Decentralized Venture Ecosystem

Category Archives: Digital, NEO and Open Banking

McKinsey Global Banking: Revenue pools moving to customer-ownership with embedded digital financial services

McKinsey & Company | Dec 1, 2021

McKinsey customer ownership and embedded financial services - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial services

The Great Divergence:  2021 Global Banking Review excerpt:

Future-proof business models

In a world that continually surprises, we hesitate to talk about a “future-proof” business. Many companies that thought they were ready for anything in 2019 are frantically reinventing themselves—or disappearing. Nonetheless, the concept is useful: What does it take to build a bank that is impervious to disruption as we understand it today?

Payments can serve as an example. Fiserv, Global Payments, Klarna, and Square are very different and operate in different parts of the payments value chain, but they all have thrived in a business in which most banks have been struggling to create value. Their business model is capital-light, focused on sales growth in the most relevant and attractive revenue pools and with a strong investment in technology and scalable and integrated systems. Banks, on the other end, have focused on the debtor-side interfaces where value creation has been limited and revenue sources are under pressure—for example, current accounts and cross-border payments.

See:  65% of Global banking executives see branch-based models dead in 5 years

Overall, specialized financial-services providers—in payments, consumer finance, or wealth management—are generating higher ROEs and valuation multiples than most global universal banks. Some fintechs are going from a rough sketch to billion-dollar valuation in a few years. And there are indeed some banks among the institutions diverging from the pack. What do these top performers have that others can build, acquire, or access through partnerships to deliver a higher shareholder value? Our analysis points to three common elements that make a future-proof business model:

1. Customer ownership with embedded digital financial services

Companies like Amazon, Apple, Google, Netflix, and Spotify have taken existing services and transformed them into digital experiences that are now embedded in customers’ daily lives. Leading fintechs, specialists, and banks are replicating this model in financial services, turning products into features to meet customer needs and keep them engaged. The existing, underlying elements are still there—the checking account, the personal loan, or the POS terminal—but they are less visible, a seamless part of a digital experience that goes beyond banking.

Successful financial-services providers take three steps to position their business for this shift. First, they attract customers by solving very specific yet relevant needs. Examples include Alipay and Klarna, which make shopping and cash management easier and convenient for small businesses through quick and simple onboarding, transparent pricing, new POS terminal features, and buy-now-pay-later checkout solutions.

See:  Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

Second, top performers bring customers into an ecosystem, connecting them with other services and building a dynamic and distinctive customer experience. For example, Square’s core offering is a payments service, but from there it developed comprehensive value-added services for sectors such as restaurants.

The third step is providing customers with personalized analytical insights. This increases customer engagement and, eventually, advocacy through word of mouth and social media. And in a virtuous cycle, it tells the bank or fintech more about customer behaviors and needs. The Canadian bank RBC’s AI-powered financial assistant app NOMI provides users with cash flow forecasts that take into account loan installments and subscription services, and applies deep learning techniques to customer transaction behaviors.

2. Efficient economic model that fosters growth beyond the balance sheet

Financial institutions with higher valuations tend to have a 40 to 60 percent lower cost to serve than the average universal bank and four times greater revenue growth. Higher revenues and low costs lead to more value, of course, but a deeper analysis of these leading financial institutions also shows that 55 to 70 percent of their revenues come from origination and distribution, compared with 40 to 50 percent for an average universal bank, and they leverage digital channels to interact with customers two to three times as frequently as the average bank (Exhibit 6).

Continue to the full article --> here


NCFA Jan 2018 resize - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial services The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial servicesFF Logo 400 v3 - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial servicescommunity social impact - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial services

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - McKinsey Global Banking:  Revenue pools moving to customer-ownership with embedded digital financial services



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

New Mastercard Study: Majority of Canadian Consumers Embrace Open Banking

Mastercard | Dec 15, 2021

rise of open banking mastercard - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Banking

Report finds more than 77 per cent of consumers in Canada – and 86 per cent of Gen Z – are already connecting their bank accounts to technology apps

TORONTO, Dec. 15, 2021 /CNW/ - Mastercard released a new report, The Rise of Open Banking, demonstrating the mainstream adoption of technology to power smarter, more meaningful digital experiences. Open banking puts consumers at the centre of where and how their data is used to more effectively provide the services they want and need. Fintech companies and banks use this consumer-permissioned data to provide easier and more inclusive access to credit, personal financial management, digital wallets and payments services.

See:  Tink Survey Report 2021: Open banking spending, investments and use cases

Open banking is already embedded in several areas of our daily lives, including personal financial management tools, linking of financial accounts and account opening. According to the report, over nine in 10 consumers (95 per cent) in Canada use online and mobile financial applications to manage money, with paying bills (85 per cent) and banking (84 per cent) as the most popular use cases.

Willingness to Connect Financial Accounts

Critical to driving many, if not all, of these transactions is the ability for consumers to securely link their bank or payment accounts and authorize their financial data to be used in online financial applications. The report found that:

  • 65 per cent of consumers in Canada have, or would, consider connecting their bank accounts to financial apps and services to automate financial tasks
  • 69 per cent of consumers in Canadian have, or would, consider connecting their bank accounts to financial apps and services to easily send money to someone

mastercard report image 1 - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Banking

See:  Privacy Implications of an Open Banking System in Canada

Trust in Fintech

Consumers are already connecting their data via multiple platforms to manage finances, and thus make their data work harder for them. Of those surveyed:

  • 55 per cent of consumers in Canada feel very confident using technology to manage money
  • Convenience is a top driver for using financial technology, with 62 per cent of consumers in Canada saying fintech saves them time and is less work

Continue to the full article --> here


NCFA Jan 2018 resize - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Banking The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - New Mastercard Study:  Majority of Canadian Consumers Embrace Open BankingFF Logo 400 v3 - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Bankingcommunity social impact - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Banking

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - New Mastercard Study:  Majority of Canadian Consumers Embrace Open Banking



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

RBC Research: Preparing for Hyperdrive – Themes that will define our new future

RBC Wealth Management Research | Dec 7, 2021

preparing for hyperdrive RBC - RBC Research:  Preparing for Hyperdrive - Themes that will define our new futureGet ready for accelerated disruption. As we think forward to the future, progress will be faster than it has ever been and it will not be linear. Just as we did in our Landmark 2018 Imagine Report, in this thought leadership study we have taken a global, cross-sector approach to determining the themes that will define our new future.

Challenging our global research teams in their respective areas of expertise and coming together to share ideas in recent months, we identified five key themes investors and executives alike across all industries must collectively understand to prepare for the years ahead.

Themes that will define our new future

1. The Quest for Immortality – Biopharma breakthroughs, life science real estate, 5G, autos, consumer wellness, space exploration and more come together to increase life expectancy rates globally.

2. The Individual Revolution – Data monetization, blockchain, gene editing and an evolving gig economy put the individual front and center like never before.

3. Artificial Intelligence Activated – This is no longer a drill. The path is set for the latter stages of AI to be integrated into our global economy. Don’t be left behind.

See:  WEF Insight Report: Digital Assets, Distributed Ledger Technology, and the Future of Capital Markets

4. Hybrid Living – Our physical and digital worlds are rapidly combining, suddenly becoming indistinguishable and the implications are radical.

5. The Great Balancing Act – An accelerating rate of change on multiple fronts has the potential to create unprecedented instability. Resources are constrained and as we make tremendous forward progress on global sustainability, we must always keep in mind the other side of the coin. Innovation will thrive and new tensions will arrive.

Download the 263 page PDF RBC Research report --> here


NCFA Jan 2018 resize - RBC Research:  Preparing for Hyperdrive - Themes that will define our new future The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - RBC Research:  Preparing for Hyperdrive - Themes that will define our new futureFF Logo 400 v3 - RBC Research:  Preparing for Hyperdrive - Themes that will define our new futurecommunity social impact - RBC Research:  Preparing for Hyperdrive - Themes that will define our new future

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - RBC Research:  Preparing for Hyperdrive - Themes that will define our new future



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

Wealthsimple exits UK market (for now) – Too many investment apps in the UK?

Betakit | | Dec 6, 2021

elephant bank - Wealthsimple exits UK market (for now) - Too many investment apps in the UK?As Wealthsimple exits another international market, the Canadian FinTech giant has completed the transition begun earlier this year to focus solely on Canada.

Wealthsimple announced today that the company has sold its UK book of business to European digital wealth manager Moneyfarm (terms of the deal were not disclosed). Wealthsimple UK will transfer its existing 16,000 customers to Moneyfarm by end of January next year, and no longer provide advisory services.

The sale is the last step in a transition out of international markets begun earlier this year. Wealthsimple sold its US book of business to Betterment in March, citing a desire to focus more directly on the Canadian market.

“I think what you’ve seen from us, as we’ve divested from the advisors business a year ago, as we left the US market to focus on Canada, it’s about focus,” Katchen said, referencing Wealthsimple’s sale of its advisory service in 2020.

See:  Wealthsimple adds crypto portfolios to group-retirement plans

In contrast to its market scale-back, Wealthsimple has been aggressive in expanding its product offerings, adding savings and spending, cryptocurrency asset purchasing and spending, as well as peer-to-peer payments. In June, Katchen also told BetaKit that the company is exploring credit and insurance offerings.

Still, at that time, the CEO noted “our ambitions remain beyond Canada, and certainly we’re excited about other markets in time.”

The phrasing closely mirrors that of Murphree, which indicates Wealthsimple might not remain Canada-only forever.

Before new markets might come an IPO. In 2019, Katchen told BetaKit that Wealthsimple had set a target of $20 billion in assets under administration (AUA) before considering an initial public offering. According to the company, Wealthsimple currently sits at $15 billion in AUA, with over 2.5 million clients and tax filers across its Invest, Trade, Crypto, Tax, and Cash services; that’s three-quarters of the way to the finish line and a significant number of customers.

At the start of the decade, the standard FinTech approach to growth was to own one segment of the local financial value chain and scale to own it globally. Such global ambitions have mostly been dashed by a highly-regulated space where regulations differ per market, limiting the traditional scaling benefits of technology businesses (see Revolut’s on and off and perhaps on again-relationship with Canada).

See:  Rise of the super app

Following this year’s Money 20/20 conference in Las Vegas, the aspiration for FinTechs now seems to be becoming financial services ‘super apps’, adopting the model of Chinese giants like Alipay and WeChat. Both Revolut and PayPal have warmed up to the branding, and with some analysts skeptical that local wedge-product incumbents have what it take to compete globally with the likes of Apple and Amazon, the proposition of using regulatory hurdles as a walled garden to becoming a national FinTech super app seems quite appealing.

Continue to the full article --> here


The Armchair Trader | Stuart Fieldhouse | Dec 6, 2021

Low cost investment app Wealthsimple announces exit from UK market

Investment app Wealthsimple has announced it is closing down its UK operations and transferring its existing clients over to rival service Moneyfarm. The Canadian-based investment service said it would instead be refocusing efforts on its Canadian clients.

Wealthsimple had been active in the UK offering low cost investment services for almost five years. The company said it had contacted all its UK customers today about the transfer to Moneyfarm. Eligible assets will be transferred over in cash and will be reinvested in Moneyfarm portfolios based on the client’s investment goals.

Too many investment apps in the UK?

The decision by Wealthsimple to pack its bags is being seen by some experts as evidence that the low cost money app game is getting a little overcrowded. Further withdrawals and collapses are anticipated next year, including some M&A activity. There just seem to be too many so-called robo-advisers operating in the UK market, and margins are very thin indeed.

See:  How Do Canadian Discount Brokers Compare With Robinhood?

“The difference between setting up an app-based investment service and full financial advice couldn’t be larger and the general public is clearly waking up to this,” said Adam Walkom, co-founder of IFA Permanent Wealth Partners in London. “Finance can be scary and intimidating and people can and will make mistakes. That’s unfortunate but there is no substitute for a real person to talk through your situation and help you. Yes, of course it costs more, but what price do you put on peace of mind and long-term wealth building?”

The apps have succeeded in assisting many first time investors into the market in a cost-effective way, including helping them to benefit from the massive rally in stocks last year. But now it does look as if the UK market has become too crowded. Some pundits are wondering this morning whether Wealthsimple was getting distracted by the Canadian market.

Continue to the full article --> here


NCFA Jan 2018 resize - Wealthsimple exits UK market (for now) - Too many investment apps in the UK? The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Wealthsimple exits UK market (for now) - Too many investment apps in the UK?FF Logo 400 v3 - Wealthsimple exits UK market (for now) - Too many investment apps in the UK?community social impact - Wealthsimple exits UK market (for now) - Too many investment apps in the UK?

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - Wealthsimple exits UK market (for now) - Too many investment apps in the UK?



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

Finconecta | Betty DeVita | Dec 3, 2021

Finconecta article on Open Banking in Canada - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

The Open Banking model marks a global evolution (although some experts talk about a “revolution”) in the financial market. Motivated by the increased
need to respond to customer demands, compete with new financial players and meet regulation requirements, banks are adopting API-based business models. Open Banking emerges in the financial industry as a new model of collaboration with third-party providers. By working in partnership with fintech banks, they are able to expand customer reach, accelerate the adoption of new technologies, and create new revenue streams. The underlying mindset is the realization that complex problems that demand immediate resolution, need a strategy that taps into “the wisdom of the many”, rather than siloed proprietary solutions.

While, in some countries like the US and China, Open Banking is spreading only by market forces, in other geographies the regulatory agenda is playing a central role. In Europe, some Asian and Latin American regulators, often driven by financial inclusion mandates, are promoting the shift to open ecosystems by launching directives like the well-known PSD2 in Europe and the Open Banking Standard in the UK.

See: 

Taking into account these regulatory successful practices, the government of Canada appointed an Advisory Committee (AC) in 2018 for the design and implementation of the Open Banking framework. As a first phase, the AC started with consultations with stakeholders across Canada. Based on its findings, in spring 2020 the committee started the second phase, providing advice on potential solutions and standards focusing on data.

Bringing together the government and the private industry, Canada is aiming to embrace a hybrid, made-in-Canada strategy. The scope is ambitious as all federally regulated banks will be required to participate while others regulated banks could join on a voluntary basis. Despite some delays due to the pandemic, the AC plans to have the Open Banking regime operational by January 2023.

Canada's Open Banking Phased Implementation Plan

Live Date January 2023

advisory committee on open banking - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

While the regulation is cautiously but steadily progressing in Canada, leading banks are already partnering with FinTechs using APIs to deliver new digital products. Even later adopters are exploring new technologies as COVID-19 forced them to respond, adapt and innovate. As far as fintechs are concerned, they have gained attention by proving to be the solution to navigate the crisis.

According to Accenture, Fintech Report 2020, the Canadian FinTech industry is booming with 700 FinTechs and hundreds of nascent startups. Registering record levels of investment, venture capitalists remain optimistic despite COVID-19 uncertainty. The potential of the Canadian ecosystem is massive, especially when
considering the proactive approach taken by an efficient public sector. That explains the surge of many Canadian unicorns, like Clearco, a lending platform, Coveo an AI platform and Wealthsimple, an online investment manager, to name a few.

See:  Betakit podcast with Senator Deacon on Open Banking and Competition

Going beyond the Open Banking model, the Canadian financial sector is also benefiting by innovative collaborative structures like Banking-as-a-Service and Embedded Finance. As an example we have Hopper, the travel mobile-only app that uses predictive analytics to make travel recommendations. This Canadian unicorn, recently awarded as the Best Travel App, provides information about best deals on flight and hotels, sends push notifications to their users when best prices are available, suggests new destinations based on your search and most importantly allows the payment for all travel services through one single interface.

Open Banking can and should be a journey towards digital innovation. As FinConecta’s Chief Business Officer Betty deVita remarks: “Infrastructure is sexy” (and now it is trendy!) . There has never been a better time for enabling new business models. In March 2021 Amazon Web Services (AWS) and FinConecta launched Open Finance, a leading-edge platform based on FinConecta’s technology, that expands the boundaries of Open Banking to the next level”, deVita adds. “And now we landed in Canada, as the engine behind tunl., an API platform that brings together Financial Institutions and Fintechs” (To learn more about Ficanex and FinConecta’s joint launch of tunl 2.0) Banking-as-Service goes beyond the data sharing contemplated in Open Banking, including products that are embedded into the financial institution's own core, such as infrastructure, data and banking licenses on a white-labeled basis.

The future is open and Canada is ramping up. We anticipate dramatic changes in 2021 pushed by the FinTech sector growth and the regulatory framework. If financial institutions were contemplating digital transformation as a “nice to have”, now is a must-have shift.

See:  Reflections on Canada’s open banking report

Bottom line is, great things are to come in Canada. A flurry of fintech activity is gaining traction, bolstering the ecosystem.This API economy opens new horizons for all types of institutions, by enabling collaboration and the co-creation of new solutions leveraging what others have available, in a robust, interconnected and integrated roadmap.

As the old adage says: “If it’s not here, where; if it's not me, who; if it’s not now, when.”

Authored by:

betty devita - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunlBetty DeVita, CBO, FinConecta

Betty is a global digital transformation executive with expertise in consumer financial services/payments. Her focus is on early-stage and emerging companies driving value creation, partnerships and the path to global scaling. She most recently served as Chief Commercial Officer of Digital Payments & Labs at MasterCard. She also served as President at MasterCard Canada. Prior to that she was with Citi in Latam, the US and Asia in their consumer franchise and left Citi as Chair/CEO for Citibank Canada Inc.Betty sits on the board of Molson Coors Brewing Company (NYSE: TAP), where she sits on the audit committee. She holds a Bachelor of Science from St John’s University, a CEO Certificate from the WhartonKMA in South Korea and is a certified director from the Institute of Corporate Directors, University of Toronto


NCFA Fintech Confidential Issue 4 250 - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

This article is featured in NCFA's digital magazine, Fintech Confidential (Issue 4 Oct 2021). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

Checkout NCFA's digital magazine, Fintech Confidential (Issue 4) --> here

 


NCFA Jan 2018 resize - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunlFF Logo 400 v3 - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunlcommunity social impact - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - Canadien blooming. The fertile “Valley” for finance innovation FLOW: OB, CAN Trends, Beyond OB: BaaS + Embedded Finance, tunl



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

Tink Survey Report 2021: Open banking spending, investments and use cases

Tink | Dec 1, 2021

Open banking spending in Europe 2020 - Tink Survey Report 2021:  Open banking spending, investments and use cases

We surveyed 308 financial executives in Europe to get a better understanding of how their open banking budgets are shaping up in 2021, and what use cases they are most likely to invest in.

In this report, we explore how investments are shaping up and what use cases executives have in sight. Here is the ‘too long; didn’t read’ version, if you’re just curious to know some of the top findings on the investments front:

See:  Open banking continues to evolve — what’s next?

  • Across all segments of finance, the mean spending on open banking objectives in 2020 was €32 million.
    • The spending was significantly higher for retail banks and wealth management firms – at a mean of €84 million and €79 million, respectively.
  • The pandemic played havoc with budgets in 2020, and executives spent less than they’d initially budgeted. But this year, investor confidence is back up and open banking is high on the agenda.
  • Although one third (30%) of executives say budgets declined in 2021, the largest chunk (46%) indicate that their budgets have grown year-on-year.
  • As to where the money might be going, financial executives have set their eyes on a broad set of open banking use cases:
    • Payment initiation services comes out on top as the most important use case across all segments.
    • Opportunities to improve the customer experience follow, with use cases related to financial management and onboarding.
    • Risk-related use cases also rank high – especially for retail banks, credit institutions and mortgage providers who consider these ‘extremely important’.
    • Differentiators and add-ons (such as subscription management, loyalty programmes, targeted advertising) rank lower on the list – although they are still important for a majority of respondents.

See:  Financial data unbound: The value of open data for individuals and institutions

We also explore how open banking is tearing down barriers and allowing new players to enter the market – meaning financial institutions should move fast to keep a competitive edge. The full report (which you can download as a PDF) dives a bit deeper in the results, analysing the industry context and our own take on what might explain the results. It also includes additional interviews with three industry thought leaders, and some practical tips for staying ahead in this fast-moving space.

Continue to the full article --> here


NCFA Jan 2018 resize - Tink Survey Report 2021:  Open banking spending, investments and use cases The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Tink Survey Report 2021:  Open banking spending, investments and use casesFF Logo 400 v3 - Tink Survey Report 2021:  Open banking spending, investments and use casescommunity social impact - Tink Survey Report 2021:  Open banking spending, investments and use cases

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - Tink Survey Report 2021:  Open banking spending, investments and use cases



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate




 

State of Challenger Banking in Canada

FGS | Surinderjit Kaur Bhatti | Nov 25, 2021

State of challenger banking in Canada - State of Challenger Banking in Canada

Challenger Banks are the players that offer digital-only alternatives to traditional financial institutions’ banking products and services. As per FGS database, there are 40 such players in Canada, and we categorize them into the following 4 categories based on the status of their banking license. Top players under each category include:

  • Beta (using parent FI’s banking licence) - EQ Bank, Simplli, Tangerine, Brightside by ATB
  • New (secured a new banking licence) - PC Financial, Motusbank, Canadian Tire Bank, Rogers Bank
  • Neo (don’t have their own banking licence but have a partner who does) - Neo Financial, Koho, STACK, Mogo
  • Non (don’t have a traditional banking license but meet the conditions to offer financial products in non-traditional ways, like getting a e-money license) - Brim

Over the years, these players have seen tremendous growth in their adoption through launch of innovative value propositions for Canadian consumers. Following are some of the recent trends seen in space:

SME Challenger Banks finally enter the picture

While challenger bank for small and medium businesses was a white space for a very long time in Canada, this year we have seen four players enter the space - Carry, Float, Benji, Jeeves. While most of these solutions are in beta stage right now, they have amazing value propositions for Canadian SMEs like no fee, no personal guarantee corporate cards,  unlimited one-time use virtual cards,  one-click accounting sync and spend management.

See:  KABN North America and Liquid Avatar Unveils New Challenger Banking Program for Verified Self Sovereign Identity Users

While these are the solutions for small businesses, Moves is a player that has recently launched Moves Spending Account, a banking solution for gig workers. Uber, Lyft and DoorDash  have also partnered with Payfare to offer instant payments to their gig workers through a prepaid card. Apart from these, there are expected launches of SME banking solutions in Canada from Shopify (Shopify Balance) and Quickbooks (Quickbooks Cash), which are live south  of the border.

Kids/Teen banking gaining traction in Canada

In the past couple of years, we have seen a new niche of challenger banks  appear on the Canadian landscape - Challenger Bank for Kids/Teens. Treasure, Walo and Wingocard are some of the players in this space. RBC Ventures has also launched a kid banking app called Mydoh. These solutions not only enable parents to digitally give money to their children, they also help them to track children's spending, set tasks  that need to be completed for earning allowance, and help kids learn about  savings. While most of these apps  are meant for kids and teens for earning allowance from their parents, we have seen a new player, SideKick, which is meant for international students in Canada. SideKick helps international students to receive money from their family in different currencies and enables spending in Canada through a prepaid card.

Challenger Banks are enabling  innovation in the rewards and PFM space

Challengers are innovating the rewards space which is no longer limited to the traditional loyalty programs. The new players are offering a range of reward options from cashbacks that are immediately accessible for spending to personalized discounts at a curated list of retailers. Mogo has given the rewards a completely different twist by offering a cashback in bitcoins. For every purchase through a Mogo account, you earn 1-2% bitcoin cashback which is accessible through Mogo’s bitcoin account (Mogo also has a bitcoin investing product). STACK has created a community called World Stream where STACK users can share their purchases and STACKHacks to earn best rewards and save money.

See:  Fintech Card Space is Growing: Brim Financial, Float, Caary Capital, Jeeves, Neo Financial

PC Financial, on the other hand, is staying strong  on its loyalty program game through its PC Optimum points program. The program has more than 18 million members and is in fact the layer behind most of the Loblaw offerings - PC Money, Credit Cards, PC Health and beyond.

Additionally, challenger banks  are enabling Canadians to better manage their finances by offering tools like automated savings, spending limits, sub-accounts for saving goals, transaction round-up savings and spending insights. Some of the players also offer credit score monitoring and building solutions. These use-cases will further grow with the advent of Open Banking in Canada as users would then be able to link all their accounts to a single app and get a full view of their financial standing which will enable informed financial decisions.

Prepaid is enabling  non-banks to enter challenger banking space

Non-banks are entering the financial space through the launch of ‘bank like’ solutions which are mainly enabled by a prepaid card. The categories of these non-bank players launching challenger banking solutions for their customers range from tech giants to e-commerce players to major retailers.

See:  Financial Consumer Agency of Canada publishes BNPL pilot study

Prepaid enables these players to quickly enter the financial industry and start capturing the banking relationship of their customers with minimal regulatory requirements and skipping the need for getting a bank license. The non-bank players are thus able to not just offer an end-to-end experience to their customers but also capture their spending data  which helps them to learn more about  the consumer and further innovate to offer predictive services.

Authored by:

Surinderjit Kaur Bhatti Headshot 1 - State of Challenger Banking in CanadaSurinderjit Kaur Bhatti, Co-CEO at FGS, is a FinTech expert with experience ranging from the venture capital world to leading an innovation lab of a financial institution to innovation consulting. At present, she is a leader at FinTech Growth Syndicate and helping Canadian Financial Institutions build their FinTech strategies through market intelligence services.

 


NCFA Fintech Confidential Issue 4 250 - State of Challenger Banking in Canada

This article is featured in NCFA's digital magazine, Fintech Confidential (Issue 4 Oct 2021). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

Checkout NCFA's digital magazine, Fintech Confidential (Issue 4) --> here

 


NCFA Jan 2018 resize - State of Challenger Banking in Canada The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - State of Challenger Banking in CanadaFF Logo 400 v3 - State of Challenger Banking in Canadacommunity social impact - State of Challenger Banking in Canada

Support NCFA by Following us on Twitter!






NCFA Sign up for our newsletter - State of Challenger Banking in Canada



For more information about FFCON21: BREAKING BARRIERS, on-demand videos and ways to participate