Why Canadian Fintech Startups Can’t Live Without Incumbent Financial Institutions

Canada is abuzz with fintech startups who offer highly attractive alternative financial solutions to consumers across Canada.

With more than 80 fintech companies attracting nearly $1 billion in investments since 2010, a growing number of fintech companies are partnering with long-standing financial institutions to successfully launch their programs across Canada. And it’s a perfect match. Fintech companies are natural technology innovators, while incumbent financial institutions have unparalleled experience navigating the payments landscape.

Fintech companies are stampeding into the market with savvy technology platforms that offer Canadians more flexible and convenient tools to manage their finances, often from an online card account or a mobile device. Even though they are highly banked, Canadians are starving for alternative financial solutions to help them reduce their ever-growing debt. Fintech companies across Canada are gaining major momentum, thanks in part to the support of established, nimble, and innovative financial institutions as their go-to-market partner in four key areas:

1. Payments expertise.

Fintech companies bring a great understanding of technology, but they need support navigating the intricacies of the Canadian payments landscape.

Established financial institutions offer extensive regulatory, market and payments expertise and the federal resources that are crucial for fintech companies to successfully enter the market.

2. Time-to-market.

Startups are known for being nimble, and often outpace their larger, more traditional counterparts. But it doesn’t take long for fintech startups to realize that it’s unwise to improvise their way into a nearly 150-year-old financial system. Implementing processes around various market scenarios and key operations such as implementing charge backs and launching on multiple payments platforms and with various networks, are easier said than done.

To accelerate market entrance and ensure success, fintech companies should choose an adept and innovative financial partner. But they must choose wisely, as many of those same financial institutions that can make burdensome processes manageable also require months of lead time just to get started.

3. Flexibility for innovation.

Fintech companies need a financial institution that isn’t locked into a single system or process and can offer the flexibility for innovation. This includes the ability to enable a choice of network (Visa, MasterCard, Interac), a choice of payments platform, and the ability to upgrade to new features and functionality as the market innovates.

Choosing a financial partner at the forefront of card technology that is technology-agnostic allows program managers, fintech companies and others to implement, sustain and achieve greater integration, efficiency and control.

4. What’s fintech without mobile?

68 percent of Canadians own a smartphone, and fintech solutions must be able to adopt a payments platforms that fully enables mobile integration. Innovative Canadian financial incumbents such as Peoples Trust work with fintech companies to support the delivery of mobile budgeting apps to Canadians who need them. 

How can fintech companies identify the major players?

Canada has a wealth of payments resources for fintech companies to leverage as a resource, including: Canadian Prepaid Providers Organization (CPPO), Canadian Payments Association (CPA), Fintech Association of Canada, Interac, MasterCard, and Visa. With a bit of research, fintech companies can make an educated choice from financial institutions that have brought innovation and solutions to the market first. Delivering on its innovative approach, Peoples Trust was the first to market prepaid cards that were NFC and EMV enabled.   Another great example going to market in mid 2016 is Koho, a Vancouver-based fintech, who is among the first to offer millennials a new way to manage their money through a general purpose reloadable (GPR) card that can be managed online and through mobile. As Koho’s premier financial partner, Peoples Trust offers them extensive regulatory, market and payment solutions expertise and resources that is enabling them to launch their GPR card in Canada.

As Canada sees an upsurge in fintech companies, the financial institutions that are the most nimble and innovative will be the ones to to help fintech companies bring their solutions to market. Fintech companies’ solid technology expertise paired with an established financial institution’s deep payments expertise will continue to satiate Canadians with the alternative financial solutions they so desire.