Category Archives: Marketplace Lending/P2P, Online Lending
#FFCON21 Brings Canada’s Tech Hub to the Web for 3 Days of Fintech Insights, Business Building
Investor Wire | Jonathan Keim | April 10, 2021
FFCON21: Breaking Barriers May 11-13
- The 2021 Fintech & Financing Conference and Expo (#FFCON21) is scheduled May 11-13
- Global virtual conference streamed from Toronto, the hub of Canada’s developing fintech ecosystem, but presented online due to pandemic concerns
- 50-plus speakers with expert insights planned
- Networking opportunities to connect one-to-one with peers and experts
- Draft pitching competition to gain attention for business brand (as well as prizes)
The 7th Fintech & Financing Conference and Expo will be held for global participants virtually from May 11-13, 2021. Originating in Toronto, FFCON21 has grown from a basic collaboration between entrepreneurs and big businesses intent on driving change into a thriving gathering of fintech, blockchain, crypto, digital banking, AI, payments, wealthtech, regtech, alternative finance stakeholders and global participants with a love for Canada’s fintech ecosystem.
In its seventh year, the 2021 gathering (#FFCON21) has been adapted to the health security needs of attendees during the present global pandemic, offering exclusive online access to a three-day collection of educational courses, networking opportunities, pitch competitions, e-booth demos and an auction for charity.
The conference will take place May 11 to 13, still celebrating its place within Canada’s rising fintech and financial sector even as it extends its reach to a global audience through a virtual platform. Tickets, including early bird rates at present and a special startups-only package, are available at https://ibn.fm/3Ov1h.
Conference organizers anticipate bringing attendees to the table with some 50 speakers ranging from Main Street executives such as the president and CEO of public-private partnership Toronto Finance International to enterprising up-and-comers such as the founder-partner of startup builder Borderless Ventures and its CryptoAssets Institute.
See: Showcase your products/services: Secure a DEMO Speaker spot at FFCON21: May 11-1
The second annual draft pitching and demo competition follows a sports league model geared toward identifying and featuring emerging and high growth fintech startups and scaleups. The “Breaking Barriers” theme of the conference is particularly appropriate here as draft participants compete for exposure and prizes, including promotion to investors, media, prospective buyers and partners.
The online access format driven by the pandemic proved advantageous last year following a scheduling delay necessary to reimagine the presentation of the spring conference. The digital venue and interactive platform allows for increased participation on a global scale because of the elimination of travel expenses from the plan. Networking and file sharing are able to occur naturally and easily using integrated online text and video chat features.
Additionally, the online platform makes it simple to access all digital content to catch up on anything attendees may have missed at a time when it is more convenient. Networking and e-booth displays present attendees with the potential to make connections with a future business mentor, investor or a prospective employee to help build their companies.
And at the heart of it all is the class schedule with insights from thought leaders on the direction of fintech solutions and emerging fintech trends. Presentations will explore topics that address the latest innovations, emerging industry regulation and the impact of government activity on financial technology markets.
For more information, visit the conference’s web portal at https://fintechandfunding.com.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Mogo to enter $4+ trillion Canadian Wealth Management Industry with acquisition of Leading Saving and Investing App, Moka Financial Technologies Inc.
Mogo | March 23, 2021
- Wil increase Mogo’s member base to more than 1.7 million with addition of Moka’s more than 500,000 members
- Acquisition will form core of MogoWealth, leveraging Moka’s investing platform & team, which includes over $250 million of AUM along with registered portfolio management capabilities throughout Canada & Europe
- Will accelerate planned launch of Mogo’s free stock trading solution, further expanding Mogo’s digital wallet capabilities
- The $64 million all-stock transaction will bring new Mogo shareholders including Desjardins Capital, National Bank of Canada and Ferst Capital Partners
VANCOUVER, British Columbia--(BUSINESS WIRE)--Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO) (“Mogo” or the “Company”), a digital payments and financial technology company, today announced it has entered into a binding letter of intent to acquire 100% of Moka Financial Technologies Inc. (“Moka”), one of Canada's leading saving and investing apps, in an all-stock transaction. The proposed acquisition will increase Mogo’s member base by over 40% to more than 1.7 million and expand Mogo’s wealth offering to include saving and investing products. In addition, the acquisition will accelerate Mogo’s plan to launch a free stock trading solution for Canadians which will further solidify Mogo’s position as the most comprehensive digital wallet in Canada. The two companies expect to complete a definitive agreement and close the transaction in Q2 2021.
See: Fintech Canada Directory Category: Wealthtech | Alternative Investing
Montreal-based Moka launched in 2017 with the social mission to help millennials achieve their financial goals, and it has since been downloaded by over 1 million consumers and earned thousands of 5-star reviews. The Moka app has become one of Canada’s most popular investing apps due to its roundup feature, which automatically rounds up daily purchases and invests the spare change in personalized, diversified portfolios of low-cost Exchange-Traded Funds. Moka members can invest through a TFSA, RRSP or non-registered account. There is no financial knowledge, minimum investment or lifestyle change required to use Moka, so anyone can start saving and investing by downloading the app and simply linking an existing debit or credit card.
“This acquisition represents another significant milestone for Mogo on our journey to building the leading digital wallet for Canadians,” said David Feller, Mogo’s Founder and CEO. “Like Mogo, Moka is driven to help users improve their financial health, and they have built an innovative solution to enable consumers to easily save and invest money. By adding these digital saving and investing products – along with Moka’s technology platform and experienced fintech team – we will dramatically enhance what is already one of the most compelling and differentiated value propositions in Canadian finance. Moka will complement our existing MogoCrypto account and form the core of MogoWealth, making Mogo’s digital wallet the most comprehensive solution in Canada.”
Philip Barrar, Founder & CEO of Moka, added: “We’re very excited to join Mogo, a fintech pioneer and one of Canada’s leading fintech companies. Moka has built a robust customer-centric technology platform and, as part of a larger, more diversified and well-capitalized digital platform, we enhance the opportunity to grow our business and, importantly, to give our members access to even more digital products and tools to improve their financial well-being. We look forward to bringing these two companies together.”
Greg Feller, President and CFO of Mogo, added: “This is a highly strategic acquisition for Mogo. In addition to adding capabilities in two large and important financial segments – saving and investing – we would immediately increase our member base by over 40%, accelerate the growth of our subscription & transaction-based revenue and increase Mogo’s total addressable market into the $4+ trillion wealth management business along with expansion into Quebec. Following the Moka acquisition, we expect to further expand the MogoWealth product offering in 2021, including introducing a free stock trading solution to Mogo members.”
See: Advisors Seek Venture-Investing Gold in Fintech
Moka currently has more than 500,000 active members and over 100,000 monthly subscription members, and the company generated approximately $6.5 million of revenue in 2020. Moka has approximately $250 million of assets under management and registered portfolio management capabilities throughout Canada and in Europe, where the company launched in France during 2020. Moka’s key investors include Desjardins Capital, the venture capital arm of North America's largest association of credit unions, NAventures, the venture capital division of National Bank of Canada, and Ferst Capital Partners, a private investment firm that specializes in consumer fintech and digital assets.
Following completion of the acquisition, it is expected that Philip Barrar, Founder & CEO of Moka, will join Mogo’s leadership team in a newly created role of Chief Innovation Officer. Dr. Liam Cheung, Chairman of Moka and partner at Moka shareholder Tactico, is expected to join Mogo’s board of directors. Cheung is a seasoned financial services entrepreneur and executive with over 25 years of experience. Prior to founding Tactico, he was instrumental in successfully establishing several new businesses for several brokerage and trading technology companies worldwide. Cheung was instrumental in founding Fidelity Clearing Canada, which provides clearing, custody and back-office support services to Canadian-based brokerage firms and the Canadian brokerage arms of U.S.-based firms. Previously, he was closely involved with JitneyTrade where he served as Chairman, during which time the company became one of the top ten highest volume trading firms in Canada. JitneyTrade was eventually sold to Canaccord Genuity in 2018.
View the original release --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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NCFA Announces 7th Annual FFCON21 Digital ‘Breaking Barriers’ FinTech Conference
NCFA Canada | FFCON21 Team | March 11, 2021
FFCON21 to connect HR talent and explore accelerated Fintech trends and innovations paving the way to mass adoption and scale
TORONTO — March 11, 2021 — The National Crowdfunding & Fintech Association (NCFA), organisers of Canada’ foremost Fintech conference, is pleased to announce the return of FFCON for its 7th consecutive year. The annual FFCON Digital Event, held in association with Toronto Finance International (TFI), will take place May 11-13, 2021.
Building on the success of previous conferences, this year’s event -- titled ‘Breaking Barriers’ -- will bring together an international community of leading voices in fintech, digital banking, tokenization, blockchain, CBDCs, digital identity, AI, capital markets innovation, EDI (equality, diversity and inclusion) and sustainable, open, and alternative finance.
“Fintech is evolving quickly and breaking barriers,” said Craig Asano, Founder and CEO of the National Crowdfunding & Fintech Association of Canada. “Fintech is no longer niche -- it is a permanent technological evolution that is changing the world of finance by high growth fintech companies and incumbent financial institutions. It’s rewiring financial services for the new economy and setting new standards that also demand new regulations. Most importantly, it’s about improving access and delivering better financial products, services and outcomes for everyone especially consumers and small to midsize enterprises (SMEs).”
The theme of FFCON21 reflects the growth and challenges that the Canadian Fintech industry has had to navigate through to foster scalability and mainstream adoption, made all the more complicated through the disruption caused by Covid-19.
“Our Fintech ecosystem has become a great strength in the greater Canadian innovation landscape. COVID-19 has accelerated the pace of change in the industry and highlighted the important role digital innovation plays in the competitiveness of the financial services sector. Rapidly changing consumer habits and ways of delivering products and services offers a significant opportunity for Canadian Fintechs" Jennifer Reynolds, President & CEO, Toronto Finance International
Beyond covering important fintech topics, FFCON21 will offer an engaging and fast-paced interactive agenda, including investor speed dating, sports-inspired Fintech Draft pitching and demo competitions designed to identity and feature emerging fintech stars, debates, round table discussions, digital ebooths and virtual expo, 1-on-1 networking opportunities and unique experiences. Delegates and partners can build their knowledge base, launch or scale an idea or collaborate digitally with visionary entrepreneurs and investors.
New to FFON21 this year, organizers are adding an HR fintech talent marketplace to connect anyone seeking new opportunities with high growth companies, and a ‘deep dive’ masterclass series on the topic of decentralized finance as part of its quarterly Global Fintech Now program for VIP passholders.
The multi-day event will run from May 11-13 inclusive with daily content to span feature themes of Digital Innovation and Breaking Barriers, Creation & Growth and Global Future Forward. Updates to the evolving programme and speaker lineup can be found on the FFCON21 website.
Registration Now Open
Registration for FFCON21 Breaking Barriers is now open with special early bird rates for delegates, exhibitors and startup packages available for a limited time. Tickets can be purchased at https://fintechandfunding.com/tickets/.
Useful Links
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Connect with us
About the NCFA
The National Crowdfunding & Fintech Association (NCFA) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain and cryptocurrency, Regtech, and Insurtech sectors. To learn more about NCFA visit www.ncfacanada.org
About Toronto Finance International
Toronto Finance International (TFI) is a public-private partnership between Canada’s three levels of government, the financial services sector and academia. TFI’s mission is to lead collective action that drives the competitiveness and growth of Toronto’s financial sector and establishes its prominence as a leading international financial centre. For more information, please visit: www.tfi.ca
About FFCON
FFCON21 (Fintech and Financing Conference) is an annual conference hosted by Canada’s National Crowdfunding and Fintech Association (NCFA). Now in its seventh year, FFCON21, held in association with Toronto Finance International, will bring together professionals and innovators in fintech, open banking, digital identity, blockchain, cryptocurrency, AI, capital markets innovation, sustainable and alternative finance.
Further information about the conference can be found at www.fintechandfunding.com
FFCON21 Contacts
Craig Asano
Founder and CEO, NCFA
casano@ncfacanada.org
(416) 618-0254
Partnership Inquiries
Lauren Linton
Advisor, NCFA
lauren@ncfacanada.org
(416) 569-4349
Media Contact
The Top Floor Public Relations
Michele McDermott-Fox
michele@thetopflooragency.com
(905) 379-1893
David Lewis
david@thetopflooragency.com
(905) 541-5699
Has fintech made banking better?
DUCA Impact Lab | Keith Taylor | Feb 18, 2021
Fintech is responsible for a long list of innovations. Helping people make better financial decisions could be next.
Building banking that is not just different, but better, is a common refrain when speaking with fintech entrepreneurs. It is natural to wonder then, what roles are fintech companies playing now in building ‘better banking’, and more importantly, what opportunities are there to better deliver on this promise?
The DUCA Impact Lab was established by DUCA Financial Services Credit Union to explore these types of questions, and to ultimately work with its partners to build and test models of banking that benefit all. Each year, the DUCA Impact Lab, in partnership with Angus Reid Group, examines national perspectives on fair banking in Canada. The study surveys a national pool of banking consumers on their perceptions of fairness in their banking experiences. It evaluates a number of fair banking factors such as transparency, credibility, pricing, as well as access to products and services. It then compares these consumer perspectives with responses from bank employees working in a sales or lending capacity at different types of lending institutions, including fintech’s.
See: State of Fair Banking 2020
Reflecting on the study results for 2020 reveals some key considerations for fintech companies as they continue to innovate and build on their presence in the financial services marketplace. For example:
More people need access to quality advice.
The majority of consumers interact with a financial advisor once per year, or less. In fact, 29% say they have never met with one. Even for those that do meet with an advisor, chances are they either don’t trust, or are indifferent to the advice they get (75% of consumers combined). This is particularly troublesome, given that the right advice is desperately needed - nearly 45% of people with debt say they have neither a budget, nor specific financial goals. Lenders surveyed who work in fintech take an overly ‘sales first’ view of their companies compared with peers, and are significantly less likely to view the primary focus of their company as helping people (21%), when compared to 35% at banks, and 48% at credit unions. Perhaps there’s an opportunity to do both.
Trust is a short-term opportunity, but long-term potential risk for fintech’s.
Nearly as many Canadians distrust financial institutions as trust them, with a winnable 46% of consumers who are somewhere in the middle. Also consider that only 22% of big bank customers think they are getting a good deal on their financial service products; this should translate into opportunities for new entrants and alternatives to the big banks. The level of trust consumers have in fintech companies is generally similar to other lending options to start, but borrower experience becomes more negative post fulfillment. For example, fintech customers are more than twice as likely to respond that their debt has impacted their ability to afford basic health care services such as prescription drugs. Mitigating these risks has benefits for everyone.
See: How Banks, Fintechs, and Customers Win Together
The Fintech sector has produced some amazing innovations, improving the way financial institutions are able to offer a range of services, facilitate transactions and understand customer needs. Extending this innovative thinking to focus on consumer experiences and well being is a natural fit.
About the author:
Keith Taylor is the Executive Director of the DUCA Impact Lab at DUCA Financial Services Credit Union, an innovation hub focused on building banking that benefits all. He works with a range of collaborators such as fintech’s, community organizations, academics and others to build and test solutions to inequity in the banking system.
This article appears as a featured article in NCFA's digital magazine, Fintech Confidential (Issue 3). Click to read the latest thought leadership, insights and trends about Fintech in Canada:
Checkout NCFA's digital magazine, Fintech Confidential (Issue 3, Dec 2020) --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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GET TICKETS NOW: BREAKING BARRIERS CONFERENCE & EXPO #FFCON21 MAY 11-13Sign-up for NCFAs weekly newsletter and never miss a beat:Support NCFA by Following us on Twitter!Follow @NCFACanada |
State of Fair Banking 2020
DUCA Impact Lab | Keith Taylor | Feb 4, 2021
Defining Fair Banking
Pursuing the mission of ‘Building banking that benefits all’ requires a working definition of what that type of banking looks like. It needs to go beyond a set of ‘customer promises’ and needs to articulate a definition of fairness that enables banking consumers to spot fair banking when they see it.
We believe fair banking is any financial product or service that lives up to the following set of principles:
- Pricing is clear, transparent, and well understood
- Pricing is representative of the cost of funds, cost of administration and risk, rather than what the market will bear
- It is clear to all parties how any personal data is being used by the lender
- Personal data is only used for purposes agreed to by both the borrower and lender
- The terms and conditions, including penalties and the rights of each party are clearly explained and well understood by both lender and borrower
- Products are only recommended that will bring the borrower closer to their expressed goals
- The borrower is clear on what the institution will do (and not do), with deposits to earn a return
- The assessment of risk is objective, transparent and not prejudicial
- Financial institution recommendations are not biased towards in-house product recommendations
- Products empower consumers when they need access to financial services, not just when they do not
See: Fintech Fridays EP45: DUCA Impact Lab with Keith Taylor - Mission-driven and Consumer-centric Financial Services
Since we released the last report in 2019, much has happened. The COVID-19 pandemic has shocked the world and trailing with it came an economic recession we have not witnessed in nearly a century. Although the novel coronavirus does not discriminate, the infectious disease as well as the economic precarity of the pandemic is impacting individuals differently depending on their socioeconomic status. In the next few weeks, we will discuss the implications and the questions raised from the data and what the status of fair banking looks like today.
The first iteration of this study from 2019 will prove to be an important baseline to understand how the challenges of the public health crisis has rippled into the financial health and wellbeing of everyday Canadians through 2020 and beyond.
Download the State of Fair Banking: Borrower and Lender Perspectives (70 page PDF )--> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canadian banks are following in BlackBerry’s footsteps, and that’s not very good news
Hardbacon | Julien Brault | Jan 15, 2021
In my time as a business reporter, I was at the forefront during the decline of the country's 2000s tech giant, BlackBerry.
BlackBerry launched its mobile app store in 2009, a year after Apple launched the App Store.
Everyone knows the rest of the story.
See: NCFA OpEd: Canada’s Open Banking Consultations: Let’s Get it Done!
While BlackBerry executives praised themselves for having better sound quality and a more efficient keyboard, what people wanted when they bought a smartphone were apps.
Today, the Canadian banks are making the same mistake by refusing to put control of financial data back into the hands of their users, as the European banks are already doing.
In fact, since September 14, 2019, European open banking regulations (PSD2) force banks to allow their customers to share their data with third parties according to a standardized protocol. In other words, their customers can choose to share their bank information with an online loan app or even with a budgeting app.
In Canada, the federal government created the Advisory Committee on Open Banking in 2018, which delivered its first report in 2020, which was very favorable to open banking. The report listed the many benefits of such an approach, including increased data security and accelerated innovation in the financial services industry.
The committee then conducted public consultations, the results of which have not yet been released at the time of this writing. Meanwhile, Canadian banks are patiently waiting for a possible regulatory framework before taking action.
This slowness is all the more deplorable as the Canadian banks won’t be the only victims of this delay.
The collateral victims are Canadian financial technology companies like Hardbacon, which must operate in more difficult conditions than their American and European counterparts.
Consumers are also victims, since they can’t benefit from all the innovations they are entitled to expect, have less choice, and have to choose financial products in a scarcely transparent market.
See: Refusal to embrace open banking puts Canada behind yet another curve
Open banking shouldn't be a political issue. The game of competition should ultimately force the hands of reluctant financial institutions to allow their customers to use their financial data as they see fit. This is happening in the United States, where, despite the fact that there is no regulation forcing financial institutions to allow their customers to share their data with third parties, a growing number of players are doing so. This is notably the case with BBVA, ETrade, and TD Ameritrade.
As there is little competition in Canada, this change could unfortunately take a long time to materialize.
However, in recent months, Canadian banks have proven that they can be nimble by allowing electronic document signatures and enabling their customers to open accounts online.
Rather than wait to lose their market share to neo-banks like Revolut, which is already in Canada, Canadian banks have every interest in being proactive and embracing open banking.
The first step would of course be to create and implement a technological protocol allowing their customers to share their data with fintechs like Hardbacon or competing institutions.
But they shouldn't stop there. Canadian banks should also launch their own app stores, which would enable them to offer all kinds of services through their banking portals.
Of course, I would be eager to see Hardbacon become one of the first applications offered through a Canadian banking portal.
Despite the lack of standardized protocols, Hardbacon already manages to offer an application that helps you budget by using your banking information, track your portfolio with its brokerage data, as well as compare credit cards, online brokers, and other financial products. Imagine what Hardbacon could do if it could integrate directly with the financial institutions...
In conclusion, open banking should not be limited to banks. In Europe, PSD2 does not apply to investment account data or data related to insurance policies. However, this data is more complex than bank data, which makes their digital transmission even more significant.
Author: Julien Brault is the CEO and co-founder of Hardbacon, the Canadian fintech behind the eponymous app that helps Canadians plan, budget and invest. Before Hardbacon, he worked as a business reporter for Les Affaires and as a growth marketer for other fintech startups.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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GET TICKETS NOW: BREAKING BARRIERS CONFERENCE & EXPO #FFCON21 MAY 11-13Sign-up for NCFAs weekly newsletter and never miss a beat:Support NCFA by Following us on Twitter!Follow @NCFACanada |
How Banks, Fintechs, and Customers Win Together
Fintech Confidential | Michael King and Richard Nesbitt | Jan 21, 2021
In our recently published book The Technological Revolution in Financial Services: How Banks, Fintechs, and Customers Win Together, a group of expert contributors from North America and Europe share their insights on how the financial services industry will evolve in the coming decade. The context is the ongoing transformation in the financial services industry, which is being driven by three structural forces: heightened regulation that followed the 2008-2009 Global Financial Crisis (GFC), innovation fueled by new technologies and entrepreneurial fintech startups, and demographic trends with the rise of millennials and the retirement of baby boomers.
These forces are changing the competitive landscape of financial services, lowering barriers to entry and increasing competition from both inside and outside the industry. Our book outlines what we see as the successful strategies for financial technology (fintech) companies and incumbents, namely banks, insurance companies, and asset managers.
While there is much to learn from our contributors, this article shares our main conclusion and a few key takeaways.
We argue that the winning strategy for the coming decade will be for banks, insurance companies and asset managers to partner with fintech startups to deliver a superior experience to end-customers.
The media has portrayed fintechs and financial incumbents as rivals. But the real threat over the coming is coming from outside the financial services industry – from large technology companies such as the Chinese techfins (Alibaba and Tencent) and North American bigtech companies (Amazon, Apple, Facebook, Google, and Shopify). These global players have platform ecosystems with large and loyal customer bases, massive datasets on customer behavior, and well-known brands. Techfins and bigtech are bundling financial services with non-financial products to provide end-customers with the delightful, easy, convenient and lower cost experiences they desire.
See: Why Partnerships Are the Future for Fintech
Faced with these new entrants, we argue that incumbents need to partner with fintechs, combining their respective strengths to provide a better customer experience.
- Banks, insurance companies and asset managers are product-centric. These incumbents have millions of customers, expertise in risk management and compliance, funding and scale. But they view the world in terms of deposits, loans, payments, and investments. They see technology as a tool to reduce costs and increase profitability while meeting increased regulatory requirements. They are more focused on their shareholders than on understanding their end-customers.
- Fintech companies are customer-centric. Fintechs are better at understanding the customer’s needs and their financial journey. Fintechs leverage technology to solve customer pain points and offer a better value proposition. They have access to talent and are employing design thinking to develop innovative solutions that provide a delightful user experience.
So, the technological revolution highlighted in the title does not refer simply to the emergence of new technologies or the disruption from new entrants. It refers to a paradigm shift in financial services that refocuses on the end-customer, their experience and their lifetime journey.
Briefly, here are three more takeaways:
Technology is not a strategy, it is a tool for the execution of strategy.
Strategy is the answer to three questions: where is the organization today, where does it want to go in the future, and how will it get there. Technology can provide better tools for pursuing this strategy, but technological innovation is not the end goal of strategy itself. Technology does provide a sustainable competitive advantage; it is widely available and can be copied by competitors who are fast-followers. The biggest barrier to entry in banking is not technology or even regulation, but access to customers.
See: Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program
Trust in banking is paramount, supported by data security and privacy.
The loss of trust in incumbents following the GFC opened the door to new entrants including fintechs. But trust in financial services is intertwined with cybersecurity and data privacy. Cybersecurity has clearly become the biggest operational risk. The approach must be a shift in mindset from “if we are hacked” to “when we are hacked”. Finding it fast, disclosing it and dealing with it immediately, and minimizing the impact on customers will be critical. Data privacy is a second critical issue. Consumers and privacy advocates are acutely aware of the mixed incentives created by the advertising- based business models of Facebook and Google. This is one area where technology (such as blockchain) and new services (such as digital identity) can promote trust, by protecting customer data, privacy, and identity.
Open banking sits at the nexus of these concerns. We argue that the adoption of open banking -- in Canada and globally – will increase data security by putting in place a secure system for the transmission of data using application programming interfaces (APIs).
Regulation and risk management remain pillars of financial services.
See: The future of European payments: Strategic choices for banks
Regulation is not going away, nor should we want it to. Leading financial players – whether fintechs or incumbents – support higher regulatory requirements to weed out bad actors. We argue that maintaining a level playing field and avoiding regulatory arbitrage are important. Effective risk management will continue to be a driver of success in financial services. Incumbents possess this expertise. Fintechs and other new entrants will inevitably need to invest in risk management and compliance to be successful.
Authored by:
- Michael R. King, Lansdowne Chair in Finance, Gustavson School of Business, University of Victoria
- Richard W. Nesbitt , CEO, Global Risk Institute in Financial Services
This article appears as a featured article in NCFA's digital magazine, Fintech Confidential (Issue 3 Dec 2020). Click to read the latest thought leadership, insights and trends about Fintech in Canada:
Checkout NCFA's digital magazine, Fintech Confidential (Issue 3, Dec 2020) --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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