Collaborating to win in Canada’s fintech ecosystem
March 15, 2021
March 15, 2021
Despite the challenges brought about by the global pandemic, 2020 remained an exciting year for Canadian fintech. New partnerships were forged while international recognition continued to rise. Although investment slowed relative to 2019’s record highs, venture capitalists remain optimistic about future industry prospects, particularly given the country’s strong talent base and cross-border appeal.
Canadian fintech hubs such as Toronto and Montreal are among the fastest growing in the world.
The Greater Toronto area continued to lead other Canadian hubs in terms of 2020 fintech deal and dollar volume, with hubs such as Montreal and Calgary accelerating their growth as well. Incumbents and startups alike found innovative ways to use their platforms to assist clients and the public at large during the pandemic as digital adoption among Canadians grew. As leading fintech hubs around the world roll out their innovation frameworks, Canadian policymakers and industry players continue to discuss a prudent and appropriate path forward.
Cumulative fintech financing CAGR % vs. fintech deal volume for major Canadian hubs, 2010 – 2020. Bubble size is indicative of total relative deal value.
As policy catches up to consumer behaviour, Canada is already witnessing the emergence of modern enablers built for a connected future. Several public and private bodies are pushing ahead with digital identity projects, while banking-as-a-service models are blurring industry boundaries. The pandemic also bared other opportunities and gaps in the market. For one, fintechs demonstrated their resilience in a socially distant economy. The industry at large may also help set new standards in our post-pandemic world in areas such as credit decisioning and small business solutions. Cloud, AI and API technologies also stand to offer evermore personalized and seamless experiences.
Data Ownership, Digital Privacy and Identity
The rise of Banking-as-a-Service
The digital race to serve small and medium-sized businesses
The future of credit and the "Elastic Workforce"
Among 20 international fintech hubs examined, Canadian cities ranked amongst the fastest growing in the world in terms of investment. Our global benchmarking study found that Canadian hubs are also leaders when it comes to the primordial elements necessary to grow and sustain a successful innovation ecosystem, such as accommodative government business policies and strong talent.
FinTech global market hub
400+ Canadian fintech equity deals have closed in the last 10 years. This represents a total combined value in excess of $2.5 billion USD, based on publicly disclosed information.
However, opportunity still exists within these hubs to build even stronger, world-class fintech communities. Overall, our analysis ranked Toronto (8th), Vancouver (12th), Montreal (14th) and Calgary (16th) against 16 other international hubs.
Looking beyond 2020, the Canadian ecosystem remains poised for growth. While uncertainties may persist, by fostering further innovation, collaboration and international expansion, ecosystem participants will be well-positioned to support each other and the broader Canadian economy. These themes will be key to ensuring Canadian fintechs and financial institutions learn from 2020 and use this momentum to emerge from the downturn even stronger than before.
We remain optimistic about the future potential of the financial services ecosystem in Canada, as well as the next generation of startups, institutions and partnerships set to play their part in driving Canadian hubs forward. Download the full report today for our full, in-depth analysis of the Canadian fintech ecosystem.