:
We elaborate on key emerging trends we           Looking Ahead
see as influencing the future direction of the   Finally, we summarize our findings and explore
Canadian financial services industry. These      opportunities to further accelerate the growth
include data ownership, privacy and digital      of the Canadian fintech ecosystem. Key
identity, the banking-as-a-service model,        themes moving forward will be accelerating
the importance of small and medium-sized         ecosystem collaboration, fostering innovation
business (SMB) clients, and several possible     policy and expanding global recognition.
industry impacts from COVID-19.

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Executive Summary

The Canadian fintech industry approached         adoption of digital among Canadians, the
the end of 2019 on a bull run, entering a new    long-term impact of COVID-19 on the pace,
decade with hundreds of nascent startups         shape and evolution of the fintech ecosystem
supported by record levels of investment.        remains to be seen.
Some of this success has been temporarily
overshadowed by COVID-19. Now cautiously         As policy catches up to consumer behaviour,
navigating out of quarantine, we look back at    Canada is already witnessing the emergence
an unprecedented year for Canadian fintech       of modern enablers built for a connected
while examining trends that may shape the        future. Several public and private bodies
future of the ecosystem.                         are pushing ahead with digital identity
                                                 projects, while banking-as-a-service models
Strong ecosystem partnerships coupled with       are blurring the lines of what it means to be
sophisticated investors have helped Canadian     a “fintech”. The pandemic also bared other
fintech startups during the crisis. Incumbents   opportunities and gaps in the market. For
and startups alike have also found innovative    one, fintechs demonstrated their resilience
ways to use their platforms to assist clients    in a socially distant economy. The industry at
and the public at large during the pandemic.     large may also help set new standards in our
Venture capitalists also remain optimistic       post-pandemic world in areas such as credit
about future industry prospects, particularly    decisioning and small business solutions.
given the country’s strong talent base and       Cloud, AI and API technologies also stand to
cross-border appeal.                             offer evermore personalized and seamless
The changing dynamics between fintechs
and other ecosystem participants - including     Looking ahead, the Canadian ecosystem
incumbents, innovation hubs and the              remains poised for growth. Our global
government - are also of interest this year.     benchmarking study found that while
As more institutions develop technology          Canadian cities are benefitting from the basic
partnerships, new strategies are emerging        factors necessary to achieve international
for both serving and protecting customers.       leadership, major hubs may still have room
Concerns about the privacy and security of       to build stronger reputations as world-class
consumers have been raised in recent public      fintech communities. Hubs such as Calgary,
consultations particularly when it comes to      Montreal, Toronto and Vancouver might
rising usage of screen scraping technology.      achieve this by fostering further innovation,
While the pandemic has accelerated the           collaboration and international expansion.

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Part 1:
Canadian Fintech
Ecosystem Analysis
Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
I. Canadian Fintech Overview

Despite the challenges brought about by the global pandemic, 2020 remained
an exciting year for Canadian fintech*. As the ecosystem evolves, new
partnerships are being forged and international recognition is on the rise.
Although long-term trends shaped by COVID-19 remain to be seen, many
Canadian fintechs and financial institutions stepped up and pitched in from
coast-to-coast, despite the uncertainty. Looking ahead, we remain optimistic
about the country’s tech talent as well as the prospects for Canada’s growing
fintech hubs.

Canada’s Fintech Ecosystem is Evolving              See the Venture Capital section for further
Last year the fintech ecosystem flashed             investment analysis.
signs that may indicate shifts in the broader
industry are taking root in Canada, perhaps         Aside from investment, the slowing rate at
accelerated by the pandemic.                        which Canadian fintechs are being founded
                                                    may indicate Canada’s fintech ecosystem is
By the end of Q3 2020, global fintech deal          broadly evolving. The country is now home to
activity had declined by 24% in the prior           approximately 700 fintechs, with 18 of those
12-month period.1 While preliminary global          founded in 2020. This is the second straight
Q4 figures indicated a bounce back may be           year in which the number of fintechs founded
underway, both deals and dollars were still on      has declined, and represents a material drop
track to decline from last year.2 Notably, global   from the 43 founded in 2019 (see Figure
seed-stage deals have been projected to fall to     1.1). Such a decline may be attributable to
37% of total activity in 2020, with later-stage     various interrelated trends, with early-stage
deals gaining in share.3                            financing challenges discussed above being
                                                    one possibility. The economic recession
While Accenture analysis found early-stage          initiated by COVID-19 may have also caused
deals’ share of deal volume stayed relatively       some would-be entrepreneurs to temporarily
consistent in 2020, average early-stage deal        pause projects. Based on research conducted
size has dropped since the beginning of the         throughout the rest of this report, longer-
pandemic.4 Venture executives have lamented         term possibilities may include an accelerating
this challenge over the past year. After            convergence of offerings leading to a more
graduating Acceleprise’s first Canadian startup     crowded market, or the rise of later-stage,
cohort in 2020, CEO Michael Cardamone               large-scale fintech employers. Examples
stated his team “didn’t fully realize how           of the latter might include fintechs such as
much of a funding gap there is in Toronto for       Lightspeed or Wave, who both achieved
the pre-seed stage”.5 Likewise, Brightspark         high-profile exits in 2019 while continuing
Ventures’ Managing Partner Mark Skapinker           to expand the breadth and depth of their
described Canada’s situation in 2020 as “a          services across industry boundaries into 2020.
little bit of a seed crisis”.6 On the other end
of the spectrum, one area where Canada may
be diverging from global trends includes so-
called fintech “mega-rounds”. Whereas 2020           *This report defines Canadian fintechs as those firms that are
                                                    headquartered in Canada, founded after the year 2000, and
represented a high watermark for these major        whose main products leverage technology to offer financial
deals globally as high-tech solutions caught        services that complement or compete with products provided
                                                    by established financial institutions.
the attention of investors during COVID,
Canada’s share has declined as of Q3 2020.7,8

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Figure 1.1: The number of Canadian fintechs founded, 2000 – 2020. The number of new fintech companies
established has declined since 2017.


     80                                                                                                                                  75
                                                                                                             70            70
     60                                                                                              56
                                                                                              42                                               43
     40                                                                                  35

                  15                                 15                    15    15                                                                    18
     20    11                                 13
                         8      8      6                    6      9

          2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020

                                                                         Founding Year

Source: Accenture analysis of Crunchbase, Pitchbook, FinCadence, Maple FGS and CB Insights data.

Nonetheless, Canada still has opportunity for                                   at which they can partner and collaborate.
growth when it comes to fintech adoption                                        The Global Alliance Fintech Link, for example,
and financing rates (see Part 3: Global Bench-                                  is designed to “streamline the partnership
marking). As these Canadian fintech leaders                                     process for fintechs by providing clear
have emerged, public shareholders and early                                     visibility of the customer problems facing
acquirers may now be looking past growth                                        banks”.9 US-based companies and investors
to profitability. During this period of refine-                                 are already betting on this trend accelerating.
ment, new opportunities may slowly begin to                                     Former CTO of Koho, Kris Hansen, departed
emerge at the seams between large-scale, es-                                    the Canadian challenger bank in October
tablished fintechs and incumbent institutions.                                  2020 to co-found a “marketplace”, Synctera,
Moreover, experienced talent incubated within                                   designed to bring US community banks
these mainstay businesses may go on to lead a                                   and fintechs together. Canada is already
new wave of innovative Canadian fintechs.                                       on the company’s roadmap, according to
Additionally, two further key trends observed
in recent years are set to drive the evolution
of the Canadian fintech ecosystem: 1) part-
nerships between fintech startups and in-
cumbents, and 2) growing global ecosystem
                                                                                      “Larger financial
                                                                                       institutions are

In recent years, a significant increase has
been observed in the number of fintech-
incumbent partnerships, often designed to
bolster differentiated products and services.                                            accelerating
Larger institutions have accelerated the ways
and means in which they engage innovation
partners, described in detail in the Canadian
Financial Institution Ecosystem section below.
Some, such as CIBC, Bank Leumi and National
Australia Bank, have launched dedicated
channels through which to accelerate the rate
Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Finally, global attention and expansion                            An Overview of Canadian Hubs Poised to Grow
plans have become a more common sight                              As part of this report Accenture scanned the
among Canadian fintechs. Seven Canadian                            Canadian fintech ecosystem identifying nearly
companies recently appeared in CB Insights’                        700 fintechs across the country (see Figure
global 2020 Fintech 250 list.11 Mindbridge AI                      1.2). About 60% of these fintechs reside in
and Trulioo were also featured in the World                        the province of Ontario, with many of those
Economic Forum’s Technology Pioneers of                            occupying Toronto and the Kitchener-Waterloo
2020.12 Moka (formerly Mylo) exemplifies the                       corridor. Given the many new and exciting
global dynamic well. After being featured                          technology developments across Canada,
in KPMG’s 2019 Fintech100 list, the savings                        below we highlight key developments outside
app was chosen by the UK’s Department for                          of Southern Ontario.
International Trade to join a trade mission
to Britain.13 More recently, Moka announced                        Vancouver
plans to expand to France and beyond.14                            British Columbia is currently home to over 120
The company’s decision to swap names                               fintechs, with Vancouver itself fast becoming
was a direct consequence of going global,                          a well-rounded technology hub. US-based
with moka having fewer pronunciations and                          Chime established their first international
meanings across languages according to the                         office in the city in 2020. The challenger bank
CEO. Such commercial missions are becoming                         cited the city’s natural north-south disposition
more commonplace for Canadian fintechs.                            to American hubs as well as talent quality16,
The Finance Montréal cluster recently led                          factors which Canadian executives and
a number of foreign trips to better connect                        founders interviewed for this report reiterated.
fintechs of that city, while Toronto Finance                       Other notable success stories in recent years
International put out a call in October 2020                       include the likes of Hyperwallet, Grow, Trulioo,
for fintech delegates to join virtual sessions in                  Koho, FISPAN and Mogo all announcing either
Tokyo, Singapore and the UAE.15                                    major rounds of funding or exits. In early 2020,
                                                                   the federal government invited MasterCard to
                                                                   open its sixth global technology centre in the
Figure 1.2: The nominal distribution of Canadian                   city, with a total planned investment of C$510
fintechs in operation by region, 2020.                             million.17 Additionally, both Amazon and
                                                                   Microsoft have recently announced significant
                                                                   expansions northward into Vancouver, with
                                                                   the former planning to add 3000 jobs to the
                                                                   city in the coming years.18

                                  40                 Manitoba

    Source: Accenture analysis of Crunchbase, Pitchbook,
    FinCadence, Maple FGS and CB Insights data.

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Like Vancouver, Calgary’s reputation as a
fintech hub is a quickly growing one; 80%
of Alberta’s fintechs reside in the city. The
city is already home to a well-rounded base
of technology talent. Although Calgary has
                                                       “Montreal has
one of the lower concentrations of “digital”
workers among Canadian cities, it has
among the highest for overall technology
                                                       become one of
employment, buoyed by the engineering
talent working in the resources industry.19
The last few years have also seen provincial
                                                        the country’s
politics continue to play an influential role
on the city’s tech community and innovation
economy.20 Meanwhile, fintech activity is on
                                                       leading hubs.”
the rise. Morgan Stanley’s C$1.1b acquisition
of Solium Capital, and Symend’s C$73m Series
B round, one of the largest in the province’s
history, are significant bright spots in the
last two years.21 Helcim, who launched a
proprietary payments stack in June 2020 to        Fintech Station co-working space, and backer
take on the likes of Stripe and Square, will be   of the newly created AMF-Finance Montréal
another Calgary challenger to watch.22 The        Research Chair.25
city’s fintech ecosystem ended the year on
a high note after Neo Financial’s CAD $50         Atlantic Canada
million financing round. The startup is seeking   Collectively the Atlantic provinces made
to build the country’s newest neobank.23          up one of the smallest hubs examined, with
                                                  approximately 14 fintechs headquartered
Montreal                                          there. And yet there are many reasons to
With approximately 15% of Canadian                be excited about the future of East Coast
fintechs located in the province of Québec,       fintech. Highlights include Canada’s largest
the Montreal area has become one of the           ever venture deal, at C$515 million, going
country’s leading fintech hubs. A driver of       to St. John’s-based fintech Verafin in 2019,
Montreal’s track record has been the hub’s        followed by its acquisition by Nasdaq in late
growing slate of fintech-specific venture         2020 for USD$2.75 billion.26,27 As part of the
capital firms and accelerators. Investors Luge    deal, Nasdaq committed to maintaining the
Capital, Diagram Ventures, Real Ventures,         company’s St John’s headquarters, as well as
Ferst Capital Partners and the Holt Accelerator   investing in local talent, R&D and corporate
are among the most active in the industry.        citizenship. Discussions with fintech founders
With corporate-backed interest on the rise,       and executives from the region revealed
National Bank continues to actively invest        quality of life and cost competitiveness as
through its NAventures arm while Desjardins       top reasons for choosing Atlantic Canada as
Capital announced the launch of a C$45            a home base.28 Atlantic Canada is home to
million fintech-specific fund in mid-2019.24      competitive talent when it comes to technical
Several major Canadian fintechs, such as          roles such as developers, especially compared
Lightspeed and Nuvei, are headquartered in        to hubs such as Toronto and Montreal where
the city, which also benefits from academic       recruits may be courted away by larger
and technical research institutions such as       players. Given the region’s highly trained,
CDL-Montreal. The city’s industry roundtable,     bilingual workforce, work-from-anywhere
Finance Montréal, rounds out the robust           policies coming in the wake of the pandemic
ecosystem as the purveyor of the annual           may spur further hiring activity and fintech
Canada Fintech Forum conference, the              growth in this region.29

Collaborating to win in Canada's Fintech ecosystem - Accenture 2021 Canadian Fintech report
Canadian Fintech Verticals to Watch                  Canadians struggled to pay bills on time
As exciting developments unfold across the           and manage monthly expenses; COVID has
Canadian fintech ecosystem, three verticals          exacerbated these challenges.35 In response,
are particularly well-positioned for growth          a complement of PFM fintechs have thrived in
given current market trends: RegTech                 Canada to support customers, such as KOHO
(Risk), WealthTech, and personal financial           and Moka. Watch for more fintech-incumbent
management tools (PFM).                              partnerships in this areas as well, both big
                                                     (e.g. Sensibill and JPMC) and small (e.g. DUCA
Recent drivers of RegTech adoption include           and Cacheflow) demonstrating the value
pressure to reduce growing compliance                that can be achieved by working together.
costs, increasing technical debt, mounting           As consumer early-adopters have demanded
practitioner workloads and rapidly evolving          better digital experiences, the broader market
regulations. A recent study estimated that           may soon take notice of these powerful new
Canadian financial institutions spent over           tools designed to help manage financial
USD$5 billion on AML compliance in 2019,             wellbeing, especially in the wake of COVID.
with 96% of Canadian FI’s indicating they
expect cloud-based KYC utilities to provide          The Payments, Lending, Back Office, and
standard support for these processes within          Digital Currencies verticals are still amongst
five years.30 It’s little surprise then that         the largest by number of Canadian fintechs
Canadian RegTech startups such as Trulioo,           (see Figure 1.3). However, fintechs operating
Assent and Verafin have set funding records          in or across the RegTech (Risk), WealthTech,
while achieving international recognition.31,32      or PFM segments may be some of the best
                                                     poised for future success in the coming years
The Canadian ecosystem has also benefitted           should these trends continue or accelerate.
from an uptick in both retail and enterprise
WealthTech activity. Fintechs are now looking
                                                     Figure 1.3: The distribution of Canadian fintechs in
across the investment value chain to simplify        operation by service offering, 2020.
the end-to-end investment process, from
manufacturers through to individual investors.
Power Financial’s Portag3 Ventures doubled                                Capital Markets       3%

down on this thesis in early 2020 with a C$3                                          7%
million investment in Conquest Planning,                                                                      21%
complementing their popular B2C portfolio                               9%
company Wealthsimple.33 CI Financial
also added to their WealthTech stable via a
partnership with analytics platform D1g1t,        Digital Currencies/FX
as well as the full takeover of Wealthbar                           12%
in May 2020. National Bank followed suit                                                                                  14%

by expanding their stake in competitor
Nest Wealth in July. The industry may see                             Risk
consolidation and more strategic partnerships
in this space in the near future, especially                     Personal Financial                         Back Office
by institutions looking to rapidly build                        Management (PFM)
capabilities, reduce cost to serve and improve                                              Management
investor experiences.                                                                       9%

The average Canadian household debt-to-
income ratio now sits at over 170% as of Q3          Source: Accenture analysis of Crunchbase, Pitchbook,
2020.34 Even prior to the pandemic, some             FinCadence, Maple FGS and CB Insights data.

Canada is Benefitting from Fintech Brain Gain                                  While on the whole Canadian hubs are
CBRE Research recently ranked Toronto fourth                                   experiencing net brain gain, interviews with
in tech talent among 50 North American                                         fintech executives as part of this report
cities, after the Bay Area, Washington, D.C.                                   uncovered evidence that regrettable talent
and Seattle. Vancouver, Ottawa and Montreal                                    losses to American “Big Tech” companies are a
all landed in the top twenty.36 In particular,                                 popular concern, both at home and abroad.38
Toronto’s tech potential draws from its high
ratio of “brain gain”, or the difference between
a region’s number of technology jobs and the
number of those technologically-educated
there. By this measure, every Canadian city
evaluated except Ottawa has achieved net
brain gain over the last few years (see Figure

Figure 1.4: Chart represents top 15 North American cities by net gain. Ottawa has also been included to
provide a holistic Canadian perspective in-line with the other fintech hubs examined throughout this report.



                                   45,000          42,817





  Difference in the number         15,000
   of technology degrees
   granted vs. number of           10,000
  technology jobs created           5,000                                                                   2,643   1,891


                                  (10,000)                                                                                  (6,214)

Source: Figure 6, 2020 Scoring Tech Talent report, CBRE Research
Note: Chart represents top 15 North American cities by net gain, plus Ottawa

US tech leaders continue to expand their            to start abroad. Some Canadian fintech
Canadian presence, such as Amazon’s                 entrepreneurs are opting to first start their
aforementioned Toronto and Vancouver office         businesses elsewhere, tapping into larger
expansions set to add 3500 jobs across both         markets, robust ecosystems and high-profile
cities.39 While such expansion is a significant     VC’s before returning home. Popular markets
positive contributor to the Canadian economy        to scale include the US and UK, where some
and brain gain, it nonetheless increases local      fintechs maintain a permanent presence while
competition for talent. Some reasons cited          acquiring top-tier international clients.
by fintech executives for these regrettable
losses included generous signing bonuses,           Even as more Canadian graduates choose to
secondary perks and brand prestige.                 work abroad, data compiled by BDC shows
Abroad, research by the Munk School of              that 2018 represented a five-year high for
Global Affairs found that 25% of STEM               skilled foreign workers as a percentage of
graduates from top Canadian universities            Canada’s total population.43 Canada’s ratio
left Canada after graduation for work.40 The        has slowly edged up to 0.28% since 2013,
rate is higher for certain professions, with        representing a concentration nearly six times
nearly half of Canadian software engineering        that of the US. This growing gap is attributable
graduates employed outside of the country           to Canada’s progressive immigration policies
working for US companies such as Microsoft,         relative to the United States, which have
Google and Facebook. Some growing fintechs          been lauded as “the most elaborate and
attempting to bootstrap have cited this as a        longest-standing skilled labour migration
cause for concern, particularly when Canada         system in the OECD”.44 Former US President
has historically struggled to scale startups into   Trump’s decision to ban green cards and
true multinational leaders despite investments      suspend H-1B visas in mid-2020 may have
in public research and education.41 A               widened this gap further, with several US tech
common reason for heading south is higher           companies initially voicing concerns over the
compensation. Of the 50 cities analyzed in          decision and Canada seizing the opportunity
CBRE’s 2020 Scoring Tech Talent report, the         to court skilled foreign workers who may
five Canadian hubs examined came last for           have suddenly found themselves stuck.45
average wage, partly owing to the stronger US       Regardless, continuing this momentum
dollar.42 It’s worth noting, however, that when     may now be especially important; Canadian
adjusted for talent “quality”, the same study       immigration dropped off dramatically during
found Canadian cities such as Vancouver and         pandemic travel restrictions, which have
Toronto host among the highest value tech           continued to linger well beyond America’s
workers in North America.                           tumultuous 2020 election season. Novel
                                                    initiatives, such as virtual work permits,
A related theme identified during discussions       have already been proposed as possible
with serial entrepreneurs and fintech               workarounds until the situation stabilizes.46
executives for this report was the choice

Canadian Fintechs Respond to the COVID-19 Pandemic
As the coronavirus swept across Canada, financial institutions were among those organizations
forced to respond, adapt and innovate. The crisis weighed on some startups; 24% of those
in Canada, including some fintechs, made the decision to lay off staff due to the virus’
effects as of May 2020.47 By June, some startups showed promising signs of rebounding by
rehiring workers, while others focused intently on retooling their products and services to
accommodate the new reality.48 With digital at their cores, these fintechs have been among
those well-positioned to support clients with the means to navigate the crisis (see Figure 1.5).
In the short-term, some of these offerings may remain some of the best suited for continued
physical distancing measures. Longer term, later adopters who have experimented with fintech
during the pandemic (both B2C and B2B) may indeed become regular users, further increasing
market share and driving growth.

Figure 1.5: Selection of Canadian fintechs who pivoted their offerings to support customers impacted by COVID-19.

Fintech Description              COVID-related Challenges Opportunities and Solutions

Borrowell: Helps                  Customers urgently              Accelerated the roll-out of a new tool called Boost
customers make better             seeking information about       which predicts upcoming bills to help manage cashflow,
decisions about credit.           their credit standing, how      plus covers gaps with an interest-free cash advance.
                                  to manage debt and stay         Also added a feature to ensure mortgage deferrals are
                                  on top of finances.             captured correctly on one’s credit report.49

Fundthrough: Online               Many SMB’s suffered a           The company committed to waiving up to C$10 million in
invoice factoring for             major loss of business and      fees for its SMB clients during the crisis.50
small and medium-sized            struggled with managing
businesses (SMB’s).               cashflow.

KOHO: Prepaid Visa with           Customers, particularly         Partnered with staffing platform Hyr to allow retail and
cashback, plus saving and         gig workers, needed             restaurant workers using KOHO to access C$100 of the
budgeting tools.                  quick access to cash and        Canadian Emergency Response Benefit up to three days
                                  emergency response              early.51 KOHO later piloted this feature across all their
                                  benefits.                       clients.

Boss Insights: Digitizes          Business borrowers              Boss Insights launched their CARES platform in May,
the commercial lending            reported confusion and          specifically tailored to streamline PPP applications and
process while enabling            difficulty accessing the        credit calculations for both lenders and borrowers, who
insights.                         US Paycheck Protection          can connect their financial data directly to the platform
                                  Program (PPP).                  via API’s.52

Nesto: Allows borrowers to        Prospective home buyers         While the Nesto platform itself reported a surge in use
quickly search and apply          were challenged by              during the pandemic, the company also offered users
for a mortgage online.            the sudden lack of in-          and their family free access to Dialogue, a telemedicine
                                  branch services available       app allowing virtual consultations with nurses and
                                  or preferred to remain          physicians.53
                                  socially distant.

JUDI.AI: AI-driven loan           FI’s were required to           CEO Gord Baizley committed the startup to pivoting
adjudication platform for         rapidly evaluate credit         from their “short-term product roadmap” to help FI’s
financial institutions (FI’s).    applications and distribute     accelerate the dissemination of the Canada Emergency
                                  millions in emergency           Business Account.54
                                  funds to SMB’s.

II. Canadian Fintech Venture Capital

As of Q3 2020, year-to-date venture investment across all Canadian industries
totaled CAD $3.5 billion - down nearly 26% in dollar terms as compared to Q3
2019 YTD figures.55,56 Now against the backdrop of COVID-19, venture capitalists
are positioning their fintech portfolios for greater uncertainty in the short-term,
while remaining confident in their companies’ abilities to navigate the crisis and
emerge stronger. Despite a drop in fintech investment last year, in the context
of other industry trends discussed above, fintech talent is ostensibly well-
positioned to seize new opportunities and spur further investment growth in the
years ahead.

Figure 1.6: Total pre-IPO equity investment volume and dollar value, Canadian fintech companies,
2010 – 2020 ($USD M).

      No. of deals

                                                                                   54           52

                                                                                               $419         $435
                                           19           20                       $230
                             15                        $170
                12                       $145                                                                                           $148
                                                                                                                         $303      H1
   6                         $82
  $12          $28                                                                                                                      $100 H1
  2010          2011         2012         2013         2014          2015         2016          2017         2018         2019          2020

Source: Accenture analysis of CB Insights data as of January 6, 2021.
Note: Investment value refers only to deals with amounts reported by CB Insights while deal volumes refers to all deals.
Yearly volume of equity financing (pre-IPO angel, incubator, growth equity, seed, series A+ and private equity stages only)
for fintech in Canada.

2020 Canadian Fintech Investment:                                             While some evidence pointed to initial investor
The “COVID Effect” and Beyond                                                 interest in pandemic-resistant companies,
Discussions with leading Canadian VC                                          this buzz ultimately failed to buoy overall
executives throughout the pandemic                                            Canadian investment in 2020.57 Across all
revealed a confident, yet cautious, optimism                                  industries including fintech, while Q1 2020
surrounding the fintech investment                                            saw a marginal decline from the previous year,
environment and future ecosystem growth.                                      the CVCA reported a surprising and significant
Accenture analysis revealed 2020 Canadian                                     rebound for Q2 as economies began to
fintech investment was set to decline to a                                    reopen across Canada; an overall record for
seven-year low, nearly 80% from 2019 levels,                                  the quarter.58,59 As lockdowns dragged on,
in dollar terms (see Figure 1.6). Note this                                   however, Q3 2020 witnessed a 63% drop in
presents an especially stark contrast in part                                 dollar terms across all industries as compared
due to 2019’s record levels of investment and                                 to Q3 2019.60,61 Accenture analysis of recent
the notable number of “mega-deals” (CAD                                       fintech-specific deals revealed that the
$50m+) which took place that year.                                            industry may have lagged even the broader Q2

rebound, with approximately USD $100m in           It was noted during discussions with leading
equity venture capital invested as of H1 2020      investors that while some deals were
compared to USD $301m in the first half of         paused and funds temporarily retrenched
2019 (see Figure 1.6).62                           to bolster their portfolio companies during
                                                   COVID, investment philosophies have not
Understandably, the valuations and exits of        fundamentally changed since the crisis began.
some major Canadian fintechs have been,            However, attention was temporarily diverted
at least temporarily, upended.63 However,          to a few key areas. These included ensuring
investor and government sentiment appears          safe remote working conditions for VC teams,
to be favouring a scenario where properly          helping portfolio companies secure adequate
capitalized high-tech companies well-              runway, and executing cash conservation
positioned before the crisis will emerge           efforts or cost rationalization activities. The
stronger once the dust settles.64 Calgary-based    initial inability to conduct thorough, in-person
fintech Symend’s C$73 million Series B round       due diligence and B2B sales in pre-COVID
was the seventh largest overall Canadian VC        fashion was also cited as a common reason for
deal in 2020. Meanwhile, payments processor        slowed deal and sales cycle times.
Nuvei’s September IPO closed at USD $833
million, proving to be the largest ever for a
technology company on the TSX at the time.65
                                                   Figure 1.7: A selection of notable 2020 Canadian fintech
For VC-backed companies struggling during          equity deals (CAD $10 million+).
the fallout, BDC Capital was one of the first
to roll out support in the form of its Bridge
Financing Program, which aimed to support                                                        C$73m (Series B)
eligible startups impacted by COVID-19 in the
form of convertible notes. As of mid-2020,
BDC had completed 23 Bridge Financing                                                            C$40 - 50m (Series B)
Program deals worth C$45 million, from
a total budget of C$300 million.66 Export                                                        C$25m (Series A)
Development Canada (EDC) followed with a
similar investment matching program, with
five deals closed worth C$15 million as of early                                                 C$20m (Series B)
June.67 Although government approaches
have varied at the provincial level, economic
policymakers have broadly remained open                                                          C$11.5m (Series A)
and optimistic about technology investment
playing a key role in Canada’s recovery.                                                         C$11m (Series A)
Quebec Minister of Economy and Innovation
Pierre Fitzgibbon revealed the province’s
plan to make significant direct equity
investments in local firms, along with Ontario     Source: Accenture analysis of Crunchbase data and publicly available
                                                   deal information.
Minister of Economic Development Vic               Note: Certain deals have been excluded due to undisclosed terms,
Fedeli’s consideration of the Ontario Capital      ownership structure or deal classification. NAventures did not disclose
                                                   the exact value of their July 2020 investment in Nest Wealth.
Growth Corporation’s investment matching

As discussed above in the Canadian Fintech

“The pandemic                                                                                      Overview, early-stage funding availability in
                                                                                                   Canada may pose ongoing challenges for
                                                                                                   nascent fintech startups. While the proportion

                                                                                                   of publicly disclosed early versus late-stage
                                                                                                   VC deals has edged up slightly over the
                                                                                                   last five years, 2020 early-stage funding
                                                                                                   declined considerably in dollar terms along

 in-person due                                                                                     with broader investment activity (see Figure
                                                                                                   1.8).70 The average size of angle, seed and
                                                                                                   other early-stage deals also decreased. For

 diligence and                                                                                     this reason, it will be important to observe
                                                                                                   how and when these deals recover to pre-
                                                                                                   pandemic levels as one possible indicator of

   B2B sales.”
                                                                                                   future ecosystem recovery and strength.

                                                                                                   Despite several funds focused on early-
                                                                                                   stage fintech emerging in recent years
                                                                                                   (see Figure 1.9), recent discussions with
                                                                                                   Canadian VC executives revealed that that
                                                                                                   newer companies will increasingly need to

Figure 1.8: Pre-IPO Canadian fintech equity financing distribution by round, 2015 – 2020.

     Number of Deals                                                                                   Investment Dollars ($USD M)

       No. of deals

                                                                 11%                62
                      54           52                                                                                                                   435
                                                                 11%                                                                      419                    23%
                      9%           6%          12%                                13%                     309                               10%            9%     17%
       31                         12%
                      17%                      18%                                                                           230
                                  12%                                                                                                                      41%
       6%                                                    69%                                              34%
                                                                                  73%                                        27%
       32%            65%                      63%                                                            25%            17%                                         148
                                  65%                                                                                                       29%
                                                                                                              9%                                           44%          46%
       45%                                                                                                    25%            34%                                  11%
                                                                                                                                            11%                         42%
                                                                                                               7%             8%            5%             6%     4%    12%
      2015            2016        2017         2018          2019                 2020                        2015           2016           2017          2018   2019   2020

      Angel, Seed & Other Early Stage    Series A     Series B         Series C         Series D   Series E        Private Equity, Growth Equity & Mezzanine

Source: Accenture analysis of CB Insights data as of January 6, 2021.
Note: Investment value refers only to deals with amounts reported by CB Insights while deal volumes refers to all deals.Yearly volume of equity
financing (pre-IPO angel, incubator, growth equity, seed, series A+ and private equity) for fintech in Canada.

demonstrate a high degree of differentiation                                Canadian Fintech Hubs and Leading VC’s Are
to generate interest.71 This could include                                  Growing From Coast-to-Coast
factors such as managerial experience,                                      New venture capital firms and record-sized
technical talent and intellectual property,                                 funds also emerged in 2019/2020, positioning
among others. This competition for early-stage                              Canadian fintech for further growth in an
funding may be one reason why the number                                    already burgeoning market.
of fintechs being founded is on the decline,
although the subtleties of this trend are                                   Toronto is now home to Radical Ventures,
discussed in the section above. Regardless,                                 a C$471m fund with present investments
combined with significant pre-pandemic                                      in Sensibill and Drop, aimed at supporting
cross-border investor interest in the Canadian                              startups with exponential disruptive potential.
market (see Figure 1.12), continued record                                  BDC Capital spinoff Framework Venture
valuations and exits for later-stage Canadian                               Partners also closed their first C$100m fund
fintechs remain a distinct possibility beyond                               in early 2019, with offices in both Vancouver
this unprecedented year. As the Canadian                                    and Toronto and investments in the likes of
fintech ecosystem enters a possible period of                               TouchBistro and Wave. On the corporate side,
“refinement”, young companies may find the                                  Montreal-based Desjardins Capital announced
near-term environment to be a challenging                                   the launch of a C$45m fintech-specific fund
one, notwithstanding the lingering effects of                               to better ground the institution, and its
the COVID-19 crisis.                                                        members, in the digital ecosystem.72

Figure 1.9: A selection of the most active non-corporate venture capital firms across Canada with disclosed
investments in fintech. Those with notable focus on fintech in their portfolios are highlighted.

                                                                                                          Atlantic Canada
    Greater Vancouver

                                                                                                                     Greater Montreal

     Greater Toronto


Source: Accenture analysis of Crunchbase investment data and publicly disclosed venture capital portfolios.
Note: Non-exhaustive.

At least six existing Canadian VC’s with fintech investments also substantially grew funds
 or closed new ones in the last 18 months. Growing interest in the nation’s market was also
 reinforced in 2020 as Canada gained its first private venture fund in excess of C$1 billion (see
 Figure 1.10).73

 Figure 1.10: Notable fund growth or closure in the past 18 months by existing Canadian VC’s with disclosed fintech

                                                                                       Fund grows to C$85m after addition of iA
       October 2019                                                                    Financial and BDC Capital as LP’s.

                                                                                       Closed second fintech-focused fund
      December 2019                                                                    with commitments totaling C$427m.

                                                                                       Growth Fund V is the first private venture
      February 2020                                                                    fund in Canada to close over C$1 billion.

                                                                                       Announced a C$1 billion fund with a
         April 2020
                                                                                       planned focus on global investments.

                                                                                       Closed their third fintech-focused fund,
         April 2020                                                                    totaling C$36 million in commitments.

                                                                                       Closed an innovative $60 million fund
       August 2020                                                                     as a registered exempt market dealer.

 Source: Accenture analysis of Crunchbase investment data and publicly disclosed venture capital portfolios.

“In 2020, Canada
  gained its first
 private venture
fund in excess of
   C$1 billion.”
The Greater Toronto Area continued to lead                                    At a global level, Canada continues to be a
other Canadian hubs in terms of 2020 fintech                                  beacon of academic and research strength,
deal and dollar volume (see Figure 1.11).74                                   as well as technical and engineering talent.
Despite an impressive 128% cumulative CAGR                                    Together, various Canadian cities respectively
since 2010, other Canadian hubs such as                                       boast the highest concentration of AI startups
Montreal and Calgary are well on their way.                                   in the world, and have been the launch pad for
Several fintech-focused VC firms now call                                     respected institutions and programs such as
Montreal home, while interest continues to                                    the Vector Institute, Element AI, Mila and the
mount in Calgary’s talented emerging tech                                     Alberta Machine Intelligence Institute.75 Cross-
ecosystem. Sustained investment in these                                      border investors who have taken notice have
hubs will be one important factor among                                       come to be an important source of capital for
many for the steady expansion of Canada’s                                     Canadian tech startups, including fintechs.
reputation as a diversified fintech incubator.
See the Overview of Canadian Hubs Poised to
Grow section above for more details.

Figure 1.11: Cumulative fintech financing CAGR % vs. fintech deal volume for major Canadian hubs, 2010 – 2020.
Bubble size is indicative of total relative deal value.


 200                       Montreal



 120            Other Cities
                                                                           Greater Toronto
                Ottawa                                                                                                                Total Canada

       0   20      40     60   80     100   120   140   160    180   200     220   240   260   280    300    320   340    360   380    400   420     440

Source: Accenture analysis of CB Insights data as of January 6, 2021.
Note 1: Investment value refers only to deals with amounts reported by CB Insights while deal volumes refers to all deals. Yearly volume of equity
financing (pre-IPO angel, incubator, growth equity, seed, series A+ and private equity) for fintech in Canada.
Note 2: Greater Toronto refers to the Greater Golden Horseshoe area. Vancouver includes the suburbs of Richmond and Surrey, as well as Victoria.
Note 3: Other Cities in Canada represent CAGR from 2014 – 2020 and include deals in Charlottetown, Edmonton, Halifax, Miramichi, Moncton,
Quebec, Saskatoon, Sydney, Windsor and Winnipeg. See Appendix A for additional geographical assumptions

As investors responded to 2020’s recession                                      a catalyst for certain benevolent ecosystem
and adjusted to the new normal of closing                                       forces, such as increased global attention
deals remotely, US and other cross-border                                       and talent attraction. This is particularly
VC investment also declined (see Figure                                         true of closing so-called Canadian “mega-
1.12 below).76 While Canadian fintech deals                                     deals”, such as Verafin’s record-breaking 2019
including cross-border venture capital                                          investment and eventual multi-billion-dollar
interest hit a ten-year high in 2019, these deals                               sale to Nasdaq in November 2020, which
declined in-line with the broader industry                                      involved cross-border interests throughout.
last year, falling slightly more at 83% year-                                   Larger Canadian deals are a likely place for
over-year. American investors have remained                                     cross-border investors to start on the path to
the most prominent in deals including cross-                                    restoring previous levels of Canadian fintech
border interests. The US participated in over                                   investment, especially given similar global
95% of 2020’s cross-border deals and had the                                    trends already unfolding elsewhere.79
largest dollar contribution of foreign investors
into Canadian fintech.77                                                        Putting aside any chronic impacts of the
                                                                                COVID-19 crisis, longer-term growth trends in
Assuming the global economy stabilizes                                          Canada’s fintech ecosystem may be shaped
over the next few years, Canadian venture                                       in part by the country’s willingness and ability
capital executives surveyed for this report felt                                to take on a greater number of calculated
unconcerned by increasing foreign investor                                      bets. Such activity could be focused on both
interest in Canada. Several differentiators                                     promising startups who can achieve global
were cited, such as domestic players’ deep                                      commercialization and scale, as well as on the
ecosystem roots, well-rounded understanding                                     critical underlying standards necessary for
of the market and regulatory environment, and                                   the further propagation of innovative, highly
integration with value-added partners such                                      productive solutions in-market. Factors such
as academia and startup accelerators.78 On                                      as modern approaches to interoperability
the contrary, some venture capitalists looked                                   might be one possible step among others
to the potential synergies made possible                                        on the path to unleashing further Canadian
by investing alongside others with valuable                                     fintech investment growth, from both
expertise on offer for portfolio companies.                                     domestic and cross-border sources.
Others saw healthy competition for deals as

Figure 1.12: Total Canadian fintech cross-border investment activity (deal and dollar volume), 2010 –2020 ($USD
M). While most cross-border investment into Canadian fintechs continues to include US-based interests, activity
declined during the pandemic.

             No. of deals

             US Investor Participation
                                                                                  32                                   $657
             Non-US Investor Participation                                                                             $79

                                                        15          15
                                                                                                     $3   $311
                                                                                                                 $19   $578
                    8                                  $150        $157
                                           $135                                  $133         $356
        5                                         $4          $7           $7                             $291                  $111
                               $79                                                      $13

       $8          $27                     $131        $143         $151
                                                                                 $120                                           $106

      2010         2011        2012        2013        2014        2015          2016         2017        2018         2019     2020

  Source: Accenture Research analysis on CB Insights data.
  Note: For targets headquartered in Canada. Non-US participation includes investors headquartered in South and Central America, Europe, Asia,
  Africa, Middle East, and Oceania. Deal types include pre-IPO angel, incubator, growth equity, seed, series A+ and private equity stages only. Includes
  deals with undisclosed investors.

III. Canadian Financial Institution Ecosystem

As Canadians familiarize themselves with new banking brands and digital finan-
cial services products, players are taking different approaches to standing out
from the crowd. Two questions emerge: what might the future of technology
partnerships look like in the Canadian market, and what are the implications for
how banks serve customers today versus how they might serve them tomorrow?

Neobanking in Canada                                                      billion by 2027 and CAGR of 48%.80 The
To thrive in the competitive financial services                           tailwinds of changing customer expectations
marketplace, financial institutions (FI) have                             and demographics, as well as regulatory
evolved so-called “neobanking” strategies                                 shifts supporting greater interoperability,
and partnerships to help address gaps                                     have fueled the growth of neobanks. Since
and complement core product offerings.                                    Scotiabank’s refreshed launch of ING Direct’s
Neobanks are characterized as those without                               former Canadian business as Tangerine in
physical branches that seek to meet the needs                             2012, the landscape has become increasingly
of customers predominantly through digital                                crowded with a variety of digital-only banks.
channels.                                                                 We examine these neobanks below by
                                                                          categorizing them as either Canadian Banking
Globally, neobanks have quickly started to                                Challengers, Canadian Digital Attackers or
capture market share from the competition                                 New Entrants.
with an expected market size of USD $450

Figure 1.13: A selection of neobanks with existing or planned Canadian operations.

Canadian Banking Challengers                          Canadian Digital Attackers                                   New Entrants

Source: Accenture analysis of publicly available data sources.
*Note 1: As of December 2020, neither Shopify Balance nor Wave Money had publicly available launch dates for the Canadian market.
**Note 2: NorthOne has relocated its headquarters from Toronto to New York, although it maintains a presence in both markets.

Canadian Banking Challengers                         fintechs in those hubs such as Monzo, N26
The Canadian financial services industry             and Revolut. Revolut had begun to test their
is seeing a rise in digital-only options from        platform in Canada towards the end of 2019,
incumbent institutions. RBC has recently             although the pandemic upended some of
remarked on the bank’s interest in launching a       these challenger banks’ plans and created
digital only bank in the US, which would make        significant uncertainty given profitability
it the first Canadian bank to do so.81 Manulife      challenges.84,85 Even prior to COVID, New
Bank has also taken on a digital profile with the    Entrant operations were often confined to a
further development of their mobile and web          limited number of products and services, such
platforms. And in September 2020, Loblaw             as prepaid cards and payments.
announced the launch of the PC Money
Account, an effort to rebuild the grocer’s           Entering, Competing and Partnering in the
deposit-taking business with a keen focus on         Canadian Financial Services Marketplace
loyalty and rewards.82                               As possible regulatory changes portend the
                                                     evolution of market dynamics between various
With 5.8 million Canadians using a credit            players, market participants are leveraging
union for their day-to-day banking needs,            different approaches to take part in the action.
these community institutions have also started
to launch digital offerings.83 Figure 1.13 details   While incumbent-backed Banking Challengers
some of the digital subsidiaries of credit           have emerged to answer the call of changing
unions such as Meridian and Alterna targeting        customer expectations, Digital Attackers -
provincial customer bases. Competition may           such as Wealthsimple and Neo - generally
heat up among Canadian financial institutions        rely on insured Canadian partner institutions
as they double-down on the digital-only              to facilitate parts of their business. In
customer as a key strategic initiative.              Wealthsimple’s case, Vancouver-based
                                                     Peoples Trust backs the fintech’s deposits.
Canadian Digital Attackers                           New Entrants offering prepaid credit cards
The Canadian Digital Attackers are a group           and transfer services to Canadians, on
of homegrown companies whose beginnings              the other hand, are exempt from some of
were independent of larger, charted banking          these regulations as long as they remain
institutions. Some savvy customers have come         non-deposit takers. While this strategy has
to expect the familiar experiences provided by       been an important part of ensuring speed
tech giants such as Apple, Netflix and Amazon        to market, it may ultimately place limits on
from their bank as well. In turn, each of these      future product and service differentiation
fintechs have a taken a unique approach to           among competitors. One example of
addressing this desire. On the retail side,          lowering this barrier to entry is the UK and
KOHO, Mogo, Neo, Wealthsimple, Stack and             EU’s licensing program for fintechs wishing
Wingocard have sought to bring a simplified          to hold e-deposits and issue cards, so-called
product suite to clients wrapped in a modern         Electronic Money Institutions (EMI). On the
user experience. On the small-medium                 other end of the spectrum some US Digital
business front, Shopify and Wave recently            Attackers have opted to acquire existing
announced business banking products for              charted banks as a path to market, such as
their existing e-commerce and accounting             Jiko, who recently became the first fintech to
customers, respectively.                             complete a takeover of a national US bank.86
                                                     Where willing and able, New Entrants are also
New Entrants                                         directly pursuing banking licenses; Revolut
Jurisdictions such as the UK, EU and Australia       recently announced their intention to acquire
have begun to embrace policies that support          a state banking charter in California.87 It
greater openness and increased competition           remains to be see how, or if, similar trends may
in financial services. The North American            play out in the Canadian marketplace.
market has thus become a target for the
more mature and well-funded among retail

On the business banking side (covered in                    their capabilities and incubate ideas. In lieu
Part 2: The Digital Race to Serve Small and                 of an outright acquisition, established players
Medium-sized Businesses section below),                     are now also opting to refer clients to formal
Digital Attackers such as Shopify and Wave                  partners offering more suitable services or
have emerged to simultaneously converge                     licensing white-labelled technology to elevate
on new products. Already mainstays of their                 the customer experience. For example,
expansive commercial customer bases,                        Toronto-based Sensibill distributes its receipt
these new entrants are seeking to disrupt                   management solution through several of
traditional small-medium business (SMB)                     Canada’s major FI’s, as well as a number of
banking and advisory by providing value-                    large American institutions.
added current accounts, cards and rewards
programs. Both companies have made plans                    Financial Services Partnership Trends in
to first pilot and launch these services in the             Canada
US. Shopify Balance will be powered by both                 At the 2020 Scotiabank Financial Summit,
Stripe’s Treasury product and Evolve Bancorp,               several Canadian bank executives cited
respectively.88                                             strategic fintech partnerships and ongoing
                                                            technology transformation work as sources
Finally, many successful Canadian financial                 of strength during, and beyond, the
products are the result of esteemed                         COVID-19 pandemic.89 Below, we discuss a
partnerships between FI’s and technology                    non-exhaustive selection of these publicly-
companies. As the lines of competition                      disclosed partnerships, as well as a number of
continue to blur, larger institutions are                   ways the partnership ecosystem is evolving in
increasingly looking strategically to fintechs              Canada (see Figure 1.14).
and other technology upstarts to augment

Figure 1.14: A selection of notable partnerships between Canadian financial institutions and fintech
ecosystem participants.

                  BMO will be one of eight US                             RBC, Red Hat and NVIDIA
                  launch partners for Google                              jointly developed an AI
                  Pay’s new mobile chequing                               private cloud platform to
                  account, Google Plex.                                   rapidly build, test and deploy

                  CIBC’s SmartBanking for                                 Scotiabank partnered with
                  Business platform leverages                             MaRS to broaden the Bank's
                  two-way integration with Xero,                          innovation ecosystem while
                  Ceridian and Intuit to simplify                         supporting AI development
                  the SMB banking experience.                             and adoption.

                  Manulife Bank’s virtual                                 Signed a data-access
                  assistant is powered by                                 agreement, allowing TD
                  Kasisto’s KAI to help                                   customers to securely use
                  Canadians better manage                                 PFM tools supported by
                  their finances.                                         Finicity.

                  NBC deepened their                                      Partnered to provide group
                  partnership with Nest Wealth                            benefits members with free
                                                                                                           Source: Accenture
                  in 2020 to accelerate the                               access to telemedicine           analysis of publicly
                  modernization of the Bank’s                             capabilities during COVID.       available data sources.

Accenture examined nearly 100 publicly             when asked about Royal Bank’s displacement
disclosed partnerships from the past five years    as the most valuable Canadian company by
spanning over 20 Canadian banks, insurers          Shopify in 2020, calling it a defense against
and credit unions to identify key collaboration    “potential disruptive plays” in the future.90
trends. In combination with insights drawn
from discussions with industry executives,         As banks move increasingly towards becoming
several key themes emerged.                        technology-first companies, one of the most
                                                   popular types of FI partnerships today are
Firstly, fintechs are increasingly “enterprise-    those with data and insights companies. Firms
ready” as compared to even just a few              such as Flybits, MX and Flinks are helping
years ago. Given major Canadian banks’             banks make sense of complex data and the
market share and overall consumer trust            associated plumbing. Consumer-facing
in the financial system, the country’s B2C         brands such as Dialogue Health are also giving
challenger banks are still relatively modest in    FI’s alternative, value-added ways to engage
size as compared to their US and European          with their clients while capturing valuable
counterparts. This may be one reason why           customer referrals or analytics.
both founders and investors have given a
slight edge to those startups with business        Looking Ahead: Ecosystem Banking in Canada
clients in recent years. B2B-focused Verafin       As technology-first solutions proliferate within
and Nuvei have respectively broken records         Canadian FI’s, specialized players such as
for the largest Canadian VC deal and largest       Shopify are converging into financial services.
technology IPO on the TSX in the last year, for    Looking ahead, Canada may be primed for
example.                                           increased adoption of so-called ecosystem
                                                   banking. This strategy, one slowly being
Second, several companies, such as Kasisto         adopted in different ways by global banks as
and Sensibill, are making inroads by spanning      it is predicated on their strength as trusted
multiple financial institutions with white-        brands, is based on developing a suite of
labelled offerings, often unbeknownst to end       products and services that complement core
users. More formal consortiums, such as the        offerings in many ways.
one being built by SecureKey to authenticate
users across institutions, are going beyond        Singapore’s DBS Bank was an early purveyor
customer experience transformation. Such           of one of these ecosystems. Since 2018, DBS
partnerships and consortiums are proving to        has launched four different marketplaces that
be a successful means to piloting solutions        introduce third-party technology, products
to ambitious technology challenges, such           and services designed to complement DBS’
as digital identity, without building the          core business.91 Importantly, customers
technology from scratch.                           of these marketplaces do not need to be
                                                   customers of the bank to use the various
Finally, fit-for-purpose partnerships are being    services, which include:
forged to fill strategic capability gaps. Across
the board, FI’s are leveraging both fintechs       • Property – Plan, search, buy and sell property
and industry agnostic technology companies         • Travel – Plan, search and book travel, hotels,
to access new markets, provide value-added           and tours
services and elevate the customer experience       • Auto – Search, buy and sell vehicles
for Canadians. In fact, of the partnerships        • Electricity – Compare, switch and save on
examined by Accenture, about half originated         energy plans
with technology companies not exclusively
serving the financial services industry. RBC       To enable each of these marketplaces DBS
Ventures, one of Royal Bank’s strategies to        has partnered with a shortlist of third-party
go “beyond banking”, is leveraging strategic       services, with the bank offering lines of
investments to tap into this trend. CEO Dave       credit, mortgages, insurance, and payment
McKay recently referenced the ventures arm         processing around them.

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