While the adage that “the best predictor of future behavior is past behaviour” is not always accurate, it is certainly fair to consider when looking at the small business lending landscape in Canada.
There were some notable events in this space in 2015 that have impacted the Canadian small business ecosystem, including partnerships between traditional banks and fintech players and the emergence of new players—not to mention OnDeck’s expansion into the market earlier this year.
In short, 2015 was a year of small business lending innovation across Canada. As we enter 2016, I believe fintech is well positioned to further transform Canadian small business lending. Some key outcomes to watch for:
1. Financing On-Demand: Small business loans in Canada will continue to be “digitally reimagined” – ultimately delivering on simplicity, service and solutions to make access to capital easier and more efficient for business owners.
2. More Innovation: New players will continue to emerge with business models that stretch and strengthen the industry – resulting in better products and services for small business owners. Ultimately, business owners will be able to access the right credit products for their vast and varied financing needs.
3. Partnerships:There will be even more collaboration in the industry between incumbents and focused startups. These partnerships will take the form of complementary alliances that leverage the strengths of all parties.
4. More Investor Participation: There will be continued investment fueling growth of new companies and new models; local VC money, but also US and global VC money funding proven and emerging approaches. Additionally, look for more participation from institutional investors in buying small business loans.
5. Government Interest: While the share of total fintech driven small business loans will remain relatively small, there is likely to be positive interest from policymakers looking to better understand the space.
There is a lot to be excited about in the industry and its beneficial impact on Canadian small business. At OnDeck, we are excited to be part of this growing industry in Canada and around the world, and look forward to seeing the economic impact that OnDeck and others can have on providing small business with the necessary fuel for growth. After all, small businesses are the lifeblood of Canada’s economy, so their access to capital is vital to our nation’s economic growth.
Happy New Year, indeed.