Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
A Look Inside Canada’s AI Commercialization Challenge
AI and IP | Jun 27, 2024
Image: Freepik/jcomp
Can Canada Turn Valuable Research and IP into Market Success?
Canada is internationally recognized for its leadership in artificial intelligence (AI) research, with some of the world's best AI talent and institutions. Canada's AI ecosystem is robust, thanks to leading institutions including Amii in Edmonton, Mila in Montreal, and Vector Institute in Toronto. These institutes are key to the Pan-Canadian Artificial Intelligence Strategy, supporting AI innovation and delivering comprehensive initiatives to help businesses embrace AI technologies. Despite these advantages, the country fails to translate intellectual excellence into commercial success. This article analyzes a recent post on BNN Bloomberg and explores some key issues and their implications around the commercialization of AI in Canada, from various perspectives.
Barriers to Commercialization
1. Intellectual Property (IP) Ownership and Foreign Influence
Jim Hinton, IP lawyer:
"About three-quarters of patents produced by researchers who work for Toronto's Vector Institute and Montreal's Mila leave the country, and most of these are in the hands of Big Tech" and "Foreign companies benefit from Canada’s public funding, Hinton argued, and there are 'no guardrails put on the ability for these foreign companies to basically pillage Canada's really good AI invention."
See: OSFI’s New Security and Integrity Guideline 2024
The significant outflow of patents to foreign firms means that Canada loses control over the commercialization and potential economic benefits of its AI technologies. For example, if a pioneering AI algorithm developed at Mila is patented and acquired by a foreign tech behemoth such as Google or Uber, the economic gains, employment creation, and future development predominantly benefit the foreign entity. Canada requires rules that properly protect Canadian intellectual property and ensure the economic benefits of publicly financed research remain within the country.
2. Public vs Private Sector Employment Dynamics
Elissa Strome, Executive Director of the Canadian Institute for Advanced Research:
"..a small number of our researchers' have part-time employment in the private sector. Those private-sector organizations own the rights to the IP that is generated by those researchers,' she said, but only when they're on the clock for those companies."
See: Competition Act Amendments and What It Means for Fintech
The dual employment of researchers at academic institutions and private sector enterprises complicates the issue of intellectual property rights. For example, a researcher who works for both the Vector Institute and a private tech firm may develop important intellectual property during their private sector hours, which is then owned by the private enterprise. While this approach can promote collaboration and real-world scientific applications, it also increases the possibility of key intellectual property leaving the public domain, diminishing Canada's direct commercial gains. Strengthening the "firewall" between public and private research outputs could assist to reduce these dangers.
3. Value Beyond Patents
Elissa Strome, Executive Director of the Canadian Institute for Advanced Research:
"It's long-standing practice in Canadian research 'that there are relationships around contract research with industry,' and 'a really strong firewall' is in place between IP generated via public funds at the AI institutes and that which is generated through private funds. She also argued that patents are not a good measure of commercialization, and 'it’s the people that we're training in the AI ecosystem that actually hold the greatest value in AI, not patents."
This perspective highlights the importance of talent development over patent generation with human capital as the fundamental driver of commercialization. Training highly trained AI experts can be more valuable in the long term because they contribute to the larger ecosystem by pushing innovation and commercial applications.
See: The Talent Hunt: Innovative Techniques for Sourcing Skills in a Competitive Era
For example, a well-trained AI expert may start their own business or dramatically improve the capabilities of a Canadian corporation, boosting domestic commercial success and innovation. That said, and while we applaud the prioritization of human capital, any benefits may be muted if the related IP ends up being owned by a foreign organization.
4. Ecosystem Gaps
Nicole Janssen, co-CEO of AI company AltaML
"We definitely do not have the ecosystem of companies that you would expect for the amount of talent that we have."
Despite a large talent pool, Canada lacks the robust ecosystem required for effective commercialization of AI research. Only a few Canadian AI startups have achieved considerable scale when compared to those in the United States or Europe. Canadian AI startups, for example, may struggle to obtain the necessary local venture finance, business development experience, and market access to expand. Improving support systems, such as funding mechanisms, mentorship programs, and market access activities, can help close the gap and enable more successful commercialization of AI advances.
5. Lagging Behind in Commercialization
See: Canada’s Lagging AI Adoption Needs to Accelerate to Compete
Prime Minister Justin Trudeau, Prime Minister of Canada
"In spite of that, Canada hasn't always been 'great at commercializing,' Trudeau conceded."
Prime Minister Justin Trudeau's statement reiterates Canada's long-standing commercialization challenge of turning research into practical commercial goods. This lag can be noticed in the time it takes for AI ideas to go from concept to commercialization. "AltaML takes an average of 18 months to begin developing an AI product in Canada, compared to four months in the United States," Nicole Janssen, co-CEO explains. For example, Canadian AI firms may take longer to get finance, navigate regulatory approvals, and develop market presence than their American counterparts. This delay affects Canadian companies' ability to compete globally and reap the economic advantages of their technologies.
Leadership Opportunity in Responsible AI
Nicole Janssen, co-CEO of AI company AltaML:
"Canada could be a leader in responsible AI. That is a title that is up for grabs,' she said. 'And no one has grabbed it yet."
The emphasis on responsible AI provides a chance for Canada to stand out globally. By emphasizing ethical AI development and application, Canada may attract firms and researchers who appreciate these principles. For example, developing standards and frameworks for responsible AI use can help Canada become a global leader in this field, drawing foreign partnerships and investments. This focus would help boost commercialization in Canada while ensuring that AI breakthroughs benefit society, balancing economic success with ethical considerations.
Conclusion
By implementing strategic policies, improving support systems, and focusing on responsible AI, Canada may harvest its research assets for economic and societal benefits. Addressing these challenges will be crucial for Canada to maintain its leadership in AI research and translate it into commercial success.
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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How to Make the Roads Safer for Cyclists
Jun 19, 2024
Image: Freepik
The quest for safer roads is a shared concern among urban planners, cyclists, and policymakers. The popularity of cycling as a mode of transportation, sport, and leisure activity has been constantly rising in the past. This has made it more critical than ever to ensure the safety of cyclists.
This article explores the rise in cycling accidents and outlines strategies cities can implement to protect cyclists and promote a bike-friendly environment.
The Rising Accidents of Cyclists
Cycling has surged in popularity recently, driven by its health benefits, environmental advantages, and cost-effectiveness. A report from Statista shows that around 54.7 million Americans participated in cycling, an increase from 51.4 million in 2021.
However, this increase in cycling activity has coincided with a troubling rise in accidents involving cyclists. The National Highway Traffic Safety Administration (NHTSA) reports that in the United States alone, there were 966 pedal cyclist fatalities in 2021. This is the highest number of fatalities for these commuters since 1975, when it was above 1,000.
Several factors, such as distracted driving, inadequate infrastructure, and the lack of dedicated cycling lanes, are the primary culprits for these crashes. Additionally, the coexistence of motor vehicles and bicycles on roads designed primarily for cars exacerbates the risk for cyclists. This alarming trend necessitates immediate action to make roads safer for those on two wheels.
How Cities Can Make Roads Safer for Cyclists
Cities must adopt a multifaceted approach to address the rising number of cycling accidents. This involves implementing stricter law enforcement, enhancing infrastructure, and building boulevards. By prioritizing cyclists' safety through these measures, cities can create a more harmonious and secure environment for everyone on the road.
Ensuring Strict Law Enforcement
Effective law enforcement is crucial in protecting cyclists and ensuring that traffic regulations are adhered to by all road users. Strict enforcement of speed limits, particularly in areas with high cyclist traffic, can significantly reduce the severity of accidents. Additionally, laws that protect cyclists, such as safe passing distance regulations, must be rigorously enforced.
Police departments should be trained to understand cyclists' unique vulnerabilities and the importance of protecting their rights on the road. Regular patrols in areas frequented by cyclists can deter reckless driving and provide a sense of security for cyclists. Moreover, implementing stringent penalties for drivers who endanger cyclists can be a powerful deterrent against negligent behavior.
Ensuring law abidance is crucial, as many cyclist accidents are hit-and-run. The NHTSA report mentioned above states that 220, or roughly 22%, of the bicyclist fatalities in 2021 were hit-and-run collisions.
Consider the example of a bicyclist being killed in St. Louis in such an incident. News report shows that it was a hit-and-run collision where the 47-year-old Danyell McMiller was pronounced dead at the hospital. A white Kia entered the bicycle lane to avoid the slow-moving traffic and hit Danyell, who was thrown off his bike.
Punishing the offenders in such scenarios is crucial to set examples and deter people from doing these things in the future.
In this case, the victim's family can look for St. Louis personal injury lawyers and hire experienced personnel to take legal action. When the liability is established, the family members can get a settlement to compensate for their losses. This could include compensation for medical expenses, mental trauma, and other types of damages.
According to TorHoerman Law, attorneys can help establish this liability, which is vital in any personal injury case. They can collect pieces of evidence, including police reports and witness statements. These pieces of evidence can prove clear liability and help the victim get a fair settlement amount.
Creating Infrastructure With Bike Lanes
Bike lanes significantly improve bicycle safety, as they lessen the possibility of accidents between bikes and cars. This is particularly crucial in crowded cities where cars and bikers share the road. According to research, installing bike lanes can reduce bicycle collisions by up to 50%.
In fact, one of the most crucial reasons for increasing cyclist deaths is the U.S. streets. These streets are car-centric, highlighting the importance of dedicated bike lanes. However, this was not always the case, as the first vehicles to use the streets were carriages and bikes.
Events like the League of American Bicyclists have been celebrated since the 1880s, long before automobiles were manufactured. However, automobile companies lobbied Congress to make the streets car-centric.
Having dedicated bike lanes can separate motor vehicle traffic, thereby reducing the chances of crashes. Well-designed bike lanes should be wide enough to accommodate different types of bicycles and ensure a comfortable riding experience.
These protected lanes can also help save money and protect the environment by reducing the use of fuel gases. The procedure of producing and using fields to run automobiles can emit significant greenhouse gases. Encouraging cycling for commuting by making it safer can minimize these emissions and ultimately help the environment.
Building Cycling Boulevards
Cycling boulevards represent an innovative approach to creating safer environments for cyclists. These are low-traffic streets prioritized for bicycle travel, often featuring traffic calming measures such as speed bumps and diverters that discourage traffic by motor vehicles.
A recent study found that these boulevards can have highly positive effects, as both motor vehicle drivers and bicyclists consider them very safe. However, not all types of cycling lanes are as safe as most automobile drivers consider them. According to cyclists, some lanes adjacent to parked cars still feel unsafe to them.
To be effective, cycling boulevards should be part of a well-planned network that connects key destinations within a city. Clear signage, road markings, and designated crossings enhance their safety and usability. Additionally, involving the local community in the planning and implementation process can ensure that cycling boulevards meet residents' needs and preferences.
Frequently Asked Questions
How can you be safe when riding a bicycle?
Always wear a helmet, use lights and reflectors, abide by traffic laws, and maintain awareness of your surroundings when cycling for safety. When interacting with other drivers, ensure your bike is in good working order and utilize hand signals.
How can bike lanes be made safer?
Physical barriers, adequate lighting, well-maintained markings, and routine danger inspections are all ways to make bike lanes safer. Maintaining the safety of these bicycle lanes also heavily depends on education and the enforcement of traffic regulations.
How should a bike lane be designed?
To keep bikers and cars apart, a bike lane has to be wide enough, have durable markings, and have protective barriers. In addition, it needs to include well-drained areas, smooth surfaces, and access to the city's main points of interest.
See: Decarbonizing Insurance and the Adaptation of Carriers to a New Zero Economy
To conclude, creating safer roads for cyclists is a multifaceted challenge requiring coordinated effort from city planners, law enforcement, drivers, and the community. The rising number of cycling accidents underscores the urgency of implementing comprehensive measures to protect cyclists.
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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U.S. House passes FIT21 with Bipartisan Support
Crypto | May 23, 2024
Image: Pixabay
The U.S. House of Representatives has officially passed the Financial Innovation and Technology for the 21st Century Act (FIT21)
Now, crypto in America is one step closer to getting the bill that will regulate digital assets in the country. That passage of FIT21 with bipartisan support shows growing consensus of the need for clear regulatory frameworks that foster crypto innovation while protecting consumers.
Vote Stats
FIT21 passed with a notable majority with bipartisan collaboration:
- Total Votes in Favor: 279
- Democratic Support: 71 Democrats voted in favor
- Republican Support: 208 Republicans voted in favor
- Votes Against: 136, most by the Democrats due to some reservations that they hold about some of the bill's regulatory provisions
Key Features of the FIT21 Bill
- Remove the confusion between the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) regarding which regulator is actually in charge. The current confusion leaves users vulnerable to fraud and stifles innovation in the sector.
See: Responsible Development of Digital Assets (Crypto): Decoding Biden’s Executive Order
- It ensures the appropriate consumer protections are in place to help prevent scenarios like the collapse of FTX, safeguarding customer funds.
- With a clear regulatory framework, it will make the U.S. more attractive for digital asset innovation and stop the exodus of talent and firms to other, more cryptocurrency-friendly, jurisdictions.
Next Steps
The passing of the FIT21 in the House is a significant milestone, but it is not the end of the road. It will now go to the Senate for further consideration. Meanwhile, President Joe Biden has earlier expressed doubts regarding the enactment of pro-crypto legislation, constituting a possible challenge.
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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Balancing Fintech Innovation and Regulation
Regulating Innovation | May 16, 2024
Image: Freepik/rawpixel.com
Balancing Innovation and Regulation in Financial Services. Key Messages and Insights from Governor Michelle W. Bowman's Speech
In a recent speech at the Digital Chamber DC Blockchain Summit 2024, Governor Michelle W. Bowman of the Federal Reserve provided a comprehensive view on the balance between innovation and regulation in the financial services sector. This article delves into the key messages from her speech, exploring the implications for financial institutions and the burgeoning fintech industry.
1. Emphasizing the Importance of Understanding Innovation
Governor Bowman underscores the necessity of a thorough understanding of financial innovations, suggesting that effective policy-making hinges on regulators' and financial institutions' deep comprehension of new technologies. She said:
"Before we craft a useful public policy around innovation in banking, we need to understand the various dynamics involved with particular innovations."
See: Insights from the UK’s Pro-Innovation Regulation Review
This approach demands that both regulators and financial institutions invest in knowledge and frameworks that can accurately assess the impact and scope of new technologies, such as blockchain and digital currencies. It's a call for a more informed regulatory process that recognizes and accommodates the fast-paced evolution of financial technologies.
- Regulators should invest in continuous education and training programs to keep their teams updated on technological advancements.
- Encourage partnerships between regulatory bodies and fintech companies to foster a mutual understanding of technological impacts.
- Governments and private entities should fund collaborative research into new financial technologies to better understand their implications before they reach the market.
2. The Dual Role of Innovation and Regulation
Bowman discussed the intrinsic dual nature of innovation—its potential to improve efficiency and competition, and its ability to introduce new risks:
"Innovation can lead to greater efficiency, and it can promote competition in the market... [but] innovation is inevitably accompanied by risk."
For fintechs and financial institutions, this confirms the need for a balanced approach that does not stifle innovation with overly rigid regulations, while still protecting consumers and maintaining systemic stability. She points out that innovation can greatly enhance efficiency and competition but also brings new risks that must be managed thoughtfully.
See: Balancing AI Innovation and Intellectual Property Rights: Key Insights from the U.S. Senate Subcommittee Hearing
- Develop regulatory frameworks that are flexible enough to accommodate new innovations but robust enough to safeguard systemic stability.
- Regularly update risk assessment protocols to include new risks brought about by technological advancements.
- Increase efforts to educate consumers on the benefits and risks of new financial products and services.
3. Openness to Innovation
Emphasizing the need for regulatory bodies to be open to innovation, Bowman pointed out the typical initial resistance against new technologies and methodologies in the financial sector:
"The use of emerging technology and innovation may require a change in policy or supervisory approach."
This openness is crucial for fostering an environment where new financial technologies can thrive. Regulatory bodies need to be agile, adapting their frameworks to facilitate advancements rather than obstruct them.
See: Challenges in Global Crypto Regulations – Lessons from Dubai
- Create environments where fintechs can test new products under regulatory supervision. So adopt open regulatory sandboxes that support innovation.
- Hold frequent stakeholder forums that bring together regulators, fintechs, and traditional financial institutions to discuss innovation.
- Establish clear and accessible channels for businesses to provide feedback on regulatory practices that affect innovation.
Image: Freepik/rawpixel.com
4. Promoting Innovation Through Regulation
Bowman proposed that regulatory frameworks should not only manage but actively promote innovation:
"Regulators can do more than simply tolerate innovation, they can promote it through transparency and open communication."
See: The Global Effort to Level the Playing Field with Tech Giants
This suggests a proactive role for regulators in the innovation process, which could include providing clearer guidelines and quicker feedback on new financial products and technologies. Such involvement could enhance the overall effectiveness and reach of financial services.
- Regulators should provide clear, concise, and publicly accessible guidelines for compliance with new financial technologies.
- Encourage and support pilot programs that allow financial institutions to explore new technologies in a controlled environment.
- Improve communication channels between regulators and financial institutions to ensure that all parties are aligned on the expectations and benefits of new technologies.
5. Ensuring Safety and Compliance
The Governor stressed the importance of maintaining safety and compliance within innovative practices:
"Innovation and regulatory and legal requirements can coexist—providing both enhanced capability and regulatory compliance."
See: FCA Speech: Adapting Culture to Meet Changing Societal Norms and Consumer Expectations
For financial institutions and fintechs, this means that while innovation is necessary, it cannot come at the expense of legal and regulatory obligations. Ensuring that new technologies adhere to these standards is essential for their sustainable integration into the financial landscape.
- Ensure that new financial products are designed with compliance and safety in mind from the outset.
- With the adoption of new technologies, reinforce and strengthen cybersecurity protocols to protect consumer data and financial assets.
- Conduct regular audits and assessments of new technologies to ensure they meet regulatory standards and are safe for consumer use.
Conclusion
Governor Bowman's insights provide a roadmap for balancing innovation with regulation in a way that promotes growth and stability in the financial sector. The principles of understanding, openness, and proactive regulation, will likely shape the future of financial regulation, fostering an environment where both traditional financial institutions and fintechs can innovate responsibly and effectively.
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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Generative AI Myths That Founders Should Know
GenAI | May 14, 2024
Image: Freepik
Generative AI Myths That Every Leader Should Know...Debunked
Generative AI, a transformative technology, is often misunderstood. Here’s an overview addressing common myths about the expectation of GenAI that every leaders should know.
Myth 1. Generative AI Creates Without Data
- Reality: Generative AI relies heavily on large datasets to identify patterns. For example, OpenAI's GPT-4 was trained on a diverse dataset, including books, websites, and other texts, to generate coherent and contextually relevant content. Developing proprietary models is costly, requiring significant investments in resources and talent.
- GPT-4 required over $100 million for training.
Myth 2. Perfect Out of the Box
- Reality: Nothing is ever perfect out of the box! Models require extensive fine-tuning for specific tasks. For instance, Google's LaMDA needs constant refinement to handle different conversational contexts effectively. Even third-party AI solutions require investment, like ChatGPT's $20/month subscription for its latest version and integrated into Microsoft 365 costs $30/month per employee.
Myth 3. Replaces Human Creativity
- Reality: AI enhances but doesn't replace human creativity. For example, AI can assist in content creation, but human oversight is essential for nuance and context, as seen in AI-assisted journalism. The role of the human-in-the-loop is critical for tasks requiring judgment and empathy. With the right prompts, your photo AI generator is going to produce images that align with your creative vision, helping to bring your ideas to life. However, it is still up to you to refine and adjust the generated content to ensure it fully meets your standards and expectations.
- Creative tools now span everything from generating new images to targeted editing tasks such as remove tattoo from photo, giving users more control over how AI-assisted visuals are produced and refined.
See: Can AI Truly Replace Human Financial Advisors?
- Example: The Washington Post uses AI to generate simple news reports, but human journalists add depth and context.
Myth 4. AI Always Improves Human Performance
- Reality: AI's effectiveness varies by task. A BCG study found GPT-4 improved creative product innovation by 40% but decreased business problem-solving performance by 23%. Training in soft skills like critical thinking and empathy is essential for successful AI integration.
- Example: Consultants using GPT-4 for creative tasks performed better, but those using it for business problem-solving did worse.
Myth 5. High Cost Equals Better Performance
- Reality: Effective AI deployment is more about strategic use than cost. Smaller firms using well-optimized models can compete with giants. Startups using cost-effective AI models can achieve significant efficiencies in customer service automation. Building the model is not the hardest part; transforming workflows and managing change are critical.
- Example: Startups using open-source models like Llama can achieve significant efficiencies.
Myth 6. You Can Wait and See How Gen AI Plays Out Before Making a Move
- Reality: Early adoption of generative AI can provide a competitive edge, as seen with Amazon's e-commerce revolution and Apple's iPhone. Companies must act now to avoid being left behind.
See: Considerations for Evaluating AI Startups in 2023
- Example: Nokia and BlackBerry were overtaken by the iPhone due to their hesitation in adopting new technology. Another example is perhaps more famous as many of us will remember the 'kodak moment'.
Myth 7. Investing in Gen AI Will Automatically Give You a Competitive Advantage
- Reality: Sustainable advantage requires continuous innovation and strategic use of proprietary data. The real value lies in customizing AI models to specific business needs and constantly evolving strategies.
- Example: Google’s dominance in search is challenged by OpenAI’s innovative AI-powered interfaces.
Implications for Fintech
- Personalized Financial Services -> AI enhances customer experiences by analyzing spending habits and offering tailored advice.
- Fraud Detection -> AI's pattern recognition capabilities improve fraud detection, saving billions in potential losses.
- Algorithmic Trading -> AI-driven algorithms enable more accurate and efficient trading decisions.
See: How Fintechs Can Integrate AI for Efficiency Gains
- Regulatory Compliance -> AI helps automate compliance processes, reducing errors and costs.
- AI in Customer Service -> AI-powered chatbots enhance customer support.
Why This Matters
Understanding and correctly applying generative AI can lead to more efficient, innovative, and secure fintech solutions. It’s essential for fintech leaders to demystify these myths to harness AI's full potential.
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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Interac Continued To Dominate The Online Transfer Payment Segment In Canada
May 14, 2024
Image: Pixabay/TarikVision
Interac is the dominant online payment transfer system in Canada. Last August, the company reported that for the first time ever, they had recorded over a billion mobile transactions in the previous twelve-month period. They claimed this proves that Canadians prefer using a mobile device for everyday transactions.
Mobile Interac Debits pass through a tokenization platform for digital payments, allowing consumers to make a payment without having to share their financial information. This could be at a contactless point-of-sale reader, for a virtual purchase, or when using the mobile app. Consumers are choosing Interact because it reduces fraud risk and is simple and convenient.
The latest data from Interac shows the number of Interac Debit contactless payments has gone up by over 50% in the past year. These payments are made using smartphones or wearable devices. Between August 2022 and July 2023, there were just over a billion transactions. However, Interac is not just used for physical purchases.
It continues to dominate online transactions and is used to purchase everything from travel tickets and online shopping to paying for virtual entertainment. It is the payment method of choice for many Canadians (mostly in Ontario) who enjoy a flutter at an online casino, including the listed ones that accept Interac. While risk and reward are what attract many people to gambling, they still want to know they are playing at reputable sites and that their transactions are secure.
Compared to all other business and consumer cards issued in Canada, Interac has by far the largest share. In 2022, there were 15.43 billion such transactions in Canada on cards issued by Visa, Mastercard, Interac and American Express. Interac is Canada’s top national debit card, with over 40 percent of the total market. Visa is its nearest rival at just under 35 percent, with Mastercard accounting for almost 23 percent and America Express having just under two percent.
William Keliehor, Chief Commercial Officer at Interac, asserts that the transaction milestones demonstrate that consumers are getting more comfortable using mobile technology for day-to-day transactions. He noted that consumers are gradually switching from physical cards to mobile devices for Interac Debit contactless transactions and payments, as well as choosing to use Interact Debit for online shopping.
He said,
“Canadians are embracing technologies that make their lives faster, more seamless and more convenient. Our Interac Debit data is showing mobile payments reaching a critical mass point, where a third of contactless transactions are now completed with a mobile device.”
The trend might have started with people slipping their debit cards into the back of their phone case and becoming accustomed to not having to carry their physical wallets with them. Then, improved battery life and connectivity made people feel confident that they could ditch the plastic entirely and rely on the e-wallet on the phone. The data backs this up as more consumers are using their mobile phones to complete in-person transactions instead of using their physical cards. Mobile payments rose from 18 percent of these transactions in June 2022 to 24 percent in July 2025. A quarter of Interac Debit contactless payments were done using an e-wallet on a mobile device.
In-app transactions are on the up, too. Interac’s In-App transactions surpassed 8.6 million and grew 17.5 percent from 2022 to 2023. There can be no denying that the pandemic accelerated the growth in digital payments. The trend had started before the pandemic, but contactless spending limits were low. However, increased spending limits for tap-to-pay card transactions was one of the factors that encouraged the trial of contactless payments amongst consumers who had previously been resistant. Once they felt comfortable with contactless payments, the next step was to use the in-app payment feature, which was not constrained by the limits imposed on physical card transactions.
However, Interac’s Keliehor claims these factors are secondary to the major driver of increased Interac transactions, which he says are debit-first and mobile-first payments.
He claimed,
“More and more Canadians are choosing to pay using a mobile device like a smartphone or wearable device, and we’re seeing this reflected in our transaction data as well as survey findings.”
Unsurprisingly, it is Gen Zers who are driving the change and influencing older generations to make mobile payments. They are the ones most likely not to carry a wallet and rely on a mobile device to make payments. Recent data shows that 78 percent of Canadian Gen Zers complete in-person smartphone transactions.
Generation Xers and Baby Boomers have also become less wary of mobile payments and are embracing them now. Among Gen Xers, 42 percent pay using their smartphones. However, it appears they have been nudged into doing so by the younger generation. Having watched Gen Zers in their circles leading the way, they then give it a go themselves. More than half of younger people say they have shown older family members how to use contactless mobile payments.
As Canadians adopt to new payment technologies, they take for granted that businesses will offer a full spectrum of payment options, including in-app payments, mobile contactless and online secure checkouts. Seventy-one percent of Canadians expect a ‘pay by debit’ option whether they are paying digitally, in person or online. Cash usage is definitely declining, and many stores just do not accept it anymore. We have become used to this when shopping online or on the go, but it can come as a shock when travelling. Each country has its own norms on this. Visitors to the UK can easily use digital payments, but small and medium businesses in countries like Belgium can still be cash-only environments.
See: How Fintechs Can Integrate AI for Efficiency Gains
It is expected that Interac will continue to dominate the Canadian market, and people in the sector are referring to the move away from cash and towards debit payments for everything as “the big shift”. Businesses of all sizes need to be able to meet customer expectations, and there will be even more innovation in this area in the months and years ahead.
We might still enjoy our national bank holidays, but we now live in a 24-hour digital economy that never rests.
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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Canadian Loyalty to Financial Institution Reveal ‘Soft Satisfaction’ 62% Open to Change
Survey Insights | April 9, 2024
Image: Freepik/gpointstudio
How digital transformation is influencing Canadian loyalty to financial institutions
The digital age is transforming the landscape of financial services, compelling Canadian financial institutions to reassess their strategies for maintaining customer loyalty. A recent survey by Abacus Data, conducted with 3,550 Canadians, shows the evolving relationship between Canadians and their financial service providers. With the imminent implementation of open banking legislation, this article looks at the current state of financial institution loyalty in Canada, offering insights into consumer behavior, preferences, and potential industry shifts.
How Consumers Look at Loyalty to a Financial Institution
According to the survey results, most Canadians—about 7 out of 10—say they're happy with their main bank. Also, 77% are happy with how easily they can access their accounts and do banking online, and 69% like the products and services their bank offers. However digging into the details shows that people aren't exactly satisfied with their full experience:
- Only about half or 52% of the people feel like their bank really values them as a customer
- Only half or 51% think their bank is looking out for their best interests when it suggests products or advice
- People also have mixed feelings about whether the fees they pay are fair for what they get
See: CBDCs in Canada and Impact Drivers on Banking Choices
This points out a problem: It shows there's a big difference between what customers hope for and what they actually get from their banks, especially when it comes to personal attention. Banks need to focus more on making their customers happy, building trust, and making them feel valued. If they don't, they might lose these customers to competitors, especially as more choices become available in the banking world.
How about their willingness to switch?
The hassle associated with switching providers is a significant barrier, cited by 35% of Canadians. This includes the inconvenience of transferring direct deposits and updating account information, indicating a need for streamlined processes to facilitate customer mobility.
One of the survey's critical insights is the identification of the hassle associated with switching providers is a significant barrier, cited by 35% of Canadians. This includes the inconvenience of transferring direct deposits and updating account information, indicating a need for streamlined processes to facilitate customer mobility. Some of the other top barriers to switching that were cited include:
- 35% too much of a hassle / time consuming
- 21% difficulty in transferring payments/deposits
- 21% loyalty with current institution
- 20% concerns about penalties or fees/fines for switching
As a follow-up question, consumers were asked about their willingness to switch if the process were more streamlined (aka Open Banking) and a total of 62% said that they would be open to switching.
Image: Abacus Data survey
Keeping Customers Happy in the Digital Era
Key findings reveal a marked readiness among younger demographics to consider alternative financial services, hindered primarily by the perceived hassle and administrative burdens associated with switching providers. Notably, many Canadians base their choice of financial institution on convenience and reputation rather than the financial benefits or service quality offered. This decision-making pattern suggests a market ripe for disruption, where open banking could catalyze a shift towards more informed and value-driven consumer choices.
See: BoE Report: Open Banking Boosts Productivity, Competition
Key stakeholders can immediately focus on improving their offerings such as:
- FinTechs and banks should streamline online onboarding, making it easier for consumers to switch or open new accounts, possibly through a unified digital ID system. This could significantly reduce the administrative hassle associated with switching providers.
- Leveraging data analytics and the power of artificial intelligence, institutions can offer personalized financial products and services. Tailored solutions could attract those who may not have considered switching due to a lack of compelling alternatives.
- Educational initiatives to improve financial literacy can help consumers make informed decisions based on more than just convenience or familial ties. This is particularly relevant for younger demographics who show openness to change.
- Focus on improving the overall customer experience, from digital interfaces to customer service responsiveness. Satisfied customers are more likely to remain loyal despite the allure of alternatives.
How Canada's Open Banking Regulations Complement Current Consumer Trends
Open banking regulations are expected to streamline the process of sharing financial information between institutions with consumer consent, thus minimizing barriers. This facilitation could encourage more Canadians to consider alternative providers if the process is perceived as less cumbersome and time-consuming.
See: Can Canada Harvest the Next Wave of Productivity Growth?
By allowing third-party developers to access financial data through APIs—with consumer consent—it promises a new era of financial services characterized by increased competition, productivity, consumer choice and personalized offerings.
1. Enhance Competition and Consumer Choice
The survey's revelation of a significant openness among Canadians to switch financial institutions aligns perfectly with open banking's ethos. By facilitating easier data sharing and simplifying the transition between providers, open banking is poised to lower the barriers highlighted in the survey, potentially ushering in a wave of consumers ready to explore alternative financial services.
2. Drive Financial Innovation
Open banking's emphasis on data sharing and consumer empowerment could directly address the survey findings that highlight a preference for convenience over financial benefits. It offers Fintechs and traditional banks an unparalleled opportunity to innovate, providing consumers with solutions that offer real value, from personalized financial products to comprehensive management tools that enhance financial literacy and decision-making.
3. Address Barriers to Switching
The administrative hassle associated with switching financial providers—a significant barrier identified in the survey—could be mitigated through open banking regulations.
See: Feds Promise Open Banking Laws in 2024 and to Broaden Access to Payments Canada
Streamlined processes for sharing financial information between institutions could encourage more Canadians to consider their options, making the financial landscape more dynamic and competitive.
4. Impact on Banks, Fintechs, and the Economy
For traditional banks, the survey and open banking present both a challenge to retain customers and an opportunity to innovate. Fintechs, on the other hand, stand to benefit significantly, as open banking levels the playing field, allowing them to offer new services that directly address consumer needs and preferences. The broader implications for productivity and the economy are equally promising. Enhanced competition and innovation in the financial sector can lead to more efficient services, potentially lowering costs for consumers and businesses alike. This efficiency can contribute to economic growth by freeing up resources for investment in other sectors.
Conclusion
The findings from Abacus Data illustrate a 'turning point' for the Canadian financial services sector. As consumer expectations evolve, so too must the strategies of financial institutions. The emerging trend of openness to alternative providers, particularly among younger demographics, signals a shift towards a more dynamic and competitive banking landscape.
See: Open Banking Regulation in the U.S. Strikes a Chord
Traditional banks and emerging Fintech firms must navigate these changes by fostering strong customer relationships, enhancing digital offerings, and simplifying the switching process. Doing so not only secures customer loyalty but also positions these institutions to thrive in the era of open banking.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, 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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