2016 was a banner year for Fintech in Canada: the banks adopted Apple Pay, Wealthsimple took over the Super Bowl and tech companies raised a ton of money. But there’s still a lot of opportunity for growth.
RateHub recently surveyed more than 1,000 Canadians and found that trust in Fintech is slow to grow. Given the long-engrained loyalty to the big banks in Canada, this is hardly surprising, and it presents a big challenge for Fintech companies to drive impact in the market.
The five Fintech leaders below, who share similar sentiments on where the market is headed in 2017, recognize the Canadian market’s unique dynamic:
Mike Katchen, CEO of Wealthsimple
“I think 2017 is the year Fintech will go from buzzword to mainstream. In Canada, we’ll see more traditional financial institutions partnering with Fintechs and the banks try to enter the space is a meaningful way. I think we’ll also see more companies going global, and more activity in spaces like insurance, where we haven’t seen much activity to date.”
David Berliner, CEO of CoPower
“The challenge for Fintech companies isn’t just overcoming long-engrained loyalty to the big banks, but also convincing people to manage their money differently. Working with established banks is the best way Fintech companies can quickly build credibility with the public. I predict more partnerships between startup Fintech companies and the major banks, credit unions and financial institutions. These partnerships will focus on catering to millennials through both better tech integration and the offering of products that offer environmental and social benefits.”
Sean O’Connor, VP Partnerships at Grow
“The most forward-thinking banks will partner with Fintech and other technology companies to bring new innovative banking solutions to market quickly. Big banks that fail to partner and make customer-centric innovation a priority will suffer and lose customers. At the same time, many Fintech startups will fail to gain traction and disappear. The Fintechs that are able to partner fastest and the most successfully with financial institutions and other incumbents will best position themselves for survival.”
Corey Gross, CEO of Sensibill
“Cyber security and chatbots are technologies to watch in 2017. Everybody was talking about Blockchain in 2016 but there’s a long way to go with it. My hope for 2017 is that Canadian banks find a way to better work with Fintech companies. They have to make a philosophical decision to work with us, and properly set up the culture and processes to support it. It can’t just be a mandate – the internal innovation teams need to be empowered to procure and negotiate solutions under short project cycles.”
We saw in RateHub’s Digital Money Trends Report and survey that Canadians are increasingly searching for and applying for financial products online. If Canadian banks are unable to deliver ease and convenience online, either through building technology or partnering with technology companies, then there will continue to be opportunity for standalone Fintechs.
I also agree with the sentiment, however, that more can be gained for Fintechs by partnering with banks to drive solutions, given the banks’ concentrated market share in Canada. RateHub has seen a positive shift over the last two years in the willingness of banks to work with Fintech, but there’s still a long way to go. We still find ourselves restricted by the ongoing challenge to connect with the right people or get timely approvals to launch projects, and this will be required to drive collaborative innovation.
There was a lot of buzz around robo-advisors and marketplace lenders in 2016; although we found in our survey that Canadians have a low level of trust in these new technologies right now, I believe their growth will continue into 2017. I also predict we’ll see a spike in dialogue around mortgages and insurance, both industries ripe for disruption.
Kerri Lynn McAllister is the chief marketing officer at RateHub.