Canadian banks finally embrace fintech solutions
Adoption rate rockets to 50% today after phenomena were once viewed as threat
For all the buzz about the disruption that’s occurring in Canada’s financial services sector, the country ranks a lowly 23 among 27 countries in its market adoption of fintech.
The information appears in an infographic prepared by Fortunly, an online knowledge base and financial product review-website. The charts examine the significant disruption that fintech solutions are causing in the world of finance, including mobile wallets, cash transaction systems, the rise of blockchain currencies and artificial intelligence.
Which is not to say that Canada is standing still. The country’s market adoption rate of fintech stands at 50 per cent, not insignificant but still way behind China and India, leading the pack at 87 per cent. Rounding out the top 10 are Russia and South Africa, Colombia, Peru, Netherlands, Mexico, and Ireland and the United Kingdom.
Canada’s adoption rate, however, is ahead of that in the United States, France and Japan.
Globally, adoption rates have risen from an average of 16 per cent in 2015 to 60 per cent in 2019. But Canadian adoption has rocketed even faster, from eight per cent in 2015 to the current 50 per cent, which means that we’ve moved from 50 per cent of the world average adoption rate in 2015 to some 83 per cent today.
The Canadian Bankers Association (CBA) declined to comment, instead pointing to the technology focus section of its website for information. “Banks in Canada have a long-standing commitment to technological innovation and in recent years have taken an increasingly active role in supporting the development of financial technologies, whether through in-house initiatives or external partnerships,” the site states.
“The fintech phenomena — non-banking companies that provide innovative financial products and services — have successfully responded to customers’ needs that weren’t addressed by traditional banks, forcing well-established financial institutions to adapt to this trend,” said Milana Kostic, a content strategist at Fortunly, in an email.
Indeed, according to Fortunly, a global survey of financial industry leaders in 2017 revealed that 61 per cent believed they would lose 40 per cent of revenue to innovators, with the greatest impact in conducting payments, personal finance and fund transfers.
However that may be, the CBA goes on to say that banks are not only “making significant investments in the digital side of their businesses and in technology writ large,” but “also increasingly finance or partner with fintech companies to help provide access and exposure to innovative products and solutions that benefit customers, while fintech upstarts benefit from having access to capital and a pre-existing client base to help scale their operations.”
The CBA also refers to Canadian banks’ role “as trusted incubators and accelerators in order to stimulate new ideas, tap into highskilled tech talent and help get innovations to market more rapidly.”
As the CBA sees it, fintech innovation in the banking industry can be categorized in three ways: inhouse development of new technologies; technology sourced from or developed in partnership with fintech companies; and banks as tech incubators in collaboration with the fintech community. The website’s examples lean to the first two categories, with “incubator” activity somewhat less prominent.
Among the innovations cited as “in-house” fintech developments are Bank of Montreal’s QuickPay solution, which leverages machine learning capabilities to enable customers to email their bills to BMO. The Canadian Imperial Bank of Commerce offers a SME/ Mobile app that gives business owners a comprehensive view of their finances and provides financial insights. Royal Bank of Canada’s Express Track Wire Payment leverages SWIFT’s global payments innovation technology. Bank of Nova Scotia’s eHOME tool digitizes the entire mortgage process in real-time without a mortgage specialist or financial adviser. And TD-Canada Trust has the integrated digital mortgage application.
From the “partnership with startups” perspective, the CBA includes BMO’s expanded partnership with digital lending platform, Blend; National Bank’s partnership with Thinking Capital’s AI-based platform to expand financing options, including online term loans, for small to medium sized business; and TD’s Clari, which uses New York-based Kasisto’s conversational AI platform to integrate a chatbot into the bank’s mobile app.