The rapid pace of technological change is widely seen as a threat by many global banks: however, that hasn’t stopped Canadian banks putting themselves at the forefront of financial technology (fintech).
According to consulting firm PwC, the biggest banks in the country are focused on both the opportunities and threats that fintech offers: indeed many are looking to make services and products available online, while others are ready to combine their technologies with fintech firms.
The report highlights that there are more than 80 financial technology companies across the country that have managed to pull in investments of around $1 billion: the majority boast headquarters in Vancouver, Waterloo and Toronto.
Many of these firms are working alongside the banks on innovative new technologies with the report warning that “if Canada’s banks don’t keep up, they run the risk that outside competitors will bring their proven offerings to Canada and slowly erode market share.”
The report predicts that Canadian banks are likely to focus on parallel strategies, making the most of the expertise offered by fintech companies. It is likely that they will use these partnerships alongside developing their own innovations internally.
Several banks have already made steps into the new technologies arena. For example, the Bank of Nova Scotia has invested in Kabbage and developed a ‘digital factory’ that focuses on mobile banking and technology. Meanwhile, the Canadian Imperial Bank of Commerce has formed a partnership with innovation hub MaRs, as well as a referral partnership with Thinking Capital. Toronto Dominion Bank has dipped its toes into the water too, by partnering with Moven, a personal financial management platform; while Royal Bank of Canada is taking a look at payments technology with the help of Nymi Wristband. Finally, let’s not forget the Bank of Montreal, which launched a digital portfolio management service earlier this year, called SmartFolio.
According to the report, it is likely that such rapid growth will quickly come under regulatory scrutiny and that this could impact the technology’s progress.