In the technology tsunami that is redefining life and business, fintech is just one of many game-changing waves.
Of course, sophisticated digital phones have almost completely phased out analog phones, digital cameras have mostly replaced analog cameras and TV and music streaming are transforming conventional media. Zoom is a basic of business meetings and fintech continues as disruptors, competing with banks with a constantly emerging arsenal of innovative products and services.
In just two short decades, fintech—an amalgam of finance and technology —has exploded onto the scene, revolutionizing the financial services industry as we know it.
Although it is difficult to adequately measure the growth and impact on specifically the Canadian economy, the worldwide fintech sector currently holds about a 2 per cent share of global financial services revenues and is estimated to reach $1.5 trillion in annual revenue by 2030, almost 25 per cent of all banking valuations, worldwide.
In Edmonton and throughout Alberta and North America, fintech has become a popular buzzword for new ways of doing things in the financial sector. Fintech refers to the integration of technology into offerings by financial services companies to improve their use and delivery to consumers. Without conventional bank-speak or tech jargon, fintech companies unbundle financial offerings and services and create new markets for them.
Many companies in the finance industry use fintech to expand financial inclusion and use technology to cut down on operational costs.
“There’s no doubt about it,” says Invest Alberta’s CEO, Rick Christiaanse. “Alberta’s fintech sector is growing and we expect that growth to continue. Alberta has the talent, the ecosystem, and the market for this sector to succeed. We can leverage tools like the fintech sandbox to promote these benefits abroad and solidify the province as an international hub for fintech companies.”
The facts, figures and trends not only confirm the strength of Alberta’s financial sector, but a definite shift toward digitalization, spurring the growth of numerous fintech companies. The province’s fintech firms specialize in blockchain, cryptocurrency, insurtech, paytech, capital markets and investments, wealthtech, software and more.
Christiaanse points out that, with five fintech unicorns, Alberta is not only developing innovative products but effectively connecting with the capital needed to grow.
Although often portrayed as disruptors and banking competition, fintech companies often point out that they are also an effective tool for the banking sector. Many fintech companies cooperate and work hand in hand with banks, providing solutions to make processes easier, more efficient, and more secure.
According to Invest Alberta, the fintech sandbox makes the province a very attractive landing place for foreign fintech companies who are looking to expand to North America. It is a protected space where, for two years, companies can test their products and services, meet the ecosystem and gain market traction before fully going out into the market in Alberta, Canada, and eventually the US, if that is in their plans.
Neo Financial™ is one of Canada’s most dynamic and innovation fintech disruptors. The company’s branding boldly boasts that, “Neo is driven by the vision of building a better financial future for all Canadians, by helping businesses deliver best-in-class financial products and experiences,” explaining that Neo’s focus is to bridge the loyalty gap between consumers and the brands they love.
“We’re enthusiastically proud of the contribution that fintech companies, including Neo, make to Alberta’s economy, but we’re just getting started,” admits Andrew Chau, CEO of Neo.
“Alberta is already home to more than 3,000 tech businesses employing over 50,000 people. But think about the impact of the traditional banks on employment and the economy, just in Toronto alone. That is the scale we are trying to accomplish as we plan for future growth here in Alberta; helping to power Alberta’s economy for the next generation and beyond.”
Fintech boosters and IT insiders emphasize that technology in the financial sector is not only a natural evolution whose time has come, but it continues to be a contemporary new normal about how financial matters are managed. Examples of fintech applications include robo-advisors, payment apps, peer-to-peer (P2P) lending apps, investment apps, and crypto apps, among others.
Financial sector analysts caution that, despite fintech being an exciting and innovative disruptor and going head-to-head with the strictly regulated banking industry, some transformational growing pains do exist. Fintech funding is surging but, regulatory problems exist.
Chau points out that, “We live in a time where Canadians can use their cell phone to order food, hail a ride and organize their lives. They deserve to access financial services without going to a bank branch or struggling with an often clunky, online banking website.”
The focus and mission of contemporary fintech disruptors is to create and offer new ways to help Canadians get the most value out of every dollar, like the trend of personalized insights powered by AI.
As the impact of fintech on the financial sector grows, Alberta is ready. Invest Alberta recently signed an MOU with Fintech District, the international community of reference for the Fintech ecosystem in Italy. With more than 250 companies in its network, the organization creates the best conditions so that all partners from startups to financial institutions to corporate companies and investors can work together to find opportunities for local and international growth and engage with Italian and European fintech companies looking to grow outside Europe, by offering Alberta as a natural steppingstone in their expansion plans.
With Chau’s sophisticated expertise about the role and potential of technology in the financial sector, he is adamant that fintech can be a compliment, not competition, for banks.
“People are deeply familiar with traditional banks, and that is a big reason why they still have the biggest share of the market. We believe we can earn that same kind of trust by delivering an innovative, rewarding and contemporary experience in the financial sector. There’s a huge opportunity to raise the bar for financial services in Canada and it’s the customer who will benefit the most.”
Analysts, economists and other financial forecasters agree on the significant impact of fintech. By next year, the financial sector expects greater use of blockchain, AI and IoT in financial transactions. Automation and integration will grow more sophisticated. As a result, consumers will have access to more tailored services that better suit their individual needs.
“Fintech benefits the financial sector as a whole,” Chau notes, “because competition drives all the players to perform at their best. It is a win for Alberta, as we build a global reputation for innovation and entrepreneurship.”
There’s a cautionary consensus about fintech. As technological innovation continues to shape finance, companies must stay ahead of the curve or risk being left behind.
Chau is upbeat and positive about the future of fintech.
“At a time when Canadians are struggling with affordability and suffering from the high cost of living, fintech is focused on helping people save more money, get more value from every dollar they earn and make big purchases like a first home.
“The next few years will be fintech’s opportunity to prove that it can help build a better financial future for all Canadians, with innovations to provide rewarding products, services and customer experiences in the financial sector. We are very excited about the challenge.”
