Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Entrepreneurs, Start-ups, Small Businesses
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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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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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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Who Should Apply For a Small Business Loan Online?
Dec 17, 2024
Image: Freepik/shurkin son
There are various financing solutions available to your business, from term loans from banks and online lenders, to microloans. This article will briefly review some common methods.
Traditional lenders typically require good credit, two years in business and extensive paperwork in order to qualify for loans. Furthermore, collateral may also be required along with personal guarantees as conditions of their loans.
Small business loans with Greenbox Capital offer a more flexible and accessible financing option for businesses оf all sizes. With a focus оn supporting entrepreneurs, Greenbox Capital provides a streamlined application process and quick funding decisions.
Businesses looking to open another location
If your customer base and sales have grown steadily over time, now may be an opportune time to expand by opening another location. Doing so can bring more revenue, greater presence in a market or the opportunity to test out a product or service you may have been working on in secret.
Before applying for a small business loan, make sure your company is ready for expansion. This involves having solid inventory management systems in place as well as financial security to cover additional location costs. Furthermore, profitability over an extended period must also be demonstrated by demonstrating consistent profits over time.
An effective personal and business credit scores are both important components when applying for a small business loan. Lenders use these scores to assess your ability to repay loans and will look for an adequate ratio between debt-service coverage and income - this ensures your cash flows can support repayment without negatively affecting operations of your business.
Private lenders may be an attractive option if your business doesn't fit within the parameters of government loan programs, such as being in business for a certain length of time or meeting minimum credit score requirements. Some offer unsecured small business loans while others require collateral like commercial real estate or vehicles as security.
Business loans іn Ontario can be a valuable tool for businesses looking tо expand оr improve their operations. By understanding the different types оf loans available and the specific requirements оf lenders, you can increase your chances оf securing the financing you need.
Businesses looking to purchase or upgrade equipment
If you need to upgrade equipment, furniture, supplies or inventory for your small business, applying for a small business loan might be necessary. Such financing allows you to expand operations while drawing in new customers; however, to qualify you'll have to meet specific criteria, including meeting credit, financial and business requirements or offering collateral - having these documents ready can speed up the process and help ensure a swift arrival of funds.
Before applying for business loans, it's essential that you fully comprehend their various types and the way they operate. Some lenders only require your personal and business credit scores while others may need verification of revenue and length of time in business. Furthermore, you should explore each lender's application and funding timelines; online lenders usually have quicker processing and disbursement periods compared with traditional brick-and-mortar banks.
Once you've decided which financing to apply for, it's time to assess its application and funding requirements. Some lenders allow online applications while others require in-person interviews or extensive documentation. You will also need to determine what collateral you can offer as most business loans require collateral as a safeguard in case repayment becomes impossible.
Businesses with low credit or in need cash flow during a seasonal rush or slowdown
Lenders want to see that you are generating enough income to cover your bills, and can repay a loan in full. Affiliating all income with one checking account will assist in this regard; invoicing invoices promptly is also beneficial, while following up promptly when payments become late. Furthermore, creating cash flow projections that span 12 months and compare them against actual earnings on an ongoing basis may further bolster your chances.
Lenders' requirements for business loans will differ, with most requiring personal and business credit scores as well as at least two years in operation before considering offering funding. Some may require collateral or even personal guarantees in some instances.
To secure a small business loan, it's necessary to prepare comprehensive documentation that includes your business plan and financial statements. These typically include your personal and business tax returns, profit and loss statements and bank account statements for both you and your business.
Once you've collected all of the required information, apply for a loan with a lender that best meets your needs - either online or in person - that offers terms, interest rates and disbursement processes tailored specifically for you. Keep in mind that different lenders offer differing terms, interest rates and disbursement processes - some may have faster approval processes than traditional brick-and-mortar banks making online lenders an appealing option for busy entrepreneurs needing quick access to funding.
Minority-owned or women-owned businesses
Minority or women-owned businesses (MWB or M/WBs) are commercial enterprises owned, controlled, and operated primarily by one or more women or men who control at least 51% of its voting stock and oversee its daily decision making and operations.
The federal government has set goals to support and assist these businesses. Some larger corporations also offer programs designed to assist certified minority- and women-owned business companies, offering advantages like access to financial counseling as well as networking with industry leaders.
See: Strategies for Achieving Product-Market Fit in Web3
Begin your certification journey by gathering all the requirements necessary. Both the National Minority Supplier Development Council and Women's Business Enterprise National Council offer websites listing all necessary materials. Once collected, an employee from these organizations will visit your company to observe its operations firsthand and verify any necessary details. Once complete, pay your certification fee which typically ranges between $350 to $1,250 - complete your application and begin!
Apply to the Business Diversity Lending Program, which offers funding to small businesses owned and run by minority groups or women in the US. Requirements of this program include being owned or run by women/minority owners with less than $15 million net worth and having at least $5 million annual revenue.
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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US Financial Surveillance Report Shows Privacy in Crisis
Privacy Report | Dec 13, 2024
How U.S. Surveillance Practices Threaten Financial Privacy and Innovation
Financial privacy is at a crossroads. Another 'eye opening' report dropped December 6, 2024 by the U.S. House Judiciary Committee and the Select Subcommittee on the Weaponization of the Federal Government titled, "How the Federal Government Weaponized the Bank Secrecy Act to Spy on Americans" (47 page PDF) reveals alarming financial surveillance systems being used in the United States. Using laws like the Bank Secrecy Act (BSA), federal agencies use financial institutions to monitor millions of Americans without their knowledge or consent. These findings have serious implications for fintech, innovation, and consumer trust. There's a tug of war between security and privacy and it's reaching a breaking point.
The Scale of Financial Surveillance
Last year in 2023, financial institutions filed 4.6 million Suspicious Activity Reports (SARs) and 20.8 million Currency Transaction Reports (CTRs) with the Financial Crimes Enforcement Network (FinCEN). Over 25,000 government officials at various levels accessed this data without legal warrants to conduct over 3.3 million searches using the FinCEN Query system. FinCEN's integrated access program allowed approx. 27,000 users across nine federal agencies to download entire datasets of financial records with minimal oversight.
Financial institutions often outsource compliance tasks to third party vendors which raises questions about data security and privacy breaches under the confidentiality rules under the Bank Secrecy Act. Another layer of exposure risk.
See: Opinion: The Financial Surveillance System May Be Less a Tool for Crime Prevention than a Means of Bureaucratic Ass Covering
The report describes a system that encourages banks to over-report SARs to avoid penalties for non-compliance (even when the reported activity is unlikely to be connected with a crime or wrongdoing).
Jimmy Kirby, FinCEN Deputy Director:
"There’s the mandatory requirement and then there’s the ability to voluntarily file, as the statutory construct laid out by Congress really is to encourage filing. So... there’s the ones you’re required to file, but there’s also very much an encouragement for people to voluntarily file beyond what they’re required to file."
Weaponization of Financial Data
The use of financial data to target specific individuals or groups is critical issue for policymakers, and has been increasing in recent years. Especially after Jan 6, 2021 uprising in the U.S. where institutions were told to flag individuals on politically charged criteria, such as purchasing firearms, travel to Washington, D.C., staying at specific hotels etc.
See: Surveillance Capitalism: Policymakers must put an end to abusive practices
A similar situation happened here in Canada too during the trucker protests of 2022. Canadian federal agencies used the Emergencies Act to direct banks to freeze accounts of individuals and organizations linked to the protest. They also instructed crypto exchanges to cut off crypto user accounts linked to the protests. Donation- based crowdfunding platforms were also caught in the fire as FINTRAC's knee jerk reaction to impose unwarranted AML/ATF requirements on them without any data-driven analysis.
Daryl Hatton, Founder and CEO of FundRazr:
“In summary, the regulations are ineffective, burdensome, anti-competitive, and damaging to both the domestic donation crowdfunding sector and the Canadian nonprofit/charitable sector. The goal of protecting Canadians from money laundering and terrorism is laudable, but these regulations should be scrapped, and new regulations drafted in full consultation with stakeholders.”
Implications for Fintech and Innovation
Fintech firms operating in the U.S. (especially smaller ones) in some capacity can find themselves swamped by compliance costs which eat up valuable resources away from innovation. For example, a Canadian payment processor may find that routine transactions under Canadian regulations could trigger SARs in the U.S., adding to compliance and operational costs.
See: Privacy and Crypto Shaken as Telegram’s CEO Arrested
Or consider, a crypto platform doing business in the U.S. could encounter conflicting demands such as when U.S. regulators request data but Canadian privacy laws protect that data. These different regulatory environments create frictions.
Why It Matters
Excessive surveillance hurts consumer trust and adversely impacts the adoption of fintech solutions. Use your voice and emerging technology to demand accountability and create private, ethical systems that balance security with individual rights, ensuring a future free from weaponizing financial data inappropriately.
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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Loop & EQ Bank Launch Multi-Currency Card for Canadian SMEs
Loop | Release | Dec 11, 2024
Image courtesy of Loop
Loop and EQ Bank Partner to Launch Canada’s First Multi-Currency SME Credit Card
Canadian financial platform for businesses, Loop, in partnership with EQ Bank have launched the Loop Global Visa Card, Canada's first multi-currency corporate credit card tailored for small and medium-sized enterprises (SMEs). The card simplifies cross-border transactions and offers SMEs the flexibility to operate in multiple currencies.
Why This Matters for Canadian SMEs
For many SMEs doing business overseas is riddled with high fees, unfavorable exchange rates, and complex expense tracking, creating significant barriers for companies looking to export abroad, especially in the face of global trade challenges like Trump's recent 25% tariff threat on imports. Loop is stepping up to provide smarter, lower-cost solutions specifically for the Canadian business landscape. With only 12.1% of Canadian SMEs exporting goods and services as of 2020, tools like the Loop Global Visa Card are designed to simplify international payments and reduce costs, helping more businesses operate globally.
In 2023, 97% of exporting firms were SMEs, contributing about 40% of Canada's total export value per the Canadian Federation of Independent Businesses trade research. The global marketplace is increasingly accessible yet Canadian SMEs face challenges in international trade with high barriers to entry in foreign markets compared to larger firms.
See: Loop Raises $6.4M CAD for SMB Global Finance Platform
Innovations like the Loop Global Visa Card can help level the playing field by streamlining financial complexities. Further, there's lots of room for growth. According to Global Affairs Canada in 2023, Canada's international trade reached a record $965.1 billion CAD but only 12.1% of Canadian SMEs were engaged in exporting goods and services (as of 2020).
Let's look at a couple of practical examples:
Save on forex rates - a Canadian e-commerce company sources products from Europe. With the Loop Global Visa Card, they can pay suppliers in EUR without incurring foreign exchange fees, reducing costs and simplifying accounting.
Issuing payroll smoothly in local currencies - a tech startup employs remote developers in the U.S. The card allows them to issue virtual cards in USD for payroll, avoiding currency conversion hassles while providing clear spend controls.
Key Features of the Loop Global Visa Card
- Use the card to pay in multiple currencies and settle in CAD, USD, EUR, and GBP, avoiding unwanted currency exchange fees(manage currency risks).
- Get access to Loop’s competitive exchange rates to keep international transactions affordable and save on rates.
- Create limits for physical or virtual cards, restrict purchases to specific categories, or control spending in certain currencies.
- Get automatic coverage of up to $25,000 per cardholder for unauthorized charges.
- Use the card with local vendors or global suppliers wherever Visa is accepted.
- No annual fees!
- Use the card as part of Loop’s platform to manage payments, currency exchange, and finances in one place.
- Note, this card is for business use only and cannot be used for personal, family, or household expenses. Certain restrictions may apply.
See: Explore Export Resources for Canadian Businsses
How does the Loop Global Visa Card compare with Traditional Corporate business cards?
| Feature | Loop Global Visa Card | Traditional Corporate Cards |
|---|---|---|
| Multi-Currency Settlement | Yes (CAD, USD, EUR, GBP) | Limited or No |
| Foreign Exchange Fees | None | Typically 2.5% per transaction |
| Spend Controls | Customizable limits, category restrictions, currency-specific controls | Basic controls |
| Annual Fees | None | $99–$500+ |
| Global Acceptance | Yes, anywhere Visa is accepted | Yes |
Ready to Expand Globally?
The Loop Global Visa Card helps Canadian businesses to compete globally by simplifying international payments while reducing costs so they can focus on growth and innovating. The Loop Global Visa Card is available to Canadian businesses (excluding sole proprietors in Quebec). To learn more or apply, visit www.loopcard.ca.
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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Digital Export Trends and Global Trade Fintech Opportunities
Digital Trade | Dec 10, 2024
Image: Global Trade Outlook and Statistics (WTO, Apr 2024)
WTO Global Digital Trade Growth Insights and Fintech Opportunities
The World Trade Organization published a comprehensive report on 'Global Trade Outlook and Statistics' (48 page PDF, April 2024) highlighting the growth of digitally delivered services in 2023 which accounted for 13.8% of total global exports (9% increase year over year) for a total value of $4.25 trillion.
See: IMF Working on Global CBDC Platform to Revolutionize Global Remittances and Trade
This includes categories such as IT/software development and support, financial services, media streaming, research, and e-learning. Canada ranked 16th with the United States, United Kingdom, and Ireland capturing the top 3 spots among digital exporters (see table below). There are significant opportunities for fintech in the expanding digital global trade sector.
Top 20 Digital Exporters
Visual capitalist created a great infographic that helps you visualize and compare the top 20 digital exporters table data below, view here.
| Rank | Country | Export Value (USD) | Global Share (%) |
|---|---|---|---|
| 1 | United States | $649 billion | 15.3% |
| 2 | United Kingdom | $438 billion | 10.3% |
| 3 | Ireland | $328 billion | 7.7% |
| 4 | Germany | $279 billion | 6.6% |
| 5 | India | $257 billion | 6.1% |
| 6 | France | $225 billion | 5.3% |
| 7 | Netherlands | $207 billion | 4.9% |
| 8 | China | $207 billion | 4.9% |
| 9 | Japan | $162 billion | 3.8% |
| 10 | Switzerland | $155 billion | 3.7% |
| 11 | Singapore | $153 billion | 3.6% |
| 12 | Belgium | $143 billion | 3.4% |
| 13 | Sweden | $132 billion | 3.1% |
| 14 | Spain | $128 billion | 3.0% |
| 15 | Italy | $125 billion | 2.9% |
| 16 | Canada | $118 billion | 2.8% |
| 17 | Luxembourg | $112 billion | 2.6% |
| 18 | Denmark | $110 billion | 2.6% |
| 19 | Hong Kong | $105 billion | 2.5% |
| 20 | Australia | $100 billion | 2.4% |
Select Data Insights from the Report
1. Growth by Regions
- North America: The U.S. leads with $649 billion in digital exports due to its strong technology, great infrastructure, and large consumer market.
- Europe: Countries like the U.K., Ireland, and Germany are top exporters and rank high on the list thanks to strong technology sectors and supportive government policies.
See: 2024 Global Payments Growth, Trends, and Fintech’s Edge
- Asia: India and China are rising stars and growing fast. India’s IT services grew 17% last year, and China’s digital exports doubled since 2019.
- Emerging Markets: Singapore and Hong Kong are key players in Southeast Asia, driving growth in fintech and IT services.
2. Key Trends
- Digital trade grew 9% yoy and reached $4.25 trillion in 2023. Digital services like IT and financial services enjoyed double-digit growth as more and more businesses and consumers transact more online.
- Unlike physical goods, digital services were less affected by conflicts and supply chain issues. They bounced back quickly after the pandemic with trade now 50% higher than pre-pandemic levels.
- Sustainability and ESG compliance is becoming an important part of digital trade. For example in 2023, demand for insurance services that addressed climate and geopolitical risks grew by 17%.
- Regions with smart policies and trade agreements like the EU experienced strong growth in digital services (i.e., business services alone grew by 13% in 2023).
3. Breakdown by Service Type
- Business, professional, and technical services: 41.2%.
- Computer services: 20.5%.
- Financial services: 16.0%.
- Intellectual property-related services: 10.9%.
See: Reversing Canada’s Digital Economy Productivity Decline
- Insurance services: 5.2%.
- Telecommunications services: 2.6%.
- Other personal, cultural, and recreational services: 2.1%.
- Information services: 1.5%
Fintech Opportunities in Digital Trade
1. Faster, Cheaper International Payments
Fintech companies like Wise and Ripple have democratized international payments. In Canada, Buckzy Payments is leading the charge with real-time cross-border payment solutions. Their platform allows businesses to transfer money across borders instantly which helps exporters avoid exchange rate risks and save on fees.
2. Smarter Trade Financing Options
For many exporters, managing cash flow is a challenge, especially when dealing with international buyers, however it an be easier with tools like invoice factoring and export insurance.
See: Breaking Down the Steps to Achieving Full Business Ownership in a Foreign Market
Canadian fintech FundThrough specializes in invoice factoring which is a fintech tool where businesses get paid upfront for their invoices. Their service is made for small and medium-sized exporters, helping the manage cash flow and expand internationally.
3. AI Insights to Drive Better Trade Decisions
Artificial intelligence is transforming trade decisions. Fintech companies can create platforms that analyze global markets, predict and pinpoint demand, improve trade route planning, and identify growth opportunities. Canadian AI startup, Coveo, provides businesses with advanced analytics to optimize operations and market strategies.
4. Automating Taxes and Compliance
Dealing with complex regulations and taxes is simplified by fintech solutions. Canadian company Wave Financial provides tools for automating invoicing, tax calculations, and financial compliance. While Wave focuses more on small businesses, its software can be adapted for exporters (opportunity). Imagine software that calculates tariffs, files tax reports, and ensures compliance with local laws and all in real time. This reduces errors, saves time, and helps businesses avoid costly penalties.
5. Financial Products that Promote Sustainability
Sustainability is becoming a global trade requirement. Fintech companies are creating tools that track carbon emissions, monitor ESG compliance, and provide financing for green initiatives.
See: Export resources for Canadian firms
Canadian fintech CoPower (now part of Vancity) offers green investment products such as loans for renewable energy and energy-efficient projects. These tools help companies align with sustainability goals while accessing financing for eco-friendly initiatives.
Challenges in Digital Trade
While digital trade opens up huge opportunities, it also comes with a lot of challenges that businesses must overcome to reap the rewards.
- Different tax rules in each country make it tough for exporters to stay compliant, adding extra headaches for businesses trying to expand globally.
- Increasing tariffs and trade restrictions are making it harder or more expensive for goods and services to move freely across borders.
- Political conflicts can disrupt trade routes, trigger sanctions, and create uncertainty, all adding risk for businesses looking to expand to new markets.
What Canada Needs to Do Next
To boost its ranking position as a leader in digital exports, Canada needs to invest in fintech innovation to solve practical world trade challenges. They need to build robust and reliable solutions that make global trade cheaper, more streamlined, and more predictable.
See: A Guide on Global Entity Management: Strategies & Services
Industry and government need to build more global connections and partner with global fintech hubs and trade organizations that can help Canadian fintechs tap into global expertise and markets. Canada needs simpler, trade-friendly policies to make it easier for businesses to expand their digital exports and improve Canada's competitiveness in global markets.
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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