What is FinTech?
FinTech stands for Financial Technology – an industry made up of businesses aimed at providing financial services. This includes lending, POS solutions, payments, and asset management tools making use of software and/or modern technology solutions. FinTechs are often seen as disrupting the modern banking system. They do this by providing alternative solutions to what most people would consider classic banking systems and products. Incumbent Canadian financial institutions are also embracing the FinTech mindset and partnering with up-and-coming startups, and creating incubators of their own.
BDC FinTech 2.0
BDC FinTech 2.0 was billed as a conference that brings together FinTech’s most innovative leaders. On the agenda was a schedule of insightful conversations about the future of financial services in North America. BDCFinTech 2.0 was a day of thoughtful dialogue around technology, financial services, and Canada’s role in the burgeoning field. Toronto, it seems, is Canada’s darling when it comes to the FinTech sector.
What should entrepreneurs and small businesses take away from this discussion? Here are some key points that made a big impact, and could help you on your startup journey.
– Innovation is sweeping FinTech nation
Many of the companies featured on stage at BDCFinTech 2.0 are embracing innovation as a way to differentiate. Startups are embracing innovation to disrupt the current landscape. Take Soundpays, a Toronto-based start-up company that allows consumers to pay for products or services via high frequency sound waves over mobile. Scotiabank, one of the big five banks in Canada, is using blockchain technology to think differently about how its handling payments and how it can more easily facilitate consumer transactions. From small up and coming companies, to large incumbents, innovation is paving the way in the financial technology sector.
– Don’t underestimate the value of simplicity
Thanks to presenter Angela Page, a partner with Andreessen Horowitz, we learned a shocking statistic. A staggering 71% of millennials would rather go to the dentist than listen to a bank’s message. This same group prefers financial services from tech giants they trust, like Google, Amazon, and PayPal – over those provided by big banks. A noteworthy reason for this shift in thinking? Big banks tend to be complicated, whereas technology is easily becoming integrated into our daily lives.
Take for example Apple Pay. Instead of carrying around multiple cards in a wallet and your phone, the smart app allows a customer to pay with their phone at point of sale terminals that accept debit/credit tap. With 38% of Canadian smartphone users owning iPhones, Apple Pay (and Samsung Pay for Samsung smartphone users) are convenient ways to make purchases. Building simplicity into consumers’ everyday lives is one reason FinTech companies and systems are growing at an astounding rate, here in Canada and around the world.
At the end of the day, consumers want choice, but they also care about regulation. Fintechs in Canada are rising to this challenge – competing on innovation and adhering to the government and private regulations that govern a majority of our financial transactions. Canada currently has over 20 bank-FinTech partnerships and the Canadian FinTech saw $6.8Billion in foreign investment in 2014 – no doubt growing in numbers since then. For entrepreneurs looking to break into this market, the future looks bright.