Decentralized Venture Ecosystem

$57.9B deployed into fintech so far this year, Canada one to watch

Daily Fintech | Jessica Ellerm | Aug 22, 2018

KPMG pulse of fintech 2018 - $57.9B deployed into fintech so far this year, Canada one to watchThe KPMG Annual Pulse of Fintech report shows fintech investment continues to build.

$57.9B has so far been deployed in the first half of 2018, with investments across VC, PE and M&A already in excess of last year’s annual total.

Europe outstripped the US, at $14.2B and $26B respectively. The UK continues to be the bedrock of funding, bringing in a total of $16B.

And in what will come as good news for B2B plays, the report notes an ‘increasing emphasis on business-to-business fintech solutions’.

Nine out of ten of the biggest deals of the year surpassed $1B, with deal ‘line honours’ going to Ant Financial, who raised a staggering $14B.

From the KPMG report - Canadian Focus

Fintech market in Canada growing in particular around AI

Fintech market in Canada growing, particularly around AI The fintech market in Canada continued to evolve in the first half of 2018. In the first half of the year, Canada saw $263 million invested in fintech deals across VC and M&A, including a $65 million raise by Wealthsimple. This is a solid number, although off the pace seen in the second half of 2017, when $510 million was invested.

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A number of the larger financial institutions in Canada have recognized the need to invest in fintech and have made significant inroads in terms of both making investments and in developing partnerships to help move innovation forward.

AI continued to be one of the dominant focus areas for investors in Canadian fintech. Canada is seen as a global leader in AI innovation — with highly regarded specialists in Toronto, Montreal and Edmonton attracting significant investments to those cities. We continue to see banks acquire companies in the AI space, in part as a talent grab in order to fuel their own innovation activities. For example, in January 2018, TD Bank Group acquired AI predictive analytics firm Layer 6.

VC investors and fintechs preparing for payments modernization in Canada

The Canadian government is in the process of updating its Bank Act, which is expected to occur in 2019. The new legislation is expected to mandate some level of “open banking” similar to what has been recently implemented in the UK, Europe (PSD2) and Australia. Payments Canada is also undertaking a multi-year payments modernization initiative aimed at upgrading critical infrastructure, creating a real-time payments rail and providing greater access to the clearing system.

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While both initiatives are currently in process, VC investors and fintechs recognize that change is coming and are jockeying to position themselves to take advantage of changes once they are implemented. US-based, infrastructure-focused, fintech Plaid, for example, recently expanded into the Canadian market.

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NCFA Jan 2018 resize - $57.9B deployed into fintech so far this year, Canada one to watchThe National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with fintech, alternative finance, blockchain, cryptocurrency, crowdfunding and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: ncfacanada.org

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