Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Enterprise, Scaleup
Canada’s Innovation Paradox – Strong Start, Missing Impact
Global Innovation Report | Oct 28, 2024
Image: Global Innovation Index 2024 (Canada)
Canada Has Strong Innovation Inputs But Falls Short When Scaling for Global Impact
The World Intellectual Property Organization’s (WIPO) recently published it's annual 2024 Global Innovation Index (GII) (download 17 page PDF report). The WIPO Global Innovation Index ranks countries is based on numerous metrics that are divided into inputs and outputs. There is lots of data to sift through and a great resource to benchmark innovation year over year by peer clusters and in total 133 countries.
See: How the Global Remote Workforce is Changing the Model Work Mindset
Inputs measure a country's innovation capacity and infrastructure while outputs measure more quantifiable results like patents, high tech exports, and knowledge creation. In 2024, strong innovation nations like the U.S. and UK have strong industry-academia partnerships, high R&D spending in the private sector, and enviable systems for transforming research into global technology exports. See the Global innovation tracker
Top 10 Global Innovation Countries
- 1. Switzerland
- 2. Sweden
- 3. United States of America
- 4. Singapore
- 5. United Kingdom
- 6. Republic of Korea
- 7. Finland
- 8. Netherlands (Kingdom of the)
- 9. Germany
- 10. Denmark
Comparative Table of Key Innovation Metrics
The table below shows key innovation metrics across a few countries selected just for quick comparison:
| Metric | Canada | United States | United Kingdom | Australia | India |
|---|---|---|---|---|---|
| Overall GII Rank | 14 | 3 | 5 | 23 | 39 |
| Innovation Output Rank | 20 | 5 | 3 | 30 | 33 |
| Innovation Input Rank | 8 | 4 | 10 | 18 | 44 |
| Income Level | High | High | High | High | Lower middle |
| GDP per capita, PPP | $59,813 | $80,412 | $56,836 | $64,674 | $9,183 |
| Institutions Rank | 14 | 17 | 26 | 15 | 54 |
| Human Capital and Research Rank | 11 | 12 | 7 | 10 | 51 |
| R&D Expenditure (% GDP) | 1.7% (Rank 21) | 3.6% (Rank 3) | 2.9% (Rank 11) | 1.7% (Rank 23) | 0.6% (Rank 54) |
| Business Sophistication Rank | 13 | 2 | 14 | 26 | 58 |
| Knowledge and Technology Outputs | Rank 20 | Rank 4 | Rank 5 | Rank 28 | Rank 22 |
| Knowledge Creation | Rank 16 | Rank 10 | Rank 7 | Rank 17 | Rank 39 |
| Patents per Billion PPP GDP | Rank 31 | Rank 8 | Rank 16 | Rank 39 | Rank 23 |
| Venture Capital Availability | Rank 1 | Rank 17 | Rank 11 | Rank 21 | Rank 42 |
| Market Sophistication Rank | 4 | 1 | 3 | 20 | 23 |
| High-Tech Exports Rank | 37 | 20 | 25 | 63 | 41 |
| Creative Outputs Rank | 25 | 8 | 3 | 29 | 43 |
How did Canada Rank on Innovation in 2024?
Canada holds the 14th spot among 133 countries. (also see Canada's last year 2023 GII ranking)
Canada's innovation approach shows solid support for startups in their early stages but the research suggests that Canada could further strengthen its innovation outcomes by adopting policies that help companies continue to grow as they scale, and encouraging more companies to develop and retain domestic intellectual property (IP) strategies. See Canada's economic profile
Known for its research institutions, availability of early stage capital, and stable regulatory environment, Canada ranks high in innovation inputs but when it comes to translating these strengths into competitive products, patents, and high technology exports, Canada lags behind pointing to a key gap in its innovation approach and pipeline.
1. Top Rank for Early-Stage Venture Capital but Challenges with Scaling
- Canada: 1st in venture capital availability | Peers: U.S. (17th)
- Insight: According to the WIPO ranking and to our surprise, Canada ranks number 1 in early-stage venture capital. That's great news for startups. That is there are plenty of funding options to consider from angels to investment crowdfunding and government support including incubators all help many businesses secure initial funding. However when it comes to later stage funding, there's a noticeable gap. The U.S. has a much larger market and range of resources for scaling companies up making it an attractive place to grow domestically. In contrast, Canadian companies often have to look elsewhere for additional scale-up funding and expansion markets and opportunities.
See: Finance Canada Publishes the Canada Innovation Corporation Blueprint for $2.6 Billion Over 4 Years
- ➤ If Canada can expand support for later stage financing it would help incentivize more startups to scale here in Canada without relocating overseas. We need specialized funds for expansion along with encouraging private corporations and investors to participate in later-stage funding.
2. High Innovation Inputs but Disproportionately Lower Outputs
- Canada: 8 in innovation inputs, 20 in outputs | Peers: U.S. (Inputs 4, Outputs 5), UK (Inputs 10, Outputs 3)
- Canada’s strong input resources like research institutions, venture capital, and stable regulations are not translating into proportionate innovation outputs. Comparably, the U.S. and UK have systems in place to bridge this gap by supporting IP commercialization and high tech manufacturing. This points to a gap in Canada’s in converting inputs to measurable outputs. Canada seems to have a lower 'Knowledge and Tech outputs' ranking than expected, and ranks 102nd in labor productivity growth.
- ➤ Focus on commercialization to convert high research spending into economic impact. Canada could enhance industry partnerships and align research with market demands, as seen in Switzerland and the U.S. where inputs are directly targeted at high value patents, tech exports, and innovative goods.
- ➤ Mission Driven Research Programs - Canada could learn from successful programs like the European Union’s Horizon Europe, which connects academic research to industry objectives (i.e., clean energy, advanced manufacturing, or health sciences). Canada can make it easier for universities and companies to work together by creating solutions that are ready for patents and commercialization.
- ➤ Industry-University Research Centers - Canada could learn from Industry-University Cooperative Research Centers in the U.S. that have companies fund projects that align closely with commercial goals to ensure research is practical and achieves economic outcomes and patent development. This approach brings research beyond academic papers and closer to market applications and demand.
3. Untapped Intellectual Property and Low High Tech Exports
- Canada: 31st in patents per billion GDP, 37th in high tech exports | Peers: U.S. (8th in patents, 20th in high tech exports), UK (25th in high tech exports), Switzerland (10th in high tech exports)
- Canada's intellectual property and high tech exports show that homegrown innovations aren't being fully utilized. Unlike Switzerland and the UK who have policies and incentives that help keep and develop IP within their borders, Canada’s lack of similar measures means fewer local innovations reach commercial success. This untapped potential of IP limits Canada’s ability to turn research into marketable products and economic output.
See: IP Box: Would a special IP income tax rate boost Canada’s flagging innovation?
- ➤ Canada could adopt IP retention policies, such as a “patent box,” which provides tax incentives for patents held and developed domestically. These policies could help increase IP outputs, making it more feasible for companies to develop and commercialize new technologies without needing to shift operations abroad
Strategic Focus for Canada
Canada’s need to bridge the gap between research and commercialization. Countries like Switzerland and the U.S. are top innovators because they don’t just fund research but they make it easier to turn research into real world products and applications. Below are a few strategies to help fill the gap and better align what's being researched and what industries and markets actually need.
- Encourage more companies (public and private) to invest more in R&D which will help align research efforts making commercialization more efficient and feasible. Having companies invest in this way derisks their own investments.
- Offering tax breaks for patents held in Canada to strengthen domestic IP which would give Canada a stronger position in exporting high tech globally.
- Build stronger connections between industry and universities to better align research and commercialization.
See: Analysis of Centrality in Canada’s Innovation Entrepreneurship System
Conclusion
By focusing on these strategies, Canada can better support its startups and create an ecosystem where new ideas grow into global successes. Closing these gaps will be key to Canada strengthening its position as a leading innovator worldwide.
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, artificial intelligence, 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
 |  |  |
|---|---|---|
 |  |  |
The Case for Better Banking Options for Canadian SMEs
Banking Competition | Oct 28, 2024
Image from BNN Bloomberg, The Close (Cato Pastoll, CEO) Loop Financial)
Canadian small to medium sized businesses (SMEs) show great interest in expanding operations globally to tap new markets and scale but they often encounter an unexpected challenges when they do so. According to Cato Pastoll, CEO of Loop Financial during an interview on a BNN Bloomberg show The Close "Why small business needs better international banking access", Canada's banking infrastructure lacks the necessary capabilities to facilitate their global aspirations. So why is this the case? Canada doesn't have a competitive banking system to support Canadian companies looking to expand globally given there are only a handful of incumbent banks that dominate the market, leaving consumers with minimal choices.
See: Can Fintechs Help Narrow Canada’s Prosperity Gap?
Canada's financial system is heavily concentrated making it harder and more costly for small businesses to access better financial solutions that are available elsewhere. This is especially bad at a time when Canada's productivity is dying on the vine and in major need of a boost. This lack of diversity has resulted in outcomes such as charges, complicated procedures and restricted assistance for cross border transactions.
During small business week, Cato Pastoll spoke to many business owners who were frustrated with Canada's current financial system that failed to support their growth ambitions (understandably so) saying:
"It’s time to switch from unfocused grant programs to a targeted regulatory overhaul to help Canadian businesses succeed."
Fostering Change to Help Canadian Businesses Grow
He highlights two approaches to foster change to help Canadian businesses expand globally without unnecessary barriers.
1. Prioritize Competition
It is time for Canadian policymakers to shift their focus towards prioritizing competition and innovation by backing fintech firms that have the potential to provide innovative solutions for various financial needs. Implementing changes could pave the way for new entrants in the banking industry to introduce services catering to SME requirements like reduced charges and simplified international transactions.
See: CFPB Finalizes Open Banking Rule: What it Means for Canada
By emphasizing innovation and fostering the growth of fintech industry players in Canadas landscape the country could establish accessible financial services aimed at promoting fair competition among businesses (level the playing field).
2. Prioritize Innovation in Banking Services
Canadian businesses require specialized banking services tailored to their challenges in order to stay competitive globally. Fintech firms such, as Loop Financial are actively crafting payment solutions to streamline trade for businesses by offering faster and more convenient options. These innovative financial tools cater specifically to the needs of businesses, and play an essential services role in filling the void left by conventional banks in the market.
See:
Small Step Forward As Feds Publish Straw-man Open Banking Framework
FCAC Embraces New Role in Canadian Consumer Banking
Canada’s Open Banking Framework 2024 Preview
Conclusion
When Canadian companies thrive overseas the positive effects are felt throughout the economy. Expanding internationally leads to job creation, higher economic productivity and nurtures development.. Canadian SMEs need financial services that cater to their growth aspirations. By modernizing our banking system Canada can facilitate the expansion of SMEs that play an underappreciated role in strengthening economic resilience.
Canada's businesses are prepared to face competition but our financial infrastructure needs to keep pace with them.
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
The Agentic Web Begins. Coinbase Launches ‘Base Agent’
Agentic Web | Oct 28, 2024
Image: Freepik
Meet Base Agent: Coinbase’s Vision with Crypto AI Agents Driving the Economy
Coinbase has launched 'Base Agent', a new tool where AI powered bots (read: programs) manage and execute crypto transactions independently. The tool was developed alongside OpenAI and Replit and catapults Coinbase into the future where digital economies will potentially rely more on smart agents more than humans.
See: How PhD-Level AI Agents Will Change Financial Services
Imagine a situation where AI agents have their own crypto wallets, invoke transactions, and even build apps directly on chain without any human help. This is a paradigm shift called the Agentic Web which rethinks economic roles with AI agents as major contributors while advancing automation.
Introducing Based Agent: create AI agents with full onchain functionality on @base in less than 3 minutes.
The era of Autonomous Onchain Agents is here
Built with @CoinbaseDev SDK, @OpenAI , and @Replit
oh, and you can make it an @X bot too 😉 pic.twitter.com/RgbXp290bV
— lincoln.base.eth (@MurrLincoln) October 26, 2024
Immediate Impacts
1. Automating Small Payments
Base Agent’s main advantage is its ability to automate small and recurring transactions. AI agents can now manage regular expenses like API payments or small service fees on their own. This functionality i s a game changer for developers and small businesses who will no longer need to oversee each process manually.
2. Streamlined Operations in Decentralized Finance
AI agents can simplify workflows by automating transactions and in doing so, reducing human errors. They can autonomously handle smart contracts making financial transactions and the systems that power them more efficient and secure.
Longer Term Economy of Autonomous Agents
A. The Growth of an "Agentic Web"
The release of Base Agent may soon result in an “Agentic Web”, a digital first economy where AI agents can interact, make deals, and trade with each other and with humans. This could open the door to a future where economic activity isn’t led by just humans but pioneered by creating new digital models where AI plays roles as both buyer and seller.
See: Have You Been Interviewed by an AI Avatar Recruiter?
As Agentic markets grow we will start experiencing entire economic models centered around autonomous agents that earn, spend, and invest on their own. Think of AI agents buying digital assets, investing in blockchain projects, or even creating decentralized applications (dApps). This would be a massive shift in a new financial world where decentralized AI and automated financial systems are are prominent.
B. The Elephant in the Room (Regulations)
Having independent agents active in the market raises tricky regulatory questions. Already today, regulators in many jurisdictions dislike automated trading systems for a variety of reasons (see this Automated market makers report by the BoC and OSC), as it brings a host of questions that either have not been asked before or do not have easy answers from a regulatory perspective.
See: AI’s Double-Edged Sword of Retail Investing
How should ownership, accountability, and compliance be handled when non-humans are involved? Should AI agents have a form of legal status? And how will authorities handle taxes or rules for them? The growth of an AI driven economy will likely need new regulations to tackle these and other questions. Expect major push back for anyone in a position of power or authority today.
C. Increasing Need for Security
As AI agents become more independent they’ll engage in increasingly complex interactions, establishing intricate networks with other agents. If that technology isn't science fiction and here today, there's an even more pressing need for increased security, as any vulnerable agent could impact a network of connected systems. Stability and security will be an essential part of digital economies.
Outlook
Coinbase’s Base Agent unveils the future, one where AI bots interact autonomously in digital and financial sectors.
See: Salesforce to Transform Slack Into AI Agent Hub
This is leaps and bounds beyond the case of integrating AI for efficiency but one where an entirely new kind of economy could exist that blends economic systems and incentives, overhauling how humanity thinks about and uses money, trade, and digital operations.
The real question is: Are we prepared for a world where AI isn’t just an assistant but a full participant in the economy?
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
Coinbase Teams Up with CFL as Crypto Scores Big in Canada
Coinbase in Canada Announcement | Oct 25, 2024
AI Image
Coinbase Partners with CFL and Grey Cup to Bring Crypto Closer to Canadians
Today, Coinbase announced a Canadian sports partnership with the Canadian Football League (CFL) and the 111th Grey Cup (2024 championships), which will delight many football and sports fans. Coinbase, a major crypto exchange in the United States, recently expanded to Canada and is operating with a restricted dealer license.
Coinbase is also forming business partnerships North of the border including one with Balance, an Alberta-based digital asset custodian for institutional investors, financial institutions, and high net worth individuals. Canadians have seen major crypto firms sponsor sports organizations in the U.S., such as crypto.com arena in Los Angeles (formally the Staples Center) and perhaps now with Coinbase's partnership, other crypto-related firms may be motivated to strike big partnerships with other sports teams in the country.
Goals of the Partnership
The goal of course is to raise awareness and exposure to a new audience, and make digital assets more accessible to a broader Canadian audience (currently there are about 5 million Canadians who use crypto).
- Coinbase is collaborating with the CFL to help more Canadians better understand and use cryptocurrency including for digital payments and other transactions.
- At the Grey Cup fans will enjoy special crypto giveaways, digital collectibles (limited edition NFTs - see NBA topshot), and interactive games. These experiences are all about making it fun to learn about digital currencies.
See: Resurgence of Cryptoassets in Canada’s Investment Landscape
- Coinbase will offer educational resources, workshops, and live demonstrations during the Grey Cup to show how digital currencies work and why they are important.
Why the Partnership Matters
This partnership strengthens Coinbase's commitment to playing a key role in making crypto a bigger part of daily life in Canada, and offers fans a unique opportunity to engage in the world of digital assets while enjoying one of Canada's major sporting events. From sporting events to using digital currency for payments, the outlook for crypto in Canada just got brighter.
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
Stripe Acquires Stablecoin Platform Bridge for $1.1 Billion
Crypto M&A | Oct 24, 2024
Image: Freepik
Stripe’s $1.1B Bridge Deal Signals Big Push for Global Crypto Payments
Fintech payments giant Stripe has acquired stablecoin platform Bridge for a whopping $1.1 billion, one of the largest deals in crypto. This is big news for stablecoins and the future of global payments and how Stripe is bringing digital currencies into mainstream adoption.
According to a16z’s "State of Crypto 2024" report, stablecoins are becoming a major part of the digital economy. In Q2 there were $8.5 trillion in stablecoin transactions which far outpaces payment systems like Visa handling $3.9 trillion during the same period.
See: The Federal Reserve Issues State Member Bank Guidance for ‘Dollar Tokens’ (Dollar-pegged Stablecoins)
This growing usage and Stripe's acquisition is validating the use case of how stablecoins are being used for international payments. Bridge’s technology offers companies an efficient way to make stablecoin transactions, and Stripe's integration will make it easier for companies to make digital payments in stablecoins.
Stablecoins are room-temperature superconductors for financial services. Thanks to stablecoins, businesses around the world will benefit from significant speed, coverage, and cost improvements in the coming years. Stripe is going to build the world’s best stablecoin… https://t.co/6yKi7OKXVT
— Patrick Collison (@patrickc) October 21, 2024
Strategic Acquisition
Bridge was recently valued at only $200 million, so post $1.1 billion acquisition price is five times its recent valuation. This premium confirms the value that Stripe believes Bridge's technology can transform current payment technologies. Stripes purchase of Bridge follows the addition of USDC stablecoin payments in over 70 countries. The acquisition is aligned with Stripe's goal to develop robust stablecoin infrastructure and expand its capabilities in global payments, and to make digital currencies a popular choice for businesses worldwide. Bridge's tech is able to serve both large corporations (ie., SpaceX) and smaller enterprises making it a versatile player in digital payments.
See: Stripe’s Total Payment Volume Passed $1 Trillion in 2023
With this acquisition, Stripe can make global payments cheaper and faster providing a solid alternative to traditional methods like SWIFT. This move pressures other payment companies like PayPal and Visa to expand their own digital currency offerings to keep up with the changes in the market.
About Bridge
Bridge it as a competitor to incumbent cross-border payment networks like SWIFT but with the flexibility and speed of blockchain technology. Bridge provides tools for creating, managing, and using stablecoins across several blockchains and was launched in 2022 by ex-Coinbase execs, Zach Abrams and Sean Yu who wanted to make international payments faster and easier to be recognized as a dependable replacement for outdated incumbent networks like SWIFT.
See: 2024 Global Payments Growth, Trends, and Fintech’s Edge
- Bridge allows businesses to create their own stablecoins or use existing ones like USDC. These digital tokens are tied to fiat currencies to keep their value stable so companies don't have to worry about wild price swings when making a transaction.
- Bridge simplifies cross-border payments by using stablecoins linked to currencies like USD which results in faster and cheaper transactions compared to traditional banking methods (especially in areas where banks may be slower or costly). It helps businesses avoid exchange rate changes and high fees.
- Bridge's platform is designed to work with existing banking and fintech infrastructure, so companies can start using stablecoin payments without expensive or timely setup making it relatively easy to use digital currencies alongside traditional methods.
- Bridge ensures that transactions are compliant with regulations and prevents money laundering. It prioritizes security and transparency making it easier for the platform to work with banks and other regulated financial institutions.
Outlook
By bringing stablecoins into its core payment infrastructure Stripe has a major opportunity to actively shape the future of global payments beyond it's current 1% of global GDP moving through its systems.
See: How Permissioned DeFi Will Transform Global Payments
For the fintech ecosystem and digital currency advocates Stripe’s move signals a new phase of acceptance in the crypto space where stablecoins are viewed as essential parts of the global financial infrastructure and not just a speculative trading tool.
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
2024 Global Payments Growth, Trends, and Fintech’s Edge
Report | Oct 24, 2024
Image: Global Payments in 2024 (McKinsey & Company)
Insights from McKinsey's 2024 Global Payments report highlights fintech opportunities, evolving trends and challenges
The 2024 McKinsey Global Payments Report (17 page PDF) shows that the way users are interacting with payment systems globally is becoming easier but the systems themselves are getting more complicated. This post looks at the trends and opportunities for fintechs (and challenges) that are reported on.
Top Line
- In 2023 the payments industry processed 3.4 trillion global transactions, with a total value of $1.8 quadrillion.
- Global payments generated $2.4 trillion in revenue in 2023, growing 7% annually from 2018 to 2023. Growth is expected to slow to 5% per year from 2023 to 2028, due to lower interest rates and a shift to less profitable payment methods like account-to-account transfers.
See: Canada’s Retail Payments Boom: $11.9 Trillion Growing Fast
- Over the next five years revenues are forecasted to grow by $700 billion, reaching $3.1 trillion by 2028. This will represent approximately 35% of the total banking revenue.
Image: Global payment revenue 2013-2028 (McKinsey)
Insights and Trends (for the Next 5 Years)
- The use of Cash has dropped to 80% of 2019 levels and continues to fall by 4% each year. Countries like India and Brazil are moving quickly towards digital payments but cash usage is declining slower in countries where cards are still prevalent like in the United States. Cash still makes up $26 trillion in global payments so there is still fintech opportunity to capture the digital transition towards full adoption.
- Instant payment systems are moving across major markets and working to replace cash and outdated checks. As an example, in the European Union instant payment transactions are expected to jump from 3 billion to 30 billion by 2028, growing 50% annually.
- Some countries like India, Brazil, and Estonia have implemented strong public digital payment infrastructures (DPI) making digital payments more accessible. This trend is expected to spread further especially in emerging markets like Indonesia and Nigeria who are looking to boost digital payment growth.
See: Goldman Sachs Funds Blockchain Payments Firm
- E-commerce Payment platforms like Shopify and marketplaces like Amazon now handle 30% of global consumer transactions. This trend is especially strong with small to mid-sized businesses (SMEs) where integrated payment solutions are popular. This is putting pressure on banks and other global tech players who are launching their own small business payment tools like Fiserv’s Clover.
- Business clients now expect the same slick payment experiences that consumers get and transaction banking is evolving to meet those needs. Banks like Goldman Sachs and Royal Bank of Canada are investing significantly in transaction banking as they look to compete with specialized B2B payment providers and digital first challenger banks.
- Despite the public and commercial privacy concerns with CBDCs, over 90% of central banks are working on or testing CBDCs. Although it seem like the initial CBDC excitement has worn off, central banks are expecting CBDCs to establish new standards and provide real alternatives to stablecoins.
Implications and Opportunities for Fintechs
- With the rise of instant payments Fintechs can stand out by offering easy to use, mobile-friendly cross-border payment options and improving treasury services with real-time data, not to mention quick payments for gig workers.
- Payment card fraud losses are expected to reach $400 billion over the next decade. Fintechs can improve anti-money laundering and fraud detection systems, and clients can offer that to their customers as a competitive advantage.
See: API Magic: Empowering Payment Services Providers and Fintech Innovators to Scale
- With the growth of digital public infrastructure in some countries like emerging markets, fintechs can develop services that integrate seamlessly with government approved national ID systems, digital wallets, and other payment channels. India's UPI is a good example to review - see UPI One World wallet service
- 23% of SMEs in the UK prefer to use non-bank providers for cross-border payments. Fintechs can develop customized (and personalized) payment solutions that optimize international transactions. See companies like Loop here in Canada who recently raised $6.4 million CAD for a SME-focused global finance platform.
- Payment infrastructure needs to be reliable and operate around the clock 24/7 while handling large volumes globally. Fintechs that build scalable, cloud-based systems will have an advantage over traditional setups that are slower to adapt.
Outlook
Regulatory changes involving interchange fees and consumer protections will impact how global payments evolve. Fintechs need to stay on top of these changes for compliance and earn customer trust. Traditional banks like JPMorgan and RBC are investing big time in updating their digital payment offerings to compete with fintechs. Companies that make strategic investments in technology, partnerships, and maintain compliant will have an edge in an increasingly more complicated and growing global payment sector.
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
Perplexity AI Sued for Copyright Infringement
AI | Oct 23, 2024
Image: Freepik AI
Perplexity AI Lawsuit Adds Fuel to Broader Discussion on AI, Copyright, and Regulation
News Corp has filed a lawsuit against Perplexity AI for hijacking its content without proper permission (see legal document). Reports say the core issue is that Perplexity blends AI generated content with real news articles (called 'hallucination'), which creates content that seems genuine but is fabricated. News Corp is suing for $150,000 in damages for each violation, arguing that this practice infringes on copyright laws and also undermines the value of its journalism, misleading readers and making it harder to determine when a content piece is real or fake. This lawsuit is part of a broader movement where AI companies must strike licensing arrangements with content publishers or risk being being offside and taken to court.
Licensing Agreements and Revenue Sharing
Although Perplexity AI has a revenue-sharing model with some publishers, it didn't with News Corp at the time of the lawsuit. Some AI companies have made formal agreements with media outlets to use their content, such as:
- In July 2023 OpenAI struck a deal with Associated Press (AP) where OpenAI could use AP news articles to train its AI models where AP received compensation.
- In April 2024 OpenAI made a similar deal with the Financial Times. This partnership allows OpenAI to create summaries of FT articles and provides credit and links back to the original articles on FT's website.
- In May 2024 OpenAI partnered with Vox Media and The Atlantic allowing OpenAI to use their content to improve AI responses with proper citations (back to the original sources).
- In July 2024 Perplexity launched a revenue-sharing program with 6 smaller publishers in the first batch, such as the Texas Tribute and automattic (parent of wordpress.com). This provides publishers an advertising revenue share when their content is used in in generated AI outputs. However perplexities revenue-sharing model is different than the structured agreements that other AI companies like OpenAI are making.
So there are a variety of approaches that AI companies are taking to address content licensing and usage. Each strategy of course has varied legal and financial implications, as seen with the current lawsuit against Perplexity.
Canada’s Regulatory Approach to AI and Copyright
As industry evolves, countries like Canada are working on new rules to address the challenges that come with AI technology. In October 2023, the Canadian government launched a public consultation to gain inputs on how AI systems should use copyrighted materials for their training, who owns these AI generated works, who is responsible with AI content infringes existing copyright laws etc.
See: AI Search Wars: SearchGPT vs Google Battle for Supremacy
This consultation builds on earlier efforts like the proposed Artificial Intelligence and Data Act (AIDA) under Bill C-27, aiming to ensure AI development in Canada respects the rights of content creators, and could lead to updates in the Copyright Act.
In the United States, the U.S. Copyright Office has gathered feedback from over 10,000 stakeholders. In Canada, according to Faskens, 98 submissions were collected, with many groups calling for changes to the Copyright Act to better balance the needs of creative industries and AI developers.
Future Policy Implications and Outlook
If the courts side with publishers like News Corp it might push AI companies toward making more formal agreements, similar to what OpenAI has done. This could lead to clearer rules where content creators are fairly paid when their work is used by AI systems, potentially setting new industry standards.
See: The Necessity of Copyrighting Your Voice in 2024
On the other hand, if AI companies win the case they might have more freedom in how they use publicly available content. But this would most certainly complicate the relationship and economics between media vs AI firms. The outcome is critical since AI is completely changing the way we create, share, and consumer information on a daily basis.
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, artificial intelligence, 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
| | |
|---|---|---|
| | |
