Sense among advocates of 'open banking' that things are finally movingThe policy is known as “open banking” and it could provide a competitive shock to a banking system whose idea of competition is engaging in price wars over the issuance of government-backed mortgages. The review has been so slow in coming to what many say are foregone conclusions that some have wondered if the big banks are doing their best to stand in the way of progress. Whatever the reason for the slow going, any delay from this point on will have everything to do with Freeland herself, as she now has all the information and context that she needs.
Category Archives: Digital, NEO, Open Banking, Open Finance
Minister Finance Chrystia Freeland has the blueprint to revolutionize Canadian banking — when will it be used?
Financial Post | Kevin Carmichael | Jun 7, 2021
Sense among advocates of 'open banking' that things are finally moving
“We’re in the camp of believing it’s going to come, but it’s probably going to happen more slowly than we would like it to happen,” Michael Katchen, founder and chief executive of Wealthsimple Technologies Inc., told the Financial Post’s Stefanie Marotta last month. “So we’re building our business the way we ought to build it, with the tools we have today. But we would love to see open banking come to Canada and we think it would be a wonderful thing for the industry.”
Morneau seemed to like the idea, saying in the 2018 announcement that Prime Minister Justin Trudeau’s government wanted a financial system that “promotes competition and consumer choice.” For all its strengths, Canada’s banking oligopoly isn’t known for promoting either of those things aggressively. The legacy banks have attempted to dull enthusiasm for open banking over the years, arguing that a hasty embrace of such a regime could threaten privacy and expose financial institutions to cyberattacks.
See: Big techs in finance: regulatory approaches and policy options
The big banks appear to have had some success slowing down the process. Freeland’s office declined to state explicitly that the minister has received the report.
“As the financial sector is becoming increasingly digitized, and to ensure the privacy and security of Canadians, the government is reviewing consumer-driven finance, or open banking, in Canada,” Katherine Cuplinskas, the finance minister’s press secretary, said in an email. “An advisory committee on open banking has been appointed to conduct this review and to provide advice on potential solutions and standards to enhance data protection in the financial sector. The advisory committee’s report will be released in due course.”
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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
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From Degrassi to Bay Street: what Drake has to do with open banking in Canada
CBC Radio | May 30, 2021
Toronto's 'Champagne Papi' may encourage more "open banking" in Canada by adding Wealthsimple to his portfolio
Canadian musical juggernaut Drake is among several celebrities to invest in the Canadian financial company Wealthsimple, a company that has more than tripled its value over the last year.
But the rise of the technology-focused Canadian banking competitor isn't just about celebrity endorsements and rap stars trying to make money
See: Review: Financial Consumer Agency of Canada (FCAC) submission to Advisory Committee on Open Banking
Cost of Living executive producer Tracy Johnson explores what Drake has to do with "open banking" in Canada and how there could be big changes coming to how we manage our money in this country.
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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
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AI bank of the future needs the right talent, culture, and organizational design
McKinsey & Company | Brant Carson, Abhishek Chakravarty, Kristy Koh, and Renny Thomas | May 18 2021
Technology alone cannot define a successful AI bank; the AI bank of the future also needs an operating model that brings together the right talent, culture, and organizational design.
As we noted at the beginning of this series on the AI bank of the future, disruptive AI technologies can dramatically improve banks’ performance in four key areas: higher profits, at-scale personalization, smart omnichannel experiences, and rapid innovation cycles. The stakes could not be higher, and success requires a holistic transformation spanning all layers of the organization’s capability stack.
Our previous articles have focused on the capability stack’s technology layers: reimagined engagement, 1 AI-powered decision making, 2 and modern core technology and data infrastructure. 3 Leveraging these capabilities to create value requires an operating model combining structure, talent, culture, and ways of working to synchronize all layers of the stack. Synchronizing these layers is not easy. Any organization undertaking an AI-bank transformation must determine how to structure the organization so that its people interact and leverage tools and capabilities to deliver value for each customer at scale. In this article, we take a closer look at the need for a platform operating model, the categories and scope of operating models, and the building blocks of effective models.
The heart of an AI bank is always-on customer interaction
The need to change a bank’s operating model arises from a combination of external and internal circumstances. Externally, as consumers and businesses increasingly rely on AI technologies in daily life, banks are shifting the foundation of their business models from products to experiences. In other words, as many traditional banking products become embedded—or even “invisible”—within beyond-the-bank journeys, experiences become the more salient element of a customer’s relationship with the bank.
See: 4 Use Cases for Midsize Banks Looking to Implement a Modern Data Management Solution
This shift involves a rapid increase in the number of customer interactions, and at the same time, the revenue associated with each interaction is declining. This is a fundamental change:
just a few years ago, customers conducted business with the bank by visiting a branch once or twice a month; more recently, they would conduct transactions several times each week through the bank website; now many customers interact with their bank daily through their mobile banking app, and often several times a day through wearable devices. In short, banks and their customers now have an interconnected, always-on relationship.
Circumstances within the bank are changing as well—albeit at a slower pace, due largely to the complexity of legacy technology and operating models coupled with the steadily rising cost of maintaining and upgrading IT infrastructure. Siloed structures also hamper organizations’ ability to transform themselves. Decision making at traditional banks is typically slow and cumbersome, and ineffective prioritization (done at too high a level without understanding underlying resource contentions) results in frequent project delays and cost overruns. Insufficient domain expertise and blurred accountability—particularly between business units and technology teams—too often cause new solutions to fall short of customer expectations. What is more, multiple systems perform similar functions, and the increasing complexity of IT architecture with a proliferation of applications weakens system resilience and stability and increases risk when changes are made.
See: N26 Co-founder Maximilian Tayenthal talks growing one of the fastest-growing mobile banks in the world
The widening divide between fast-evolving customer expectations and inertia within the bank reinforces silos and weakens the bank’s ability to respond to the demands of the new machine age. The challenge for leaders is to shift the organization from this siloed structure to a radically flattened network of platforms.
Platforms focus on delivering business solutions
Today, banks that recognize the value of AI and technology enabling better customer and business experience are moving steadily toward a platform operating model, leveling command-and-control structures to speed decision making and bring people together in teams relentlessly focused on delivering solutions that customers value. In this agile approach, each platform can be thought of as a collection of software and hardware assets, funding, and talent that together provide a specific capability. While some platforms, such as those for retail mortgages, deliver business-technology solutions to serve internal or external clients, others enable other platforms with shared services and support functions (for example, payments and core banking). Each platform is largely self-contained in producing business and technology outcomes and autonomous in prioritizing its work to meet strategic goals within clearly defined guardrails, such as common standards, finance, and risk control.
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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
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Economist Spotlight: Imagining a world without banks
The Economist | May 6, 2021
IT IS HARD to conceive of a world without banks, partly because they are so visible. Picture the horizon of any big city, and the skyscrapers in view are usually banks. Commuters emerge from Grand Central station in New York in the shadow of the Park Avenue base of JPMorgan Chase. Morgan Stanley looms over Times Square; Bank of America over Bryant Park. In London the skyline is dominated by odd-shaped towers in the City and Canary Wharf. In Singapore the top floors of the offices of Standard Chartered and UOB house rooftop bars looking out over the entire city. Even in places like Auckland, Mexico City or Jakarta, the logos adorning the tallest buildings are those of ANZ, BBVA or HSBC.
See: A Brilliant Fintech Future – Banking on Stablecoins
The physical dominance of banks symbolises their importance. Most people interact with their banks for such mundane transactions as buying groceries. Companies pay their workers, suppliers and landlords through banks. Banks are also there for bigger decisions, such as buying a house or getting a student loan.
And yet a world without banks is also visible on the horizon. As never before, their role is under threat from new technology, capital markets and even the public sector.
Central bankers have seen tech giants develop quicker and easier payments systems that could pull transactions out of the banking system. They worry that digital payments may bring about the end of cash. Financial regulation and monetary policy have traditionally operated through banks. If this mechanism is lost, they may have to create digital central-bank money instead.
Because technology has disrupted so many industries, its impact on banking may seem like one more example of a stodgy, uncompetitive business made obsolete by slick tech firms. But money and banking aren’t like taxis or newspapers. They make up the interface between the state and the economy. “The deep architecture of the money-credit system, better known as banking, hasn’t changed since the 18th century, when Francis Baring began writing about the lender-of-last-resort,” says Sir Paul Tucker, formerly deputy governor of the Bank of England and now at Harvard. “Which means it has not, so far, depended on technology at all, because Francis Baring was writing about it with a quill pen.”
See: Advancing a more resilient and proportional banking regulatory framework in Canada
Now a new architecture is emerging that promises a reckoning. “Economic action cannot, at least in capitalist society, be explained without taking account of money, and practically all economic propositions are relative to the modus operandi of a given monetary system,” wrote Joseph Schumpeter in 1939. Yet it is possible to see a future in which banks play a smaller role, or even none at all, with digital money and deposits provided by central banks, financial transactions carried out by tech firms and capital markets providing credit.
Bad change or good?
The question is whether such a world is desirable. Banks have many flaws. Scores of the unbanked are too poor to afford them. They can be slow and expensive. They often make more money from trading and fees, not normal banking. Negligent banks can create boom-and-bust cycles that inflict economic hardship. So it is easy to assume that the sidelining of banks might be just another shackle broken by technological advance.
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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
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ClearScore and Zopa ink deal to bring open banking to the credit industry
AltFi | Aisling Finn | May 11, 2021
Image source: Andy Sleigh/ClearScore
One step closer to removing the “computer says no” attitude to credit cards.
Another partnership that seems to be a match in fintech heaven, this time for credit marketplace ClearScore and digital bank Zopa.
Currently, four million people in the UK use open banking in their day-to-day lives, with the technology spreading across all fintech sectors and now, for the first time, into the world of credit cards too.
The collaboration is the first time that a credit marketplace and a credit provider have teamed up to utilise open banking.
By combining real-time open banking data held by ClearScore and Zopa, users will be able to find out immediately if they are pre-approved for a Zopa credit card.
The Zopa credit card offered via ClearScore’s marketplace will have a personalised APR and limit depending on a customer’s creditworthiness and personal financial situation.
See: Here are the UK’s 5 leading open banking providers
“We’ve been working with our partners to truly unlock the value of open banking, with regards providing greater access to credit, which, is so important, particularly in this day and age,” Andy Sleigh, COO of ClearScore, told AltFi.
“This is the first partnership that we’ve been able to create with our friends at Zopa, which is the first-ever credit card in the UK that’s going to be using open banking data in its underwriting, which is a really big step forward for the industry as a whole.”
By leveraging open banking, ClearScore users who may have been turned down from credit products in the past can now access Zopa’s pre-approved credit card as the decision takes a wider view of their finances into account.
“Traditional banks take a much more ‘computer says no’ attitude to lending when people have adverse markers on their credit file. So through the use of open banking, we can take a much more holistic view of a consumer’s financial situation and lend responsibly to those that would have otherwise been excluded,” he went on. In fact, 37 per cent of those that have signed up for the credit card so far, would not have qualified for a Zopa credit card using traditional credit decisioning methods.
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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
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Wealthsimple Raises Money at $4 Billion Value; Drake Buys In
Bloomberg | Kevin Orland | May 3, 2021
Power Corp. of Canada’s Wealthsimple online brokerage raised C$750 million ($610 million) in a funding round that valued it about $4 billion, more than triple what it was worth in October.
The round was led by existing investors Meritech Capital Partners and Greylock Partners, the Toronto-based company said Monday. Also participating are Canadian celebrities including rapper Drake, actors Ryan Reynolds and Michael J. Fox and basketball player Kelly Olynyk.
Wealthsimple, which has more than 2 million users, is benefiting from surging valuations for tech companies and an increase in online trading that has fueled rivals like Robinhood Markets Inc. Wealthsimple offers commission-free stock trading as well as automated investing, cryptocurrency trading and tax services.
See: Wealthsimple CEO Michael Katchen on his not-so-simple mission: to help people — especially youth — build the foundations of financial freedom
The financing announcement confirmed a Bloomberg report on April 30 that the company was in talks to raise money at a valuation of at least C$4.3 billion. Wealthsimple raised C$114 million at a C$1.5 billion post-money valuation in October, giving it unicorn status.
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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
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#FFCON21 Brings Canada’s Tech Hub to the Web for 3 Days of Fintech Insights, Business Building
Investor Wire | Jonathan Keim | April 10, 2021
FFCON21: Breaking Barriers May 11-13
- The 2021 Fintech & Financing Conference and Expo (#FFCON21) is scheduled May 11-13
- Global virtual conference streamed from Toronto, the hub of Canada’s developing fintech ecosystem, but presented online due to pandemic concerns
- 50-plus speakers with expert insights planned
- Networking opportunities to connect one-to-one with peers and experts
- Draft pitching competition to gain attention for business brand (as well as prizes)
The 7th Fintech & Financing Conference and Expo will be held for global participants virtually from May 11-13, 2021. Originating in Toronto, FFCON21 has grown from a basic collaboration between entrepreneurs and big businesses intent on driving change into a thriving gathering of fintech, blockchain, crypto, digital banking, AI, payments, wealthtech, regtech, alternative finance stakeholders and global participants with a love for Canada’s fintech ecosystem.
In its seventh year, the 2021 gathering (#FFCON21) has been adapted to the health security needs of attendees during the present global pandemic, offering exclusive online access to a three-day collection of educational courses, networking opportunities, pitch competitions, e-booth demos and an auction for charity.
The conference will take place May 11 to 13, still celebrating its place within Canada’s rising fintech and financial sector even as it extends its reach to a global audience through a virtual platform. Tickets, including early bird rates at present and a special startups-only package, are available at https://ibn.fm/3Ov1h.
Conference organizers anticipate bringing attendees to the table with some 50 speakers ranging from Main Street executives such as the president and CEO of public-private partnership Toronto Finance International to enterprising up-and-comers such as the founder-partner of startup builder Borderless Ventures and its CryptoAssets Institute.
See: Showcase your products/services: Secure a DEMO Speaker spot at FFCON21: May 11-1
The second annual draft pitching and demo competition follows a sports league model geared toward identifying and featuring emerging and high growth fintech startups and scaleups. The “Breaking Barriers” theme of the conference is particularly appropriate here as draft participants compete for exposure and prizes, including promotion to investors, media, prospective buyers and partners.
The online access format driven by the pandemic proved advantageous last year following a scheduling delay necessary to reimagine the presentation of the spring conference. The digital venue and interactive platform allows for increased participation on a global scale because of the elimination of travel expenses from the plan. Networking and file sharing are able to occur naturally and easily using integrated online text and video chat features.
Additionally, the online platform makes it simple to access all digital content to catch up on anything attendees may have missed at a time when it is more convenient. Networking and e-booth displays present attendees with the potential to make connections with a future business mentor, investor or a prospective employee to help build their companies.
And at the heart of it all is the class schedule with insights from thought leaders on the direction of fintech solutions and emerging fintech trends. Presentations will explore topics that address the latest innovations, emerging industry regulation and the impact of government activity on financial technology markets.
For more information, visit the conference’s web portal at https://fintechandfunding.com.
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
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