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
Into the Mind of Sam Altman’s OpenAI Journey
Sam Altman | Jan 7, 2025
Image courtesy of AI
Sam Altman's Reflections on Leadership and AI (ChatGPT is 2 Years Old)
On January 5, 2025, Sam Altman shared reflections on AI innovation, leadership, and organizational growth since ChatGPT became just two years old over a month ago. His post offers a few profound lessons drawn from his own journey at OpenAI that will surely only apply to a handful of high profile tech entrepreneurs/investors innovating the most impactful technologies of our lifetime (perhaps). Let's break it down and enter the mind of Sam Altman.
Select Quotes and Insights
"Expect significant advancements in the next few years, but don’t be surprised if some of them come with unexpected risks."
Altman knows rapid advancements are inevitable in the world of AI but he also rightfully knows that he is unsure about the unexpected challenges that such advancements may bring. It's a cautionary note to humanity that is to prepare governments and organizations to remain proactive and diligent in terms of governance and control. In finance, this could mean a black swan event. In terms of humanity, as the saying goes, 'expect the unexpected.'
"We know how to build AGI and are working on it. AGI could help address humanity's biggest challenges—from climate change to curing diseases."
Altman seems confident in the milestone of achieving Artificial General Intelligence (AGI) and that it's within reach in just a few years. He sees AGI as a transformative tool that will tackle/solve major global challenges like climate change and curing disease.
See: OpenAI’s Latest Updates Stock Sale, Lawsuit & Innovations
To put it in perspective, the attainment of AGI would be beyond innovations like 'fire' or the invention of the 'lightbulb'. AGI would go beyond just enabling new technologies but could also actively create, optimize and manage them, autonomously redefining the concept of productivity while making decisions across all sectors. It's akin to the agricultural revolution that evolved humans from hunter-gathers into more complex societies. AGI would be a moment where intelligence itself becomes a scalable resource and might only be comparable to becoming conscious of life itself and humanities role in it. AGI would move humans past solving problems such as survival and into the realm of how we perceive and live our own existence or intelligence/progress.
"AI agents are coming, and they will transform industries."
A lot has been written about the agentic web and how AI agents will be 'released', goal orientated and capable of managing tasks and projects in its entirety that would game-change the way businesses operate today. The media is already calling these autonomous and highly logical bots 'virtual employees' that Altman predicts will become available in 2025, opening up new possibilities. NCFA touched upon this a while back, see: Bracing For Change In The Era Of The Augmented Workforce
"Co-evolve with the technology. There is still so much to understand, still so much we don’t know, and it’s still so early."
Reading between the lines, Altman is hinting at that as AI evolves, humanity must adapt alongside it (he doesn't say what if we don't want to co-evolve however). Remaining open-minded while continuously learning is essential to ensure the tech benefits society holistically without leaving large swaths of groups behind.
See: OECD-FSB Discuss New AI Trends in Finance
"Teams tend to turn over as they scale, and OpenAI scales really fast."
Altman is referring to the challenge that as companies grow quickly team dynamics can change, causing a lot of turnover while trying to focus on a direction.
"When any company in an important industry is in the lead, lots of people attack it for all sorts of reasons, especially when they are trying to compete with it. Getting fired in public with no warning kicked off a really crazy few hours, and a pretty crazy few days."
Altman is referring to his public firing and the chaos that followed. He sees it as a breakdown of governance and communication (of well intentioned people). It's a high pressure leadership role in a competitive environment under constant scrutiny. There's a need for better ways to handle such crises.
Emotional Quotient
Altman's reflections say that he's a self-aware leader who is quite transparent about his challenges. He admits mistakes and learns from them while remaining committed to long term goals showing a high degree of emotional intelligence, if not resilience.
See: Meta’s Vision to Swarm Facebook With AI Users
His governance issues indicate the need for more proactive leadership to better manage such rapid growth and public scrutiny. Altman comes off as being vulnerable yet optimistic which people can relate to making him an inspiring tech leader.
Outlook
Altman's thoughts point to a future where AI upends industries and challenges traditional leadership and technology. AI's potential to solve humanity's greatest challenges relies on the ability to balance innovation with responsibility. Organizations must be willing to evolve and prioritize strong governance and ethical practices.
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
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Kevin O’Leary’s TikTok Bid – Privacy and Innovation
Privacy | Jan 7, 2025
Image from Kevin O'Leary's crowdfunding campaign
Kevin O'Leary Wants to Buy TokTok to Protect Privacy and National Security
In 2024, President Biden signed a law that mandates Chinese-owned apps operating in the U.S. posing security risks to be either sold to American entities or be removed from app stores. The law is expected to hold up in Supreme Court so several groups are making high profile bids to acquire the U.S. assets from TikTok's Chinese parent company, ByteDance, including Shark Tank's Kevin O'leary (and partner Frank McCourt), former Activision CEO Bobby Kotick and various investment syndicates all keen to capitalize on TikTok's massive user base and engagement. O'Leary and McCourt's bid is being called the 'people's bid' and they even setup a sold out investment crowdfunding campaign of 'expression of interest' on Start Engine that launched when it became clear that TikTok U.S. would be sold off.
More Than Ownership
O'Leary says the acquisition is about the 'mission' to protect the privacy of 170 million American users and to focus the platform on people instead of algorithms. He also highlighted the role of the inbound Trump administration signaling that President-elect Trump could expedite the regulatory approvals to ensure the platform is transitioned to American ownership to address national security concerns, politicizing the deal.
See: TikTok Finance: Lessons from Viral Chase Bank ‘Glitch’
Kevin O'leary tweeted on 'X':
"This isn’t just about buying TikTok’s U.S. assets. It’s about something much bigger: protecting the privacy of 170 million American users. It’s about empowering creators and small businesses. And it’s about building a platform that prioritizes PEOPLE over algorithms."
TikTok as a Financial Hub
Fintech influencers called 'finfluencers' in social media circles have established TikTok as a hotspot for short videos that simplify complex topics like investing, budgeting and financial literacy, especially among young audiences. Hashtags like #finance are drawing billions of views with strong demand for financial education indicating TikTok's a space where fintech companies could thrive with millions of engaged users presenting an opportunity to integrate financial services into a social platform for new generations. The experience could also include secure payment systems and tools to support creators in managing their oodles of cash.
The Privacy Factor
Although the economic potential of TikTok is significant, O'Leary's bit is positioned around protecting privacy and potential misuse of personal data. O'Leary is partnering with Frank McCourt Founder of Project Liberty (see press release with more details) with plans to implement open-source technologies into TikTok's platform (given that any takeover bid would exclude the proprietary algorithm it uses today) so users can control their own digital identities, establishing a new standard for privacy in social media.
See: US Financial Surveillance Report Shows Privacy in Crisis
Frank McCourt, Founder Project Liberty:
"It's clear that our visions for a people-centered, American-owned platform are closely aligned, and our combined efforts will give a significant boost to The People's Bid as the January 19 deadline for a sale of TikTok quickly approaches. Kevin and I, along with the thousands of supporters who have come forward to back The People's Bid, firmly believe we can build a better TikTok – one that protects our national security and becomes a safe, secure platform that millions of people on the app will trust. We look forward to working with President-elect Trump to save TikTok."
Not Without Challenges (of course)
The 'people's bid' would have to rebuild TikTok's 'addictive' algorithm that makes it so successful, which wouldn't be part of the sale, and could pose some development challenge at the risk of losing user engagement. Also the deal needs regulatory adornment from both the U.S. and Chinese governments.
See: Fintech Trends & Predictions Across Generations in 2025
Outlook
As Jan 19 quickly approaches and despite these challenges, imagine a TikTok with integrated financial tools that could katipult the company to the forefront of fintech innovation and leadership while focusing on users that prioritize privacy, personal data ownership, and ethical data practices. One to watch.
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
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UK Banking Competition Remedies, Lessons for Fintech Growth
Competition | Dec 19, 2024
Image: Pixabay/geralt
How the UK's Banking Competition Remedies Program (BCR) Boosted Fintech Growth
What happens when a government takes bold action to increase competition in its banking sector? The UK’s Banking Competition Remedies program offers a fascinating case study. Both the UK and Canada face similar challenges with highly concentrated banking sectors dominated by a few major players. In Canada, the "Big Six" banks controlled 93% of banking assets in 2023, while in the UK, the 'Big Four' control 85% of UK business accounts and 75% of current accounts.
The result is a lack of competition, stifling innovation, higher fees and limited consumer choice. The difference here is that the UK government took action to remedy the situation by investing in fintech and encouraging customer mobility (read: easier to switch banks/providers), empowering consumers and businesses which lead to economic growth. Here’s what happened, why it matters, and how Canada can learn from it.
See: Competition Act Amendments and What It Means for Fintech
What was the problem with UK banking?
After the 2008 financial crisis, the UK’s banking system had four banks (HSBC, Barclays, Lloyds, and NatWest) that controlled over 70% of the market, which lead to high fees, limited innovation and significant barriers for small to medium sized businesses (SMEs) to source financial support. A 2016 retail banking report by the UK's Competition and Markets Authority found that 60% of UK small businesses stayed with their banks for over 10 years due to the difficulty of switching. Kudos to the UK government for recognizing that without intervention, the systemic issue of lack of competition would persist.
What did the UK government do to fix it?
So in 2017, to address these challenges the UK government launched the Banking Competition Remedies (BCR), which used £775 million from fines levied on RBS for failing to divest parts of its business as required after the financial crisis, to setup two funding components to stimulate competition:
- The Capability and Innovation Fund (CIF) - £425 million to smaller banks and fintech startups to enhance their technology and expand their services. Awardees like challenger Starling Bank received £100 million to develop better products for small businesses.
- The Incentivized Switching Scheme (ISS) - £350 million to encourage 120,000 small and medium-sized enterprises (SMEs) to switch from traditional banks to challengers like Metro Bank, Tide, and Monzo.
Huge impact from these investments?
- Digital first banks like Starling and Monzo used the funding to roll out modern and user friendly mobile apps, faster payment systems, and lower fees. Starling Bank, for example, grew its SME customer base by 600% between 2018 and 2021. Challenger banks flourished.
- The ISS increased customer mobility and helped over 85,000 SMEs switch banks, giving smaller financial institutions the opportunity to compete and grow their market share.
See: Reversing Canada’s Digital Economy Productivity Decline
- The UK became a global fintech leader and hub, attracting $11.6 billion in fintech investment in 2021 alone, according to Innovate Finance. This was more than the combined fintech investment of Germany, France, and Sweden that year.
- The fintech sector contributed over £11 billion to the UK economy in 2020 and supported over 76,000 jobs.
Why it matters? Canada can learn from the UK
Adopting some of the UK’s strategies would increase competition and innovation in Canada, which is plagued with low productivity, higher fees, limited choice. With targeted investments in fintech through funds like CIF, more Canadian fintech startups could develop leading financial tools.
See: Canada Can Learn from UK’s £100M Public Service Reform
Further, adopting Open Banking (consumer-driven finance) on an accelerated timeline where customers can share their financial data securely would also make it easier to switch bank providers and spur competition, giving small businesses and consumers better options, lower fees, and improved services. This all leads to a growth orientated economy where all stakeholder's needs are met in a modernized, reinvigorated financial sector.
Closing Thought
Canada is making some progress with Open Banking but the pace is slow compared to global peers. By learning from the UK’s experience, Canada could accelerate innovation, attract investment, and ensure a more inclusive financial system.
"Improving banking competition isn’t just about breaking up monopolies. It’s about creating a financial system that works for everyone."
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
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OpenAI’s Latest Updates Stock Sale, Lawsuit & Innovations
OpenAI | Dec 19, 2024
Image: Freepik/starline
OpenAI Makes Headlines with Employee Stock Sales, AI Updates, and Musk Lawsuit
It's been a whirlwind for OpenAI, capturing the tech world's attention with all kinds of developments from a private stock sale that will turn hundreds of employees into millionaires to a high profile lawsuit and exciting product launches. Here's what you need to know to stay informed.
Key Developments
1. Employee Stock Tender Offer
About 400 OpenAI employees (and former employees) are being given the opportunity to sell some of their shares in a private SoftBank-led stock sale at a company valuation of $86 billion. Some potential payouts are up to $10 million each, and if they sell, they can still continue working there, which is unlike traditional stock sales that might happen when employees leave or during an IPO. This approach aligns incentives in a way that rewards employees while encouraging them to stay (without going public). This deal sees SoftBank increasing their investment in AI driven by products like ChatGPT now with over 100 million users.
2. Elon Musk Lawsuit
Musk (co-founder and early investor in OpenAI) initially filed a lawsuit against OpenAI on Feb 29, 2024 saying that it shifted fro its nonprofit mission to a for profit model. He withdrew the lawsuit in June but reinstated it in August citing concerns over OpenAI's direction and its partnership with Microsoft.
See: Elon Musk’s X Challenges California’s Deepfake Law
In Nov 2024, Musk tried to get a preliminary injunction to stop OpenAI from transitioning to a for profit entity, claiming that it creates unfair competition for his own AI venture called xAI. In response, OpenAI released communications indicating that Musk himself had previously supported the idea of incorporating a for profit component into the company's structure and that Musk's legal actions are baseless and could harm operations. A court hearing is scheduled for January 14, 2025 to address Musk's injunction request.
3. Sora Launch
OpenAI officially launched Sora, its genAI video model that allows users to create videos from just text prompts. It has many interesting features such as Remix, Loop, and Blend to support the creativity of video content creators. Early reviews suggest that there are limitations in Sora's ability to create realistic or seamless video sequences and capabilities are still in development.
4. "12 Days of OpenAI"
OpenAI is wishing AI developers and enthusiasts happy holidays by launching a “12 Days of OpenAI” event that reveals new tools daily for twelve days straight.
- Dec 5: Launch of OpenAI o1 and ChatGPT Pro subscription plan
- Dec 6: Expansion of Reinforcement Fine Tuning research program
- Dec 9: Public release of Sora, a text-to-video AI tool
- Dec 10: Launch of Canvas for collaborative writing and coding
- Dec 11: Integration of ChatGPT across Apple platforms like Siri
- Dec 12: Enhanced voice features with video and festiv Santa Mode
See: Israel’s AI Stock Advisor Approved: Will Canada Follow Suit?
- Dec 13: Introduction of Projects for organizing AI interactions
- Dec 16: ChatGPT Search for accurate answers from the web
- Dec 17: New tools for developers, including fine-tuning methods
- Dec 18: Launch of 1-800-CHATGPT phone access in the U.S.
- Dec 19: TBD
- Dec 20: TBD
4. ChatGPT Gets Accessibility Boost
- American users can now call 1-800-CHATGPT and interact with the AI over the phone. Each user gets 15 minutes of free talk time per month.
- Also, ChatGPT is now available on WhatsApp with a new integration, bringing AI to millions of users globally.
5. Defense Partnership with Anduril
OpenAI has partnered with defense technology company Anduril to develop AI solutions for national security, especially fending off unmanned drone threats. AI is increasing its role in military applications with the U.S. Department of Defense actively researching innovative AI tools for operational use.
In Closing
It's important to stay abreast of the latest innovations and emerging technologies. OpenAI's latest advancements can provide fintechs with opportunities to enhance customer experiences, streamline operations, and drive innovation.
Explore More AI Insights
- The Frontline of AI’s Copyright Law Battle in 2024
Examine the evolving intersection of AI and copyright law, and its implications for creators and businesses in the digital age. - OSC/EY Report: AI in Fintech Use Cases
Discover how AI is revolutionizing capital markets and the fintech sector, with insights into regulatory perspectives and practical applications. - A Look Inside Canada’s AI Commercialization Challenge
Delve into the hurdles and opportunities in commercializing AI innovations within Canada, and their broader economic impact.
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
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Open Banking Delayed to 2026, Favours Banks Over Innovation
Consumer-Driven Finance | Dec 18, 2024
Image generated by AI
Open Banking Delayed to 2026, Leaving Canada Behind While Favouring Banks
If you haven't realized it, Canada likes to delay the rollout of national projects (i.e, Trans mountain pipeline, national housing strategy, Phoenix pay system, high speed rail projects etc), and while it was painfully anticipated, the Canadian government announced its complete framework for the implementation of Consumer-driven Finance (Open Banking) in the 2024 Fall Economic Statement (FES), which will now be delayed to 2026. It's one of those 'we told you so moments' and this comes after years of promises and stalled progress. These delays and execution challenges put fintechs and consumers at a disadvantage, and undermines Canada's capacity for financial innovation and to remain globally competitive (among peer countries).
The announcement at least included more funding to the tune of $44.3 million over three years for the Financial Consumer Agency of Canada (FCAC) to enhance its capacity to supervise and regulate the consumer-driven finance framework. But it's the extended timeline that has left many industry stakeholders and investors questioning Canada's ability to keep pace with modern times. Countries like the UK and Australia have shown how robust open banking systems can unlock competition and innovation in financial services. Yet, Canada’s fragmented and overly cautious approach risks falling further behind these global leaders.
What’s the Problem?
The government is opting for a phased rollout, starting with mandatory participation of large, federally regulated banks. Then smaller financial institutions, such as credit unions, and fintech companies must opt in, assuming they can meet the same strict accreditation standards as large banks. This uniform approach to accreditation doesn't differentiate between the size or risk level between participants, imposing an undue burden on smaller players. A one size fits all requirement will make it harder for smaller players to participate, stifling the very innovation the framework is hoping to stimulate in the first place (sigh).
The plan is to start with limited functionality such as read-only data sharing, delaying more advanced functionality like payment initiation to the future (without a clear timeline leaving fintechs in the dark). It's likely the combination of prioritizing large incumbent banks while delaying access for smaller more innovative fintechs will hurt competition and innovation in the fintech sector.
See: Why Canadian Banks Are Fighting Open Banking
Originally the Financial Consumer Agency of Canada (FCAC) was adorned to supervisor and regulate open banking but adding to the complexity it was announced in FES 2024 that provincial regulators will now also be involved, risking fragmentation and unnecessary layers of bureaucracy. It echoes past mistakes made during the rollout of equity crowdfunding (also see NCFA's submission to Finance Canada re: urgent need for regulatory change and support) where fragmented provincial rules created confusion and inefficiencies, discouraging adoption while adding costs to compliant operators - only to realize this mistake several years later and work to harmonize regulations which was far too late, hurting the investment crowdfunding sector before it got off the ground.
Meanwhile, consumers are still dependent on screen scraping practices which is an outdated and risky practice with cyber security issues rampant.
Why It Matters
Globally, countries that have adopted open banking are seeing boosts to financial inclusion, productivity, and market driven innovation. In the UK for example, open banking has driven competition and productivity by making financial services more accessible and transparent. They are now advancing further ahead and expanding towards open finance.
In Australia, its Consumer Data Right policy is ushering in a new wave of fintech solutions that are giving consumers more choice and improving business efficiency.
Without any sense of urgency, Canada (again) risks falling further behind and sends the wrong message to investors and leading innovators that is 'Canada is hesitant to innovate' and struggles with implementing national frameworks that drive economic growth.
Lessons from the UK and Australia
Both the UK and Australia have implemented TIERED accreditation systems (not a one size fits all like Canada), which allows a diverse range of participants in open banking while maintaining high standards for security and consumer protection.
In the UK, the Financial Conduct Authority (FCA) employs a flexible, risk-based approach, allowing small fintechs to enter the market without being overwhelmed by compliance requirements. Early functionalities like payment initiation and account aggregation have become widely available, demonstrating how a structured yet inclusive system can deliver great value to consumers.
See: U.S. Open Banking Rule Lawsuit and Canada’s Implications
Australia's Consumer Data Right (CDR) framework also uses a tiered accreditation system to ensure participation by innovative fintechs. Smaller fintechs can partner with Accredited Data Recipients (ADRs) to access data under reduced compliance obligations using a “Trusted Adviser” model, allowing lower risk entities like financial advisors to provide services without heavy regulatory burdens. It's this tiered approach together with a clear timeline for expanded functionality that has accelerated adoption and innovation.
Finding Solutions for Canada
Canada’s framework should be more inclusive with less friction and more in line with global peers. It's uniform accreditation process is too ridged and should be a risk-based system. Smaller players offering low-risk services like a budgeting app should not face the same compliance burdens as payment processors or lending platforms. Adopting a tiered accreditation model like in the UK and Australia would stimulate a more innovative and competitive fintech environment.
Streamlining governance and oversight is also paramount. The FCAC should take a leading role with minimal provincial overlap to avoid jurisdictional conflicts and inefficiencies. The whole framework should encourage participation from coast to coast and reduce compliance burdens for fintechs.
See: Canada’s Open Banking Framework 2024 Preview
The FCAC should take their increased funding and fast track the open banking timeline and add clear deadlines for introducing core functionalities like payment initiation. Fintechs, investors, consumer alike all need more certainty and collaboration if open banking is to be more practical, widely adopted and successful.
Outlook
Canada should learn from global leaders in open banking who have amassed a ton of implementation experience if they want to avoid missteps. Canada needs to use this opportunity to boost its position as a global innovator in financial services. Delays hurt everyone from consumers to fintechs and the economy at large. It's time for Canada to step up and get open banking right.
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
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TD Bank Scandal Update: $3B Fine, Arrests, and Scrutiny
AML | Dec 18, 2024
Image: Pixabay/Alexandra Koch
TD Bank Under Pressure as ex-Employee Arrested and U.S. Senators Demanding Answers
Back in May 2024, the TD Bank money-laundering scandal hit wires with the CEO Bharat Masrani departing amid a monstrous $3B fine. Yes, that's the same TD Bank Chief that was seeking a level playing field with startup fintechs back in 2016. In October 2024, TD Bank pleaded guilty to violating U.S. anti-money laundering laws and agreed to pay over $3 billion in penalties, the largest fine ever in AML regulations. The bank also received an asst cap of approx $434 billion that restricts growth in U.S. operations until AML deficiencies meet regulatory requirements.
See: 4 AML Challenges for 2024 and Beyond
Since then, as reported in the Wall Street Journal, U.S. Senators Ron Wyden and Elizabeth Warren have written to TD’s Bharat Masrani asking for clarity on what bank executives knew and how they responded to a scheme that laundered over $470 million of drug sales through the Canadian bank, raising accountability questions.
Former TD Employees Arrested
While Da Ying Sze was the mastermind behind the $470 million laundering scheme, he was external to the bank and exploited the bank's vulnerabilities. In February 2022, Sze (also called David) pleaded guilty to multiple money laundering related charges and worked with at least 3 now arrested former TD Bank employees who facilitated.
- The first arrest took place in March 2024. Gerardo Aquino who worked at a branch in Hollywood, Florida was charged with taking bribes to open fake accounts that were used to transfer millions of dollars to Colombia, bypassing AML safeguards.
- The second arrest was in November 2024. Daria Sewell who worked in TD Bank's AML department in Manhattan, New York was charged with stealing personal customer data, and sharing this information on Telegram, which was used to bypass the bank's compliance efforts.
- The latest arrest came in December 2024, when Leonardo Ayala, a former employee in Doral, Florida who accepted bribes to issue debit cards and set up shell accounts that criminals used to launder money through the bank.
See: Elliptic Publishes New Research on AI and Money Laundering
According to the WSJ article, TD Bank employees flagged Da Ying Sze’s suspicious activity - some even joking about it in emails. One store manager warned a colleague, “You guys really need to shut this down LOL,” while another expressed concern that tellers felt uncomfortable handling the transactions. Higher-level executives were also aware of the risks. Senators are questioning the bank's accountability and how much executives knew about what was going on.
TD Bank's Repsponse
Spokesperson said:
“We appreciate the concerns expressed by Senators Warren and Wyden. TD has taken full responsibility for its AML [anti-money-laundering] program failures and is making significant investments and enhancements to meet regulatory obligations and help protect the financial system.”
Canadian Regulatory Response
In response, the Canadian government has proposed stronger anti-money laundering rules including tougher penalties, criminal charges for providing false information, and expanded powers for FINTRAC. The Fall Economic Statement (FES) of December 2024 included these changes but this year's FES was largely derailed by Chrystia Freeland, Canada's Finance Ministers' sudden resignation.
Closing
TD Bank’s AML scandal has adversely impacted the bank's financial performance and reputation. Fourth quarter profits fell short of expectations prompting a suspension of mid-term financial growth targets. More likely to come...
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
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Narwhal Project: Growth Insights from the Class of 2014
Scale-up Research | Dec 18, 2024
Image: The Class of 2014 (Narhwal project, Charles Plant)
Scaling Canadian Fintech and Lessons from the Narwhal Project Class of 2014
Ten years ago Canada’s tech sector had launched 260 startups that had raised at least $500,000 in what became known as the "Class of 2014" (14 page PDF). These companies not only showed early promise and were supported by the ecosystem at the time to kickstart their journey.
Charles Plant, founder of The Narwhal Project and an expert in scaling companies analyzed how the class of 2014 performed over the past decade, comparing their progress with international comparators like the U.S., UK, Israel, France, and Germany to gain deeper insights into the wins and struggles of Canadian startups. For fintech entrepreneurs, these data-driven insights offer powerful lessons about the art of scaling. This article explores strategies to scale in today's competitive global market.
Strong Start, Weak Scalability
It's certainly not the first time you've heard this about Canada's entrepreneurial ecosystem including in fintech - see Canada's innovation paradox: strong start, missing impact. Or dare I say like the Toronto Maple Leafs!
So here's the good news. The data analysis confirms that Canadian startups are good at raising early-stage funding (think Pre-seed, Seed, Series A). The Class of 2014 companies raised an average of $30 million each, which outpaced many peers in the study including France, Germany, the UK, and Israel yet lagged the U.S. with average funding of $49.4 million per company. Fintech founders should feel optimistic about Canada being a strong environment for early investors (includes government).
See: Tipalti Expands Canadian Operations with Localized Solutions
But here’s the catch. Only 8.4% of these companies successfully closed a Series B funding round. That’s the lowest success rate among the countries studied and well behind Israel (16.6%) and the U.S. (13.9%). Series B is really where the rubber hits the road for many of these companies who scale aggressively by hiring talent, entering new markets, strengthening their competitive tech stack and operations.
Fintech growth often depends on scaling the acquisition of new customers and successfully navigating complex markets but the inability to rise Series B is a serious challenge that goes beyond funding and points to systemic problems, such as over reliance on government grant funding, lack of sales and marketing, smaller domestic market, and then there's the so called risk adverse culture - they all need to breakthrough and change.
20% of the Class of 2014’s top companies relied on grant funding in their last raise, which was more than double the rate of any other country. Use grants as a springboard, not a crutch, as you are operating in a competitive and market driven environment.
Fintechs Need Better Sales and Marketing
Canada’s startups don’t fail because they can’t innovate. Almost 95% of the Class of 2014 had the technical chops to build compelling products and secure Seed funding but the issue was around commercialization. They couldn't take those products to market with the save fervour as their peer countries. Many companies failed due to lack of product-market fit, couldn't identify large enough markets or couldn't market effectively/efficiently.
See: Key Findings from 2025 Advanced Payments and Fintech Survey
Fintechs need to understand that to grow, they need top customer acquisition strategies, build trust with users, and strike key partnerships with established players like banks, payment networks, enterprise platforms, or ecosystems. They should not neglect to prioritize targeted, data-driven, sales and marketing from day one. If they aren't selling, they aren't iterating.
Global Expansion An Opportunity or Distraction?
Canada is a small market. Fintech startups know this better than anyone and often look globally for expansive growth but the Narwhal Project’s data shows why this isn’t always straightforward. While global markets can be lucrative, they are also highly regulated, diverse, and competitive. Take payment preferences for example. In Asia, QR codes currently dominate. In Europe, open banking laws encourage innovation and competition. In Canada, entrenched incumbents without much competition make disruption harder. Expanding without understanding these nuances can derail growth.
Fintech firms should approach global expansion as a pilot or phased rollout instead of all or nothing. Look for regions that align with your product/service offerings, such as mobile-first banking solutions for regions with large underbanked populations such as Africa or Southeast Asia. Always localize, meaning integrate with regional payment systems, learn the local cultural attitudes towards money, and build compliance frameworks for each market.
Underwhelming IPOs and Acquisitions
Canada lags in both IPOs and acquisitions. Only 2.2% of the Class of 2014 went IPO and listed on senior exchanges versus the U.S. (3.1%) and Israel (4.4%). While five Canadian companies went public on major exchanges, their average funding was just $57 million compared to the U.S. average of $364.4 million per IPO.
See: As AI-driven IPOs Take Center Stage, What Could go Wrong?
The acquisition story is similar. Only 10.4% of Canadian startups were acquired compared to 21.8% in Germany. Further, the average pre-acquisition value of Canadian companies was $12.8 million compared to $37 million global benchmark. This points to startups selling out early or missing the opportunity to grow into market leaders.
Fintechs should focus on long term value creation and instead of giving into the pressures of selling out early, founders should cultivate relationships with investors that can provide follow-on later stage funding to give the company a longer scale-up runway and unlock bigger exit opportunities. They can look to private markets. Also, organic growth is arguably underrated in fintech. In the current economic climate, fintechs are relying less on aggressive fundraising to fuel growth but are focused on profitability and revenue-first growth which attracts higher quality and deeper investors.
Takeways Fintech Growth
The Class of 2014 is like looking into a mirror as it shows Canada's strengths and weaknesses in tech, and fintech is no exception. The data shows a better playbook and pathway forward:
- Make sure your product solves a real problem for a large audience and build a business model that can grow over time before expanding too quickly.
- Invest in strong sales and marketing teams to reach the right customers and grow your market share.
- Expand internationally step by step, using data to guide decisions and adapt to local needs.
See: BoE Report: Open Banking Boosts Productivity, Competition
- Grants are okay but combine with private funding to stay competitive and set up for long-term growth.
- Focus on building a company that grows long term value and aims for bigger milestones instead of selling (out) too early.
Canadian fintechs have the potential to lead on the global stage. The challenge is clear but so is the opportunity.
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
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