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NCFA Fintech Confidential December 2020 (Issue 3)

The National Crowdfunding & Fintech Association of Canada (NCFA) and partners are excited to present Vol. 1 Issue 3, FINTECH CONFIDENTIAL, a digital pop-up of the 6th annual 2020 Fintech & Financing Conference and Expo (FFCON20) held virtually across themed 8 weeks from July 9 to August 27 and co-hosted by NCFA and Toronto Finance International. The main theme of FFCON20 was “RISE”, reflecting the joint efforts of the two associations, NCFA and TFI, to build and increase the success and sustainability of Canada’s fintech and financial sector. There were many moving parts this year and a brand-new digital format with the event bringing together 100+ thought leaders, 50+ partners, and more than 500 attendees, 2 challenges and the inaugural Fintech Draft pitching and demo competitions. Congratulations to the winners: SolidBlock and MazumaGo (formerly DivDot)! Thanks to all the partners, speakers, attendees, volunteers and the entire organizing team for making FFCON20 an impactful and amazing online experience for Canada’s fintech and funding community. We hope you enjoy this issue of Fintech Confidential magazine – it certainly makes for great holiday reading! While everyone relentlessly strives to achieve success in 2021, we encourage you to bring in the new year with good health and to be mindful that we are all in this together, and to help others in your community more than ever before. Peace, happiness, and best wishes for an incredible year and journey ahead.

The National Crowdfunding & Fintech Association of Canada (NCFA) and partners are excited
to present Vol. 1 Issue 3, FINTECH CONFIDENTIAL, a digital pop-up of the 6th annual 2020 Fintech & Financing Conference and Expo (FFCON20) held virtually across themed 8 weeks from July 9 to August 27 and co-hosted by NCFA and Toronto Finance International.

The main theme of FFCON20 was “RISE”, reflecting the joint efforts of the two associations, NCFA and TFI, to build and increase the success and sustainability of Canada’s fintech and financial sector. There were many moving parts this year and a brand-new digital format with the event bringing together 100+ thought leaders, 50+ partners, and more than 500 attendees, 2 challenges and the inaugural Fintech Draft pitching and demo competitions. Congratulations to the winners: SolidBlock and MazumaGo (formerly DivDot)! Thanks to all the partners, speakers, attendees, volunteers and the entire organizing team for making FFCON20 an impactful and amazing online experience for Canada’s fintech and funding community.

We hope you enjoy this issue of Fintech Confidential magazine – it certainly makes for great holiday reading! While everyone relentlessly strives to achieve success in 2021, we encourage you to bring in the new year with good health and to be mindful that we are all in this together, and to help others in your community more than ever before. Peace, happiness, and best wishes for an incredible year and journey ahead.

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INSIDER VIEWS, INNOVATION AND BEST PRACTICES<br />

VOL. 1, ISSUE 3 | DECEMBER <strong>2020</strong><br />

FEATURED<br />

The Good, the Bad and<br />

the Ugly of Central Bank<br />

Digital Coins (CBDCs)<br />

CREATING<br />

SUSTAINABLE WEALTH<br />

Through Digital Finance<br />

LEADERSHIP AND CULTURE<br />

Tale of Two Doors<br />

SEC VOTES TO APPROVE<br />

Changes to Regulation<br />

Crowdfunding: Increasing<br />

Max Raise to $5 million<br />

IS CANADA ON<br />

THE VERGE OF<br />

OPEN BANKING?<br />

PLUS: <strong>2020</strong> FINTECH DRAFT<br />

FFCON20 PITCHING &<br />

DEMO WINNERS<br />

FINALIST PROFILES<br />

CANADIAN FINTECH<br />

DIRECTORY<br />

FINALIST PROFILES: SolidBlock, MazumaGo,<br />

Senso.AI, FundMore.AI, Walo, Trust Anchor<br />

Group, Cyclebit, Corl<br />

Cover: Paul Schulte, Schulte Research<br />

INSIGHTS FROM Holt Accelerator DUCA Impact Lab LUGE Capital MNP FundRazr Rise & Grind 1000 Days Out WALO University of Victoria Bitvo<br />

Global Risk Institute in Financial Services FundMore.ai The Answer Company MazumaGo Coinpayments KABN Katipult SolidBlock.co


Dear Global <strong>Fintech</strong> & Funding Communities,<br />

The National Crowdfunding & <strong>Fintech</strong> Association of Canada (<strong>NCFA</strong>) and partners are excited<br />

to present Vol. 1 <strong>Issue</strong> 3, FINTECH CONFIDENTIAL, a digital pop-up of the 6th annual <strong>2020</strong><br />

<strong>Fintech</strong> & Financing Conference and Expo (FFCON20) held virtually across themed 8 weeks<br />

from July 9 to August 27 and co-hosted by <strong>NCFA</strong> and Toronto Finance International.<br />

The main theme of FFCON20 was “RISE”, reflecting the joint efforts of the two associations,<br />

<strong>NCFA</strong> and TFI, to build and increase the success and sustainability of Canada’s fintech and<br />

financial sector. There were many moving parts this year and a brand-new digital format with<br />

the event bringing together 100+ thought leaders, 50+ partners, and more than 500 attendees,<br />

2 challenges and the inaugural <strong>Fintech</strong> Draft pitching and demo competitions. Congratulations<br />

to the winners: SolidBlock and MazumaGo (formerly DivDot)! Thanks to all the partners,<br />

speakers, attendees, volunteers and the entire organizing team for making FFCON20 an<br />

impactful and amazing online experience for Canada’s fintech and funding community.<br />

Despite a challenging year for many, the fintech industry continues to demonstrate its resilience,<br />

creative capacity, and thirst to create valuable partnerships and financial products/services that<br />

benefit millions of consumers, small businesses, and the economy. As covid accelerates the<br />

adoption of digital trends, it has spotlighted the social and economic gaps that saw fintechs pivot<br />

to work on supportive solutions from mobilizing low-cost capital campaigns to personal finance<br />

apps that help users better manage their finances, spending, savings, and investment habits.<br />

Digital identity, CBDCs (and digital assets), AI, and sustainable finance are all taking off as<br />

governments and industry work to collaborate on overhauling Canada’s digital infrastructure,<br />

data rights, privacy and standards that will set the stage for years to come. The second<br />

round of open banking consultations that were delayed due to the pandemic were suddenly<br />

announced in November with many organizations, fintechs and incumbent banks coming<br />

together to discuss the scope, governance, implementation, and accreditation of a made<br />

in Canada OB solution. We urge the OB committee to remain laser-focused on consumer<br />

interests while looking globally for insights to implement a principles-based, inclusive, broadscoped<br />

and competitive framework as swiftly as possible.<br />

We hope you enjoy this issue of <strong>Fintech</strong> <strong>Confidential</strong> magazine – it certainly makes for great<br />

holiday reading! While everyone relentlessly strives to achieve success in 2021, we encourage<br />

you to bring in the new year with good health and to be mindful that we are all in this together,<br />

and to help others in your community more than ever before. Peace, happiness, and best<br />

wishes for an incredible year and journey ahead.<br />

All the best<br />

Craig Asano<br />

Founder and CEO<br />

<strong>NCFA</strong>


TABLE OF CONTENTS<br />

FEATURED<br />

01 05 08 12 16<br />

THE GOOD,<br />

THE BAD AND THE<br />

UGLY OF CENTRAL<br />

BANK DIGITAL<br />

COINS (CBDCS)<br />

IS CANADA ON<br />

THE VERGE OF<br />

OPEN BANKING?<br />

SEC VOTES TO<br />

APPROVE CHANGES<br />

TO REGULATION<br />

CROWDFUNDING<br />

INCREASING THE<br />

MAXIMUM RAISE TO<br />

$5 MILLION<br />

FUTURE OF<br />

CRYPTO MARKET<br />

INFRASTRUCTURE:<br />

THE ROLE OF<br />

CUSTODIANS AND<br />

EXCHANGES<br />

CREATING<br />

SUSTAINABLE<br />

WEALTH<br />

THROUGH<br />

DIGITAL<br />

FINANCE<br />

INSIDER VIEWS<br />

19<br />

FROM GLOBAL LEADER<br />

TO FOLLOWER, IS CANADA<br />

LOSING ITS FINTECH EDGE?<br />

24<br />

HERE IS WHY INSURTECH IS<br />

HEATING UP AS AN<br />

INVESTMENT CATEGORY<br />

22<br />

HAS FINTECH<br />

MADE BANKING<br />

BETTER?<br />

28<br />

THE OSC’S NEW INNOVATION<br />

CHARTER: IS THIS REALLY A<br />

‘NEW MODEL’?<br />

30<br />

AS FINANCIAL INSTITUTIONS<br />

BUY INTO AI, THESE FACTORS<br />

WILL BE KEY TO SUCCESSFUL<br />

TRANSFORMATIONS<br />

CULTURE<br />

32<br />

34<br />

36<br />

38<br />

BUSINESSES COMPETING ON SOCIAL<br />

VALUES USE FINTECH TO GAIN AN EDGE<br />

TALE OF TWO<br />

DOORS<br />

3 HUMAN- CENTRIC PRACTICES TO BECOME<br />

A BETTER AI FINTECH LEADER<br />

GEN Z: THE END OF STATUS<br />

QUO BANKING?<br />

IN FOCUS<br />

40<br />

42<br />

44<br />

46<br />

48<br />

HOW BANKS, FINTECHS, AND CUSTOMERS<br />

WIN TOGETHER<br />

PRICE DISCOVERY IN DIGITAL CURRENCIES<br />

IS MATURING<br />

WHY IS AI REQUIRED FOR THE<br />

FUTURE OF MORTGAGE LENDING?<br />

CASE STUDY: TRANSFORMING A GLOBAL<br />

SAAS BUSINESS WITH DATA & AUTOMATION<br />

WHAT THE HECK IS SSI?<br />

(SELF- SOVEREIGN IDENTITY)<br />

TRENDING<br />

50<br />

56<br />

58<br />

65<br />

QR CODES THE TECH THAT CHANGED CHINA<br />

IS COMING CLOSER TO HOME<br />

FINTECH IN<br />

ATLANTIC CANADA<br />

THE RISE IN BIG TECH AND FINTECH<br />

CREDIT<br />

CATCHING THE WAVE: CAPITALIZE ON NEW<br />

OPPORTUNITIES IN PRIVATE PLACEMENTS<br />

<strong>2020</strong> FINTECH DRAFT<br />

70<br />

74<br />

78<br />

88<br />

89<br />

PITCHING WINNER:<br />

SOLIDBLOCK<br />

DEMO WINNER:<br />

MAZUMAGO<br />

FINALIST AND SHORTLISTED<br />

PROFILES<br />

FFCON20<br />

PARTNERS & IMPACT<br />

FINTECHCANADA.IO<br />

FREE LISTING & SOCIAL NETWORK


iv


THE GOOD,<br />

THE BAD AND<br />

THE UGLY<br />

OF CENTRAL<br />

BANK DIGITAL<br />

COINS (CBDCS)<br />

FEATURED<br />

The good: inclusion, provenance and bank<br />

cleanup<br />

It is becoming clear to anyone with a window<br />

in their office that blockchain is now (finally!)<br />

emerging as a viable and pivotal technology.<br />

It was a long time coming and, as with all<br />

new technologies, the actual use case is far<br />

different from anything envisaged during its<br />

inception. The main drivers in the development<br />

of distributed ledger technology are central<br />

banks. And they do, in fact, see great benefits<br />

to Blockchain technology. These benefits<br />

include...<br />

• Independent identification and verification.<br />

The establishment of an identity confers<br />

ownership. Shockingly still, more than 1<br />

billion people in the world do not have a<br />

conferred legal identity and about 2 billion<br />

have no financial history.<br />

• This creates provenance for everything:<br />

ideas, people’s bodies, property, data,<br />

relationships, and so much more we<br />

cannot conceptualize now.<br />

• The provenance constructs a whole new<br />

understanding of collateral and establishes<br />

the capacity to borrow against assets<br />

which, heretofore, were an uncounted<br />

part of human experience. This includes<br />

millions of hectares of agricultural land,<br />

millions of homes, and 2 billion people<br />

who are not in the banking system.<br />

• Blockchain, thus, guarantees mass<br />

inclusion — once provenance is<br />

established, everyone’s land, ideas, and<br />

homes become protected assets that can<br />

be borrowed against.<br />

• Finally, once newly empowered and<br />

financially integrated people start<br />

businesses, blockchain technology<br />

offers them smart and cheap contracts;<br />

expensive and business-killing middlemen<br />

are eliminated.<br />

• Whole new types of financial opportunities<br />

emerge and a new class of entrepreneurs<br />

is born, creating prosperity for millions of<br />

families and their communities.<br />

There is another more subtle and complex<br />

— yet utterly simple — dynamic at play here.<br />

I have heard it from too many separate and<br />

independent corners of the investment<br />

community for it to be hearsay. The banks in<br />

the US, Europe, Middle East, and China are a<br />

mess. They need to be cleaned up after a 20-<br />

1


year Supercycle of mad lending. What if there<br />

is a plan afoot to roll out a new form of M1 in<br />

the form of digital coins from The Central Bank<br />

directly to the e-wallets of accredited entities<br />

or directly to people’s accounts so as to<br />

bypass banks altogether? What purpose does<br />

this serve? It redirects the deposit liabilities of<br />

banks directly into people’s accounts in order<br />

to give those same banks time to deal with<br />

their bad debt. In effect, digital coins will act as<br />

a “ring-fence,” turning banks into a large scale<br />

“asset management company” to clean up<br />

balance sheets. Incidentally, don’t expect the<br />

banks to sit by idly as they will want a piece of<br />

the “central bank crypto action.”<br />

In the meantime, the economy can function<br />

with digital money distributed directly to<br />

citizens. Digital coins, in effect, become a<br />

substitute bank credit. Easing the pressure<br />

on bad debt and ensuring that bad banks<br />

can’t paralyze national economies. Ideally,<br />

it is done slow enough so as not to put too<br />

much pressure on asset prices. We need to<br />

pay attention to how central bank coins (let’s<br />

call it M1-b money) replace paper money and<br />

what financial applications (the new rails) are<br />

used to distribute M1-b directly to consumers.<br />

I contend that the chatter distinguishing<br />

wholesale and retail distribution will become<br />

irrelevant as the global banking system<br />

morphs from a fractional reserve system run<br />

by banks to a full reserve system run by a<br />

group of tech companies who manage the<br />

‘electronic rails’ and ‘train stations’ by which<br />

the money flows from the government to the<br />

citizen.<br />

The Bad: conflicts of interest and political<br />

blocs<br />

Now we get to the bad stuff. What I see<br />

playing out before my eyes is a general<br />

rebellion against the dollar. There is a growing<br />

global perception that the US hegemony has<br />

morphed from an enlightened Pax Americana<br />

to a hypocritical bully-ana; DC has been<br />

weaponizing sanctions (or outright invasion)<br />

“willy nilly” to punish countries who dare to<br />

question the dollar’s supremacy. I attended a<br />

European Central Bank Zoom conference last<br />

week and was alarmed to hear that CBDC now<br />

carries intellectual baggage of regionalism<br />

and “currency bloc” thinking. There is certainly<br />

a sense of FOMO (fear of missing out) as the<br />

Eurozone confronts its lack of an alternative<br />

to Libra and BSN. That’s fair. But the optimistic<br />

tenor of the discussion belies a confused<br />

attempt to create a CDBC Frankenstein’s<br />

monster to satisfy 18-19 countries (is it “Eurofirst”<br />

or “Euro, first”). I heard a “don’t call us —<br />

we’ll call you” attitude when it comes to the<br />

creation.<br />

At the same time, I was alarmed to hear<br />

about BUNA, the newest FOMO iteration of<br />

a CBDC in the Gulf States. When pressed<br />

by interlocutors about why the Gulf States<br />

needed their own CBDC, the argument boiled<br />

down to sanctions. I am getting the sense<br />

that the CBDC’s elephant in the room is that<br />

each national bloc wants to be able to impose<br />

its OWN sanctions on its OWN perceived<br />

adversaries. They do not want someone<br />

else to impose sanctions on them, ie Uncle<br />

Sam. So, we have a world which is morphing<br />

into four blocks: Libra in the US; a manyheaded-hydra<br />

in Euroland; BUNA in the Gulf<br />

countries; and BSN in Asia. Incidentally, there<br />

was a massive pushback to Libra among the<br />

European central bank folks. A representative<br />

from the Deutsche Bundesbank was<br />

especially unflattering about Libra: “We might<br />

give it a look sometime in 2025.” OUCH!<br />

Second, the “bad” part of CBDC is the practical<br />

realization that central banks are, by nature,<br />

very conservative organizations. The joke<br />

goes that if you need a heart transplant, get<br />

one from a central banker because it has never<br />

been used. The slowness and institutional<br />

absence of imagination, technological or<br />

otherwise, means that a private sector partner<br />

is vital. Public-private partnerships are crucial<br />

to kickstart the process. Someone has to build<br />

the new digital rails! In the US, it seems that<br />

Libra has been tapped on the shoulder. In<br />

China, it is Red Date.<br />

The Eurozone has the European Payments<br />

Initiative which will use the existing technology<br />

of 14 banks in 5 countries to build a private<br />

rail system (what could possibly go wrong?).<br />

For better or worse, the private sector is vital<br />

to work alongside central banks in order to<br />

create a speedy, flexible, and interoperable<br />

system of payments. So far, Red Date is<br />

further ahead than anyone. While Libra can<br />

2


apidly create a system, there is still massive<br />

resistance to Facebook operating inside other<br />

countries as an “honest broker.” A company<br />

like Master Card might be a better candidate,<br />

but it seems that the political Rubicon has<br />

been crossed and Libra has been tapped.<br />

Lastly, there was a terrific presentation by a<br />

very senior member of the Banque de France<br />

on the politics of a digital coin. There is now<br />

yet another elephant in the living room (it<br />

seems that a herd of elephants is squeezing<br />

CBDC from all sides). He was very clear about<br />

the priorities of central banks when it comes<br />

to new initiatives of any kind. ‘What is the<br />

order of priorities?”, he asked? “First is politics.<br />

Second is policy. Third is regulation. And<br />

fourth is the functional solution.” I think this<br />

explains why the evolution of agreed-upon<br />

terminology is so problematic. It explains why<br />

the functionality of the CBDC’s “rails and train<br />

stations” is too elusive.<br />

The reality is that politics and national policy<br />

are far more important than the creation of<br />

clever solutions to glaring problems. I have<br />

learned that money and power are always at<br />

the heart of fixing national problems. Find out<br />

whose money and whose power is working<br />

the levers behind the scenes and you will find<br />

the solution. The regulators will also slavishly<br />

follow this trend. For instance, all of Libra’s<br />

senior leadership will be in Washington DC.<br />

It will likely be located in Lafayette Square<br />

across from the White House. The new<br />

spokesperson has been hired from the<br />

FDIC. The new CEO came from HSBC and<br />

has a history as an undersecretary in the US<br />

Government.<br />

Follow these breadcrumbs. It’s a matter of<br />

form over function. Investing with an eye<br />

toward finding companies with the best<br />

solutions rather than companies with the best<br />

political instincts or connections might lead<br />

one to pick the wrong horse. This is why<br />

people may be grossly underestimating Libra.<br />

The Ugly: Each CBDC bloc wants to<br />

decide who is a terrorist & who is a money<br />

launderer.<br />

Now we get back to the point I made earlier<br />

about The Euro Central bank conference<br />

last week (Incidentally, not a single Asian<br />

central banker was invited, even though it<br />

had delegates from Canada, Mexico, Libra,<br />

Bahamas, Sweden, Finland, and Middle<br />

East. I have to add that the smartest guy<br />

in the room was, I thought, Tim Lane from<br />

the Bank of Canada). There was frequent<br />

discussion of the need to regain control<br />

over a sovereign state’s ability to impose<br />

sanctions. Countries no longer want to play<br />

the game of guessing who will be the new<br />

best friend or enemy of the United States.<br />

And they certainly do not want to find<br />

themselves on the sanctions list.<br />

If a country does land in the sanctions<br />

swamp, it is essentially barred from SWIFT<br />

and cannot transact in dollars. SWIFT is<br />

NOT a ‘society’ in Belgium. It is controlled<br />

by Politicians in DC and is executed through<br />

5 banks in New York. The world has become<br />

increasingly wary of this arrangement and<br />

is seeking an alternative. Representatives<br />

from BUNA, ECB, and BSN have all made<br />

this same point loud and clear.<br />

Second, countries also want to decide who<br />

is a terrorist and who is a patriot. It is easy<br />

to forget that the 56 “terrorists” who signed<br />

the Declaration of Independence in 1776<br />

were ordered to be hanged by Great Britain.<br />

By 1781, they were hailed as patriots who<br />

created a new country. (The US was not a<br />

country until 1789 — it took 13 years to get<br />

from rebellion to nationhood!). They say<br />

that the difference between a patriot and a<br />

traitor is a matter of timing.<br />

Here we see the problem with dollar<br />

sanctions. At any time given time, the US<br />

gets to decide who is a terrorist and who is<br />

a patriot. Many countries are still very young<br />

and are in the painful and tawdry process of<br />

nation-building and establishing a national<br />

consensus. There is growing resentment<br />

about the US’ ability to take a snapshot of<br />

history and decide when nation-building<br />

must cease and restart again. The US’ gross<br />

history of international abuse ought not to<br />

be forgotten either. The 20th century is filled<br />

with the US overthrowing rightfully elected<br />

Democrats and replacing them with tyrants:<br />

Pinochet in Chile, the Shah in Iran, Arbenz in<br />

Guatemala, and so many more.<br />

FEATURED<br />

3


Third, countries want to have the freedom to<br />

decide who is a money launderer and who<br />

is a tax evader. This sounds absurd. Hear<br />

me out. Much of the clandestine activity<br />

of intel agencies are very often carried out<br />

with laundered money. Countries deem the<br />

activities of their intel agencies as essential<br />

to survival. If these activities are caught in a<br />

trap of “laundering,” the funds can be frozen<br />

by the US. Furthermore, some countries<br />

reserve the right for political or national<br />

security reasons to let some elites off the<br />

hook when it comes to tax evasion, money<br />

laundering, or hidden financial identities.<br />

Why should politicians in DC get to decide<br />

matters of sensitive national security of<br />

other nations in a simplistic “good versus<br />

evil” view of the world, especially when<br />

recent history has shown these judgment<br />

calls to be smeared with hypocrisy?<br />

So, the CBDC debate rages on. Let’s not<br />

think that it is solely about functionality or<br />

the issues being addressed. Power, money,<br />

and nation-building are first and foremost.<br />

Regulation comes a distant second. And<br />

problems being solved are, unfortunately,<br />

last. The reason why the debate over<br />

CBDC has the hallmarks of the fog-of-war<br />

is because, as always, we’re having the<br />

discussion upside down: the solutions come<br />

last, politics come first. Welcome to the<br />

world of financial realpolitik. It’s form over<br />

function — political form trumps practical<br />

function as these new digital rails are being<br />

built.<br />

About:<br />

Paul Schulte<br />

Founder and Managing Editor<br />

Schulte Research<br />

Paul Schulte is the Founder and Managing Editor of Shulte<br />

Research based in Singapore. Paul’s roles in banking &<br />

financial services in the past 30 years include equity & fixed<br />

income research (buy & sell sides) in emerging markets.<br />

4


IS<br />

CANADA<br />

ON THE<br />

VERGE<br />

OF OPEN<br />

BANKING?<br />

FEATURED<br />

Open Banking is a global movement that<br />

aims to return the ownership of financial data<br />

to the consumer. In doing so, consumers<br />

will have greater choice and access to<br />

personalized products and services that will<br />

enable them to achieve their financial goals.<br />

Overall, Open Banking will be a catalyst for<br />

innovation, transparency and competition<br />

within financial services. Canada has now<br />

entered phase two of its Open Banking<br />

consultations with new Finance Minister<br />

Chrystia Freeland in place. They will be<br />

looking at ways to implement and adopt<br />

measures in order to stay competitive in<br />

the global financial sector. The industry<br />

is starting to come together to help drive<br />

Open Banking in many ways including a new<br />

organization called the OBIC “Open Banking<br />

Initiative Canada” a not for profit which exists<br />

to lead the way in the development of a<br />

market-driven framework for Canadian Open<br />

Banking. OBIC will soon release their Open<br />

Banking Manifesto as well as a 7-part FinTech<br />

podcast series highlighting advantages<br />

of open banking in the UK and challenges<br />

currently faced by Canadian FinTech’s due to<br />

lack of a clear road map.<br />

Open Banking Will Be Important For Every<br />

Player<br />

Now, more than ever before, the need for<br />

an Open Banking structure within Canada<br />

has become even stronger. As Canadians<br />

increasingly switch over to cashless payments,<br />

the Canadian payment system will experience<br />

mounting pressure. With Open Banking,<br />

players such as the consumer, Banks and<br />

FinTechs will be set up for success.<br />

5


Consumers<br />

Open Banking will provide Canadian<br />

consumers with greater access to products<br />

and services that will help to increase<br />

productivity, education, and choice regarding<br />

their financial options. This framework will<br />

involve lower fees, tracking of consumer<br />

habits, creating the ability to move funds<br />

between banks, as well as introducing<br />

greater variety in products and services.<br />

Most importantly, Open Banking will allow<br />

customers to take back their autonomy when<br />

it comes to their data. Consumers can choose<br />

what information is shared, when their data is<br />

shared and for how long, as well as the power<br />

to revoke access whenever they like.<br />

Banks<br />

This framework will allow banks to develop<br />

partnerships with FinTechs, acquire new<br />

customers, become more effective at cross<br />

selling their products, and gain a deeper<br />

understanding of their existing customer<br />

base. Open Banking will also enable banks<br />

to become more connected with consumers<br />

and reduce fraud by obtaining enriched<br />

data through APIs (Application Programming<br />

Interface).<br />

<strong>Fintech</strong> Companies<br />

For FinTech companies, Open Banking will<br />

play a key role in levelling the playing field<br />

when it comes to getting secure access to<br />

client data. Across the ecosystem, FinTechs<br />

will be able to create innovative products<br />

and services to meet the needs of Canadian<br />

consumers. An Open Banking framework will<br />

also allow FinTechs to gain access to real time<br />

consented client data verses current screen<br />

scraping techniques which are unregulated.<br />

UK as a Global Leader<br />

Through a combination of both market<br />

actions and government legislation, the UK<br />

has become a leading global power in Open<br />

Banking as they launched in January 2018. By<br />

providing both Data Sharing and Payments<br />

Initiation to consumers, FinTechs and<br />

other banks are able to provide enhanced<br />

and personalized financial services. As an<br />

example, using Payment Initiation Service<br />

Providers (PISPs) has allowed UK consumers<br />

to automate many recurring transactions in<br />

their daily life while gaining (and maintaining)<br />

higher security and privacy over their personal<br />

information.<br />

In terms of adoption, there are now 2 million<br />

UK consumers using Open Banking. As of<br />

October <strong>2020</strong>, there were 200 third party<br />

service providers and 76 account providers<br />

with Open Banking regulations which<br />

allows consumers additional choice and<br />

drives competition. Along with its success<br />

with consumers and industry stakeholders,<br />

Open Banking will also make a significant<br />

contribution to the UK’s economy. According<br />

to an analysis from the Centre for Economics<br />

& Business Research, Open Banking will<br />

contribute an estimated $1.4 billion to the<br />

UK’s GDP on an annual basis.<br />

Other Global Leaders in Open<br />

Banking<br />

Australia<br />

Australia has over 800 FinTechs and is set to<br />

grow from $250M in 2015 to over $4B by the<br />

end of <strong>2020</strong>. Open Banking was introduced<br />

nationwide in July <strong>2020</strong>, enhancing<br />

collaboration between FinTechs and banks,<br />

and helping to accelerate growth. Traditional<br />

institutions and FinTechs alike have seized on<br />

the opportunity to build and offer innovative<br />

products and services that develop new ways<br />

to meet consumers need for more control,<br />

flexibility and transparency. Although only in<br />

its first phase, an Open Banking. Open Banking<br />

framework has been attributed to the early<br />

success of innovative business models and<br />

stakeholder’s growth across Australia.<br />

Singapore<br />

As one of the global leaders in Open Banking,<br />

Singapore’s success is based on its ideal<br />

digital ecosystem for FinTech’s as well as<br />

the adoption of APIs. Today, at least 50<br />

financial institutions and 140 FinTech’s rely<br />

on Singapore’s Open Banking framework. In<br />

<strong>2020</strong>, 89% of Singaporean banks reported<br />

that increased collaboration with FinTechs<br />

has increased growth and efficiency. Today,<br />

6


oth traditional players and market disrupters<br />

are leveraging Open Banking to deliver<br />

innovative products for consumers in spaces<br />

such as mobile banking and AI.<br />

Where Canada Stands On The Global<br />

Stage<br />

Canada has fallen far behind the global<br />

adoption of Open Banking which is hindering<br />

our FinTech investments as well as our longterm<br />

growth. Although the use of FinTechs has<br />

grown from 18% to 50% since 2017, Canada has<br />

not decided when or if Open Banking will come<br />

to Canada. We are hopeful for progress in<br />

Canada as the Federal Government is holding<br />

its second phase of consultations in <strong>December</strong><br />

<strong>2020</strong> on the merits of Open Banking.<br />

This phase will determine how regulators and<br />

the financial players can assess and mitigate<br />

data security and privacy risks associated<br />

with open banking. Another great sign is the<br />

Digital Charter Implementation Act, <strong>2020</strong><br />

was announced by the honourable Navdeep<br />

Bains, Minister of innovation, science and<br />

economic development Nov 19th that will<br />

advances the Digital Charter and its 10<br />

principles. Canada has the opportunity to learn<br />

from other countries mistake and challenges<br />

as we build our framework for the future of<br />

finance in Canada, which can drive additional<br />

investments from VC’s and stronger GDP.<br />

This technology, and other solutions that<br />

leverage an Open Banking framework, would<br />

have been invaluable to Canadian consumers<br />

when accessing CERB and CEWS funds<br />

from the Federal Government. Further, the<br />

Canadian launch plan for a Real-Time Rail<br />

(RTR) payments system will create additional<br />

benefits and synergies with Open Banking<br />

as Canadian consumers and FinTechs will<br />

be able to access faster and more efficient<br />

transactions.<br />

Moving Forward<br />

As Canada moves forward, an Open Banking<br />

structure will play an important role in<br />

encouraging innovation, transparency, as well<br />

as increasing our competitiveness on the<br />

global stage. To learn more about Canada’s<br />

Open Banking initiative, check out OBIC’s<br />

Web Series on Open Banking.<br />

FEATURED<br />

The Importance of Open Banking During A<br />

Pandemic<br />

The global pandemic has not only accelerated<br />

the shift to virtual delivery for many services<br />

across industries and sectors, but it has<br />

also forced business closures and multiple<br />

lockdowns on everyday life. In the midst of a<br />

turbulent economy, the benefits of adopting<br />

Open Banking are ever-so important. Open<br />

banking can benefit small and medium-sized<br />

businesses, as well as individuals, by allowing<br />

them to access more useful and informative<br />

financial products and services related to<br />

bookkeeping, budgeting, investing, and<br />

lending. Proving this, within 48 hours, a team<br />

of UK’s <strong>Fintech</strong> community built a working<br />

proof of concept that allows self-employed<br />

workers to self-certify their loss of income by<br />

connecting their bank statements.<br />

About:<br />

Michelle Beyo<br />

Founder & CEO<br />

Finavator<br />

Michelle is the founder of Finavator and a strategic advisor<br />

for multiple FinTech’s. Finavator is an award-winning<br />

strategy consultancy focused on bridging the gap between<br />

FinTech’s and Traditional banks. We work with Startup’s<br />

to drive growth through strategic partnerships, enterprise<br />

relationships, and new clients. When working with traditional<br />

banks, we help evaluate FinTech’s to find the best partners in<br />

order to expand their service offering to their clients. Michelle<br />

started Finavator as she is passionate about payments &<br />

financial inclusion. Her background in Telecoms, E-commerce,<br />

Payments Prepaid and Loyalty programs nurtures her passion<br />

for the world of tech. She has 20 years of extensive industry<br />

experience driving innovation across the retail and payments<br />

industry. Michelle is also a Money 20/20 2019 Rise Up alumni,<br />

Women in Payments Global Council Committee Member,<br />

Canadian Prepaid Providers Organization Membership Chair,<br />

NFCA Payment Advisor and Board Member at Open Banking<br />

Initiative of Canada.<br />

7


SEC VOTES<br />

TO APPROVE<br />

CHANGES TO<br />

REGULATION<br />

CROWDFUNDING<br />

INCREASING<br />

MAX RAISE TO<br />

$5 MILLION<br />

On November 2, <strong>2020</strong>, the Securities and Exchange Commission<br />

approved amendments to facilitate capital formation and<br />

increase opportunities for investors by expanding access<br />

to capital for small and medium-sized businesses and<br />

entrepreneurs across the United States. The vote was 3 to 2.<br />

SEC Chair Clayton said, “He’s extremely pleased with the work<br />

done by the Commission.” He believes, “that the changes will<br />

modernize the exempt offering framework and have a lasting<br />

impact on our capital markets without detriment to investor<br />

protection.”<br />

“A $5 million limit and other substantial regulatory changes<br />

will expand crowdfunding’s use rapidly. At $5 million, a tech<br />

startup can raise a seed round or a traditional small or mid-sized<br />

company can raise expansion capital. This will open significant<br />

new opportunities for businesses to use this capital to recover<br />

from the current economic crisis or launch innovative new<br />

products and services.” says Jason Best, Principal at Crowdfund<br />

Capital Advisors.<br />

We are<br />

thrilled that the<br />

Commission has<br />

finally increased<br />

the maximum<br />

issuers can raise<br />

under Regulation<br />

Crowdfunding from<br />

$1.07 million to<br />

$5 million<br />

– says Sherwood Neiss,<br />

principal at Crowdfund<br />

Capital Advisors.<br />

8


“For the first, time we have easily accessible,<br />

real time data on the economic health and<br />

sentiment of startups and small and medium<br />

enterprises (SMEs) and of the communities<br />

where they are based. This enables<br />

policymakers to understand immediately, how<br />

the SEC’s action today is positively impacting<br />

American lives. We are grateful to the Small<br />

Business and Entrepreneurship Council for its<br />

tireless efforts on behalf of these changes and<br />

for their ongoing education of their members<br />

about how to use crowdfunding to enhance<br />

their businesses. Every community across<br />

the country should immediately educate<br />

themselves about this new opportunity to<br />

support their local businesses.”<br />

The vote comes at a time when local<br />

businesses and local economies across<br />

the USA are facing the most challenging<br />

economic crisis since the Great Recession.<br />

The third wave appears to be worse than<br />

the first two with many Americans bracing<br />

for another shut down like in other parts of<br />

the world. If this happens, millions of small<br />

businesses that were just scrapping by might<br />

permanently shut their doors leading to a<br />

housing crisis as unemployed people cannot<br />

pay their rent or mortgages.<br />

There is a way to supercharge Regulation<br />

Crowdfunding and provide immediate,<br />

impactful stimulus to Main Street businesses<br />

that may not survive the pandemic. That is<br />

for the Federal Reserve to take $20 billion<br />

of the $596.3 billion they have remaining<br />

from the Main Street lending, PPP and<br />

EIDL programs and put it into the Main<br />

Street Recovery Co-Investment Fund. This<br />

fund would match dollar for dollar, up to<br />

$250,000, into businesses that are struggling<br />

to survive the pandemic but have customers<br />

that wish to see these businesses survive. By<br />

turning these customers into investors (what<br />

we are calling investomers), the businesses<br />

access capital from customers who are<br />

now stakeholders in the business and the<br />

government can successfully deploy capital<br />

at the most micro level into communities all<br />

across the USA.<br />

FEATURED<br />

Broad Appeal Among Industries Across the<br />

USA<br />

To date, Regulation Crowdfunding has<br />

raised capital for over 430 industries.<br />

The chart to the right looks at the top 15.<br />

It shows is that there is broad appeal by<br />

both issuers in a variety of industries and<br />

investors interested in backing these<br />

enterprises. The two things we<br />

expect to change over the next<br />

year, given the SEC changes,<br />

is more real estate offerings<br />

and more medium sized<br />

issuers entering the market.<br />

The $1 million cap limited<br />

many developers/issuers from<br />

leveraging money from Reg CF<br />

investors, increasing the cap to<br />

$5 million means more small/<br />

medium sized developers/<br />

issuers and more investors will<br />

be leveraging Reg CF for funds<br />

and diversified investment<br />

opportunities. It also means<br />

that firms with Revenues<br />

between $10M and $50M will find Reg CF<br />

more appealing as a mechanism for raising<br />

funds. It will be a cheaper alternative than<br />

hiring an investment bank and a faster<br />

method as the time to raise funds averages<br />

around 90 days.<br />

Source: Crowdfund Capital Advisors<br />

9


Steady Growth in Offerings Over Time<br />

This next chart shows consistent and steady<br />

growth in monthly offerings over time. July<br />

<strong>2020</strong> saw the highest number of offerings<br />

at 128 since Regulation Crowdfunding<br />

began and October saw the second highest<br />

number of offerings at 115. With the changes<br />

made by the SEC, this means that issuers<br />

that need to raise in excess of $1 million but<br />

less than $5 million will be turning online for<br />

funding.<br />

Source: Crowdfund Capital Advisors<br />

Average Number of Investors and Commitment Size is Increasing with Covid Tail-winds<br />

The next chart demonstrates how investments and investors have been increasing since the<br />

launch of Regulation Crowdfunding began in May 2016.<br />

Source: Crowdfund Capital Advisors<br />

10


As one can see, the industry began to see<br />

record numbers starting in July <strong>2020</strong> (Note<br />

Since Regulation Crowdfunding began in<br />

May 2016 we use May as the beginning of the<br />

fiscal year and hence Q1 begins in May each<br />

year). The average check size investors are<br />

writing is increasing. In February, when the<br />

markets shut down, the average check size<br />

was $436. In October that amount doubled to<br />

$879. Because they are writing larger checks,<br />

this bodes well for Main Street businesses<br />

that will need to turn to their customers for<br />

capital over the next year.<br />

“The data has been positive for Regulation<br />

Crowdfunding. The industry has proved the<br />

naysayers wrong and the opportunity for<br />

issuers and investors affirming,” says Neiss.<br />

“This truly represents the democratization of<br />

access to capital we promised and a way to<br />

engage investors at the most local level. If<br />

we can just get the government to focusing<br />

on investing alongside community investors,<br />

I believe we can get through this pandemic<br />

with minimal scars.”<br />

About:<br />

Sherwood Neiss<br />

Principal<br />

Crowdfund Capital Advisors<br />

Sherwood Neiss is a principal at Crowdfund Capital Advisor. He<br />

is at the forefront of the US Crowdfunding industry as one of<br />

the authors of the securities-based crowdfunding provision of<br />

the 2012 JOBS Act. He is the creator of the CCLEAR Database<br />

that aggregates US online investment platform data and<br />

transmits it to Bloomberg on a daily basis.<br />

FEATURED<br />

STRATEGIC PR & MARKETING<br />

For the <strong>Fintech</strong> and<br />

Blockchain Industries<br />

We craft compelling, individualized PR<br />

campaigns to help you stand out in an<br />

increasingly competitive technology landscape<br />

Find out what we can do for you<br />

PR Strategy | Media Relations<br />

Content Creation | Analyst Relations<br />

Thetopflooragency.com<br />

Email: pr@thetopflooragency.com<br />

Phone: +1 (905) 379 1893<br />

11


FUTURE OF<br />

CRYPTO MARKET<br />

INFRASTRUCTURE:<br />

THE ROLE OF<br />

CUSTODIANS AND<br />

EXCHANGES<br />

While bitcoin offers the possibility of removing<br />

third parties and making transactions peer-topeer,<br />

the reality is that most cryptocurrency today<br />

is bought and stored using third party exchanges.<br />

These platforms typically act as combined brokers<br />

and custodians—executing orders on behalf of<br />

customers, and storing their funds in commingled<br />

omnibus custodial accounts.<br />

Over the last decade, the liquidity flowing into<br />

cryptocurrency has been captured by various<br />

different exchange-custodians, creating a<br />

landscape of fragmented liquidity that is difficult for<br />

traders to navigate. At the same time, the growthfocused<br />

mindset of early exchanges has led to poor<br />

standards of security and regulatory compliance,<br />

creating billions of dollars worth of losses from<br />

hacks and security breaches. This insecurity has<br />

deterred large investors and institutional players<br />

from entering the market, further exacerbating the<br />

liquidity problem. Even cautious smaller investors<br />

are often unwilling to be exposed to such high<br />

levels of counterparty risk, especially with an asset<br />

class that has irreversible transactions, where theft<br />

of private keys leads to permanent loss.<br />

To improve this insecure and illiquid trading<br />

environment, the cryptocurrency ecosystem is<br />

beginning to mirror the institutions of traditional<br />

finance, with independent brokers, exchanges, and<br />

qualified custodians working together to provide<br />

secure custody and trading.<br />

12


Under the Investment Advisers Act of 1940, this<br />

custodial setup is a legal necessity for institutions<br />

with $150 million or more in assets. But it can<br />

also be beneficial to individual investors that<br />

want to mitigate counterparty risk. And in the<br />

bigger picture, this traditional division between<br />

custodians and brokers can help solve the<br />

broader liquidity, security, and user-experience<br />

issues that are preventing the market from<br />

scaling.<br />

Protection of customer funds<br />

is paramount. Without trust,<br />

high quality service and realtime<br />

access to funds the crypto<br />

sector will fail to expand past<br />

the current market cap and<br />

attract further adoption. —<br />

coinpass<br />

By focusing solely on safeguarding<br />

private keys, specialised custodians<br />

can offer all the same assurances as<br />

traditional finance. Investors can avoid the<br />

complexity of setting up their own crypto<br />

wallets, and renegotiate the tradeoff<br />

between security and accessibility that<br />

typically accompanies the decision<br />

between storing crypto assets in hot or<br />

cold wallets, or on an exchange.<br />

Crypto assets held with a trusted custodian<br />

can be both secure and accessible, with<br />

private keys stored in segregated accounts<br />

that are backed by insurance coverage,<br />

bank-grade security, full regulatory<br />

compliance, and governance controls over<br />

managed assets. These protections shield<br />

investors from the risks and complexity<br />

of the crypto market, creating the ideal<br />

starting point to make the most of the<br />

latest crypto asset innovations.<br />

Safeguarding cryptoassets - the evolving<br />

ecosystem<br />

Instead of needing to visit different venues<br />

to access the financial services of trading,<br />

investment, and lending, each with their own<br />

specific onboarding requirements, investors<br />

using the services of a cryptocurrency<br />

custodian can easily access these different<br />

services from a single secure wallet.<br />

Through decentralised finance (DeFi), brokers<br />

and exchanges can now access liquidity on<br />

decentralised platforms to better service their<br />

clients offering them more opportunities than<br />

ever to participate in the ecosystem and ‘sweat<br />

assets’ to maximise returns. This might be<br />

through lending, staking, borrowing, securing<br />

the network, or conducting complex trades<br />

with new financial instruments. Equally, brokers<br />

become best placed to introduce their clients<br />

to custodians featured in their network as part<br />

of their risk management strategy.<br />

By offering investors the opportunity to tap<br />

into this ecosystem and generate an income<br />

without increasing security risks, crypto<br />

custodians move beyond basic safekeeping to<br />

become a one-stop shop for cryptocurrency<br />

services—a financial browser so to speak that<br />

partners with defi protocols and exchanges<br />

to offer secure, direct access to the same<br />

diverse range of liquidity, lending and leverage<br />

services as prime brokers offer hedge funds in<br />

the world of traditional finance.<br />

Diversification with DeFi and staking<br />

The rapid evolution of the cryptocurrency market<br />

has created more opportunities than ever for<br />

portfolio diversification, with smart contracts<br />

not just replicating the functions of traditional<br />

finance on the blockchain, but supercharging<br />

them—giving investors unique opportunities to<br />

take advantage of crypto assets.<br />

The rise of Proof-of-Stake, which is expected<br />

to come to Ethereum later this year, is<br />

now giving investors the opportunity to be<br />

rewarded by setting aside assets to be “staked”<br />

or “delegated” in order to help secure the<br />

network.<br />

From an investment perspective, income<br />

generated from staking is akin to earning<br />

interest on fiat in a bank account. But with<br />

staking, returns are typically far more<br />

lucrative. Ethereum 2.0 is expected to offer<br />

staking rewards up to 15%, and smaller chains<br />

like Cosmos are already offering 8%. This<br />

opportunity to earn a yield by staking has<br />

led to comparisons between Proof-of-Stake<br />

FEATURED<br />

13


cryptocurrencies, and traditional assets like<br />

treasury bonds, which typically occupy a<br />

valuable position in an investment portfolio by<br />

offsetting risk.<br />

Individuals choosing to stake independently,<br />

however, take on the risk of incurring network<br />

penalties known as slashing. The economic<br />

model of Proof-of-Stake relies on a carrot and<br />

stick system, where honest validators that follow<br />

the rules of the network are rewarded, and<br />

misbehaving or lazy validators are penalised<br />

with a loss of tokens. While some bad actors<br />

might break the rules deliberately, slashing<br />

penalties are equally likely to be incurred due<br />

to technical errors stemming from a nonprofessional<br />

supported staking set up.<br />

With an independent custodian and exchange<br />

partnering to offer dedicated staking services<br />

and custody, investors can remove the risk<br />

of slashing by outsourcing the responsibility<br />

for following the staking procedure correctly.<br />

Instead, stakers can focus on getting the<br />

best rates by choosing between different<br />

staking service providers offered through the<br />

exchange-custodian partnership.<br />

Aside from staking, custodians can also offer<br />

crypto investors secure access to the opensource<br />

system of smart contracts known as<br />

DeFi. This new form of financial plumbing<br />

gives traders access to shared liquidity pools,<br />

borrowing and lending protocols, innovative<br />

derivatives, and decentralised peer-to-peer<br />

token exchanges—providing more potential<br />

than ever to maximise returns, minimise risk,<br />

and implement sophisticated trading and<br />

investment strategies.<br />

Regulated exchange + Insured crypto<br />

custodian<br />

As visionaries like Ethereum founder Vitalik<br />

Buterin have suggested, the ideal form of<br />

crypto custody infrastructure would let users<br />

securely tap into decentralised protocols and<br />

exchanges from a centralised fiat gateway.<br />

Hence, what the browser is to the Internet<br />

and what the bank is to traditional finance is<br />

what the custodial wallet then becomes to the<br />

blockchain, and to the future of finance - an<br />

unbundled set of services accessed via an<br />

aggregator platform such as a wallet where<br />

users secure their keys in their wallets, and<br />

then use them to manage their assets.<br />

With such a setup, an investor might sign<br />

into their custodial wallet to get full access to<br />

centralised or decentralised exchanges and<br />

protocols providing services spanning trading,<br />

lending, borrowing, staking, and liquidity—just<br />

like a prime broker might offer hedge funds<br />

bundled services in the world of traditional<br />

finance.<br />

This secure access to financial innovation can<br />

be made possible through partnerships.<br />

Independent custodians would remain<br />

responsible for safeguarding crypto<br />

assets with the same institutional-grade<br />

security mechanisms as traditional financial<br />

institutions, including segregated accounts<br />

and insurance coverage. These custodians<br />

could evolve to become ‘smart custody<br />

platforms’ or programmable custodians<br />

where endorsement APIs could effectively<br />

let end users move faster on opportunities in<br />

the market by enabling them to self-create<br />

controls or rules without needing to wait on the<br />

custodian to approve their business logic. They<br />

would also provide the technical infrastructure<br />

and support needed to integrate with staking<br />

services, DeFi protocols, and regulated fiat-tocrypto<br />

trading, through open APIs.<br />

Exchanges meanwhile, can forge their own<br />

relationships with regulated banking partners<br />

to offer the seamless transfer of fiat into the<br />

system, and move beyond simple trading<br />

services by offering direct access to DeFi and<br />

staking—underpinned by the infrastructure of<br />

the custodian.<br />

In light of these potential benefits, crypto<br />

custodian Trustology is exploring a partnership<br />

with soon-to-be regulated cryptocurrency<br />

exchange and client, coinpass.com.<br />

Trustology’s custodial infrastructure secures<br />

crypto assets with biometrics, multi-sig, toptier<br />

encryption, walled gardens, and allow or<br />

whitelists as commonly referred to. Funds<br />

are covered by a range of insurance plans,<br />

and customer support is available around the<br />

clock. With advanced integrations, crypto asset<br />

holders are able to directly tap into the latest<br />

14


income opportunities—including staking on<br />

Ethereum 2.0—in a safe, secure, and regulatory<br />

compliant manner, and securely access the<br />

DeFi economy from a web browser or mobile<br />

app via MetaMask integration or API integration.<br />

Trustology continues to focus on building out<br />

solutions within its infrastructure that best deliver<br />

on best execution for clients and meet with<br />

institutional regulatory requirements around<br />

segregation of duties. Their goal is to lead with<br />

a flexible custodial platform that can easily<br />

integrate with the right services, protocols and<br />

partners to deliver on what’s best and needed<br />

for its clients to reduce custody risk and overall<br />

transaction costs. They are currently exploring<br />

best practice in facilitating settlement and<br />

clearing, enhancing the treasury management<br />

workflow and incorporating more payment on<br />

ramp platforms such as coinpass.<br />

for retail and institutional clients across multiple<br />

user interfaces. Having recently launched their<br />

mobile app trading platform, they are now<br />

turning their focus on banking DeFi services.<br />

Together, this combined exchange-custodian<br />

partnership could bridge the gap between<br />

the institutions of traditional finance, and the<br />

burgeoning cryptocurrency ecosystem—<br />

preserving the security and compliance<br />

benefits of the traditional broker and exchange<br />

duo, while also delivering access to the new<br />

opportunities provided by digital assets.<br />

Co-Authors<br />

Alex Batlin<br />

Founder and CEO<br />

Trustology<br />

FEATURED<br />

Meanwhile, coinpass is forming the ideal<br />

entrance point into the world of DeFi—letting<br />

users swap pounds or euros for crypto with<br />

regulated banking partners, and then dive<br />

straight into the innovation of decentralised<br />

protocols. Their vision - a digital finance platform<br />

integrating banking, crypto and defi services<br />

Jeff Hancock<br />

Founder and CEO<br />

coinpass<br />

15


CREATING<br />

SUSTAINABLE<br />

WEALTH<br />

THROUGH<br />

DIGITAL<br />

FINANCE<br />

We live in interesting times. We have extreme<br />

weather events, social disruption in part driven<br />

by a global pandemic and by the dissolution<br />

of trust in institutions, and financial disruption.<br />

‘Perfect storm’ may be an overused term, but<br />

combining ecological, social, and financial<br />

stress does provide the makings of a perfect<br />

storm.<br />

While all three need to be addressed with<br />

better performance, patience and prudence,<br />

there are some critical differences. For example,<br />

while you may have the potential to refinance<br />

a loan or a mortgage, there is no option to<br />

refinance ecological debt, nor social debt.<br />

However, there is also an incredible opportunity<br />

that may be likened to a Phoenix rising. It is<br />

the convergence of sustainable finance, the<br />

democratization and naturalization of capital<br />

markets enabled by digital finance, and your<br />

opportunity to apply your wealth to a better,<br />

greener economy.<br />

and governance (ESG) considerations into<br />

account when making investment decisions<br />

in the financial sector. This is leading to<br />

increased longer-term investments into what<br />

is supposed to be sustainable economic<br />

activities and projects. Some refer to this<br />

opportunity as green finance, which I will<br />

address below.<br />

There are three layers of wealth. Think<br />

of a pyramid shape. (Insert Figure 1.) The<br />

foundation of all wealth, without exception,<br />

comes from the planet. Everything we use,<br />

grow, build, or buy - energy, food, homes or<br />

cars - comes from the planet as provided by<br />

Mother Nature. Think of her as the president<br />

Sustainable finance generally refers to the<br />

process of taking environmental, social<br />

16


of the planet. Her terms and conditions, her<br />

rules, override all regulations.<br />

Secondary wealth is derived from the things<br />

we make from primary wealth. Ore becomes<br />

steel, plants become your dinner, trees are<br />

used to make lumber, paper, etc. Because<br />

we do not follow the rules set by Mother<br />

Nature, the conversion is 96% inefficient.<br />

Some experts say that is low, and it’s really<br />

98%. Simply stated, that means for every<br />

$100, you are getting $4 or $2 of value.<br />

The final layer, tertiary wealth are all the paper<br />

abstractions that we layer on top. Tertiary<br />

wealth is entirely dependent on the primary<br />

level being healthy, and rests precariously<br />

on top of the pyramid, only kept in place<br />

by trust. When we put the primary layer of<br />

wealth at risk by our decisions or actions, you<br />

can see where this is going.<br />

The Stockholm Resilience Centre has<br />

estimated how the different control variables<br />

for seven planetary boundaries have changed<br />

from 1950 to present. (Insert Figure 2) We are<br />

in the red on three critical variables, and this<br />

is causing instability in ecosystems, social<br />

systems and risk, including stranded assets.<br />

What may be surprising to many is that<br />

with all the concerns posted in the media,<br />

the push for disclosure on climate-related<br />

financial risk, climate change is still not the<br />

biggest crisis according to experts. It’s the<br />

loss of biodiversity. It’s the impact our way of<br />

doing things had burdened our ecosystems<br />

with nitrogen and phosphorus. So not as<br />

much a tragedy of the horizons as stated<br />

by the former Chair of the Financial Stability<br />

Board, Mark Carney, but a tragedy that’s in<br />

our face, but that we are not managing.<br />

I find it extraordinarily perverse that the<br />

decisions and actions we continue to make,<br />

which diminish the quality of our lives today,<br />

and certainly undermines the quality of life<br />

for our children and our children’s children,<br />

we seem to be okay with. Perverse, yes, but<br />

predictable. As early as 1738, Dutch polymath<br />

Daniel Bernoulli figured it out, and this was<br />

echoed in a Ted Talk by behavioural expert<br />

Dan Gilbert who said “the expected value of<br />

any of our actions -- that is, the goodness that<br />

we can count on getting -- is the product of<br />

two simple things: the odds that this action<br />

will allow us to gain something, and the value<br />

of that gain to us.” So, basically we overvalue<br />

what we have in our hands today, and<br />

undervalue what the future holds. Part of this<br />

challenge may be that we mistakenly trust<br />

other people to manage our money, and at a<br />

cost to us that is no longer necessary.<br />

Digital finance offers a range of values that is<br />

only starting to be understood by the market.<br />

And in the time and space remaining I can<br />

only hint at some of the opportunity. Digital<br />

finance and the value it offers to greening<br />

finance deserves a much, much deeper<br />

discussion (and one that I hope <strong>NCFA</strong> will<br />

enable). The democratization of capital<br />

markets offers individuals the opportunity to<br />

direct their tertiary wealth to the things that<br />

matter to them. It means that every dollar,<br />

peso, euro, can be a vote and support an<br />

action to bring human endeavours back<br />

within the boundary conditions necessary for<br />

a quality of life that is sustainable.<br />

FEATURED<br />

A group of entities, including the World Gold<br />

Council, The Silver Institute, the European<br />

Central Bank and others, stated that the<br />

value of the global money supply was 600<br />

hundred times higher than the value of new<br />

gold coins minted in 2019. In the first six<br />

months of <strong>2020</strong>, digital currencies increased<br />

1,600 times over minted coins. While any<br />

currency carries a carbon and a broader<br />

environmental footprint, digital currencies,<br />

17


assets and the communities that power them<br />

offer access to new pools of capital at a lower<br />

costs while reducing intermediaries and<br />

excessive fees found in traditional banking.<br />

New consumer-centric financing models<br />

offer consumers choice and enable them to<br />

vote directly with their dollars that can lead to<br />

lower environmental impacts. It is important<br />

to note that digital currencies are not riskfree;<br />

a power failure, cell tower outages,<br />

bad reception in rural areas not well served<br />

by the internet, extreme weather; these are<br />

some of the unintended consequences that<br />

come with a transition to digital.<br />

But if money talks, with digital finance you<br />

could make it walk in the direction you want<br />

it to go to match your values aligned with a<br />

better, greener economy. If money makes<br />

the world go round, digital currency could<br />

enable you to drive initiatives that are part of<br />

a circular economy, or products and services<br />

that fit into the ecosystem where you live<br />

and work.<br />

So, whether you are buying a product,<br />

engaging services, investing in a project,<br />

asset or an activity, look at the investor or<br />

purchaser in the mirror. The first question that<br />

you should ask is “have I taken into account<br />

the environmental impact or environmental<br />

performance of the product, the asset or<br />

activity?”<br />

If not, think again? The choice is yours and<br />

the power of change is within.<br />

About:<br />

Lynn Johannson<br />

Owner<br />

E2 Management Corporation<br />

Lynn Johannson is a 27-year veteran in the business of<br />

environmental management. She is recognized as an<br />

expert in sustainability, with experience in over 50 countries,<br />

developing strategy, and applying innovative system solutions<br />

for organizations of all kinds. She is the Catalyst for “Are You<br />

Climate Ready?”, an international initiative to help organizations<br />

accelerate better management and reporting on climaterelated<br />

financial disclosures (TCFD).<br />

18


FROM<br />

GLOBAL<br />

LEADER TO<br />

FOLLOWER,<br />

IS CANADA<br />

LOSING ITS<br />

FINTECH<br />

EDGE?<br />

INSIDER VIEW<br />

Holt’s mission is to develop<br />

a more competitive fintech<br />

ecosystem in Canada to<br />

foster financial innovation.<br />

An overlooked focused<br />

area. Our research from<br />

hundreds of Holt Advisors,<br />

our digital events, and precovid<br />

travels across the<br />

globe discovered three key<br />

pillars are affected, resulting<br />

in Canada’s positioning<br />

trending from global leader<br />

to follower.<br />

Regulatory frameworks: A crucial hurdle on<br />

the path of Innovation?<br />

In an industry that moves exponentially fast,<br />

regulation can cause friction. It creates barriers<br />

through uncertainty in the development process,<br />

unclear regime, and setting primary conditions<br />

that become obsolete quickly.<br />

Take the drawn-out and delayed Open Banking<br />

process. As a result, our market isn’t benefiting<br />

from fintechs already serving this infrastructure.<br />

Why didn’t we continue to drive forward ten<br />

years’ worth of research on CBDC instead of<br />

waiting for other nations to catch up and pass us?<br />

While Open Banking gets most of the attention,<br />

other fronts would benefit from improvement.<br />

Streamlining inter-provincial regulations,<br />

improving market access for innovators, and<br />

loosening restrictions on banking/payment<br />

licenses (similar to Europe) would also help build<br />

a more competitive fintech ecosystem.<br />

19


How can we create the support systems for<br />

growth stage fintechs, who are often left out<br />

of the current ecosystem?<br />

The government must lead by example<br />

and act as the first customer to particular<br />

homegrown fintechs (e.g., PPP program in<br />

the US). They must also develop a system<br />

of incentives for these incumbents to work<br />

with fintechs and modernize themselves,<br />

improving venture investing liquidity ratios.<br />

Furthermore, stakeholders within Canadian<br />

fintech need to be included at the table when<br />

these new rules are being drawn up. These<br />

discussions need to be transparent and have<br />

to result in tangible action items with a set<br />

timeline.<br />

Corporate incentives and security are not<br />

mutually exclusive.<br />

Stifling innovation means it will eventually die<br />

off. Consequently, our financial institutions will<br />

be reliant on financial technologies from the<br />

US, Europe, or elsewhere as they struggle to<br />

catch up with the rest of the world.<br />

Financial institutions play a huge role here.<br />

They must look into improving outcomes<br />

of innovation objectives, with data-driven<br />

marketing being an activity of said objectives<br />

but not the primary aim. For instance, setting<br />

goals and then optimizing processes to<br />

achieve these results and leverage. From<br />

here, diversifying your tactics to achieve<br />

these results (i.e., CVC, hackathons) are all<br />

welcomed as long as there’s alignment to<br />

the ultimate objective.<br />

Security is and should always remain a<br />

top priority. While it’s fair game to make<br />

sure system vendors (i.e., fintechs) are well<br />

compliant here, there should be budgets for<br />

fintechs to help them deliver their solution<br />

securely to the banks’ standards. Additionally,<br />

there are many opportunities around data<br />

processing and several secure methods to<br />

analyze a Financial Institution’s data without<br />

jeopardizing its customers’ privacy and<br />

security.<br />

20


Inefficient Distribution of Financial<br />

Allocation<br />

the abundance of government investment<br />

programs.<br />

There are too few options for startups in<br />

need of venture capital when considering<br />

stage and industry. Over the short-term,<br />

there is a reluctance to invest, even<br />

with a decrease in valuation. You notice<br />

this behavior in early-stage financing<br />

(especially seed), which ultimately defeats<br />

the purpose as it takes capital to build<br />

startups.<br />

The government must continue to support<br />

R&D programs to help our startups, a<br />

significant funding source for early-stage<br />

companies, while also supporting the woes<br />

in commercializing R&D properly in Canada.<br />

Rubber stamping of IRAP has been very<br />

helpful, but we need greater transparency<br />

around who is taking advantage of it,<br />

and who has been hindered. Improved<br />

targeting programs for early-stage startups<br />

is required, as France did with a €4B plan<br />

to support startups, or better streamlining<br />

The Canadian people have shown great<br />

tenacity and teamsmanship throughout the<br />

pandemic and in combination with directed<br />

efforts and precise planning Canada has an<br />

amazing pool of talent that can continue to<br />

help build a robust ecosystem and become<br />

a global contributor in financial innovation.<br />

About:<br />

Jan Arp<br />

Founding Managing-Director<br />

Holt Accelerator<br />

Jan Arp, Founding Managing-Director at Holt, is a global expert<br />

in this space and works towards helping Canadian Financial<br />

Institutions & Services embrace financial innovation in a<br />

meaningful way. One that pays off for both their customers and<br />

bottom line.<br />

INSIDER VIEW<br />

21


HAS<br />

FINTECH<br />

MADE<br />

BANKING<br />

BETTER?<br />

<strong>Fintech</strong> is responsible for a long list of<br />

innovations. Helping people make better<br />

financial decisions could be next.<br />

Building banking that is not just different, but<br />

better, is a common refrain when speaking<br />

with fintech entrepreneurs. It is natural to<br />

wonder then, what roles are fintech companies<br />

playing now in building ‘better banking’, and<br />

more importantly, what opportunities are<br />

there to better deliver on this promise?<br />

The DUCA Impact Lab was established by<br />

DUCA Financial Services Credit Union to<br />

explore these types of questions, and to<br />

ultimately work with its partners to build and<br />

test models of banking that benefit all. Each<br />

year, the DUCA Impact Lab, in partnership<br />

with Angus Reid Group, examines national<br />

perspectives on fair banking in Canada. The<br />

study surveys a national pool of banking<br />

consumers on their perceptions of fairness<br />

in their banking experiences. It evaluates<br />

a number of fair banking factors such as<br />

transparency, credibility, pricing, as well<br />

as access to products and services. It then<br />

compares these consumer perspectives with<br />

responses from bank employees working in a<br />

sales or lending capacity at different types of<br />

lending institutions, including fintech’s.<br />

Reflecting on the study results for <strong>2020</strong><br />

reveals some key considerations for fintech<br />

companies as they continue to innovate<br />

and build on their presence in the financial<br />

services marketplace. For example:<br />

More people need access to quality advice.<br />

The majority of consumers interact with a<br />

financial advisor once per year, or less. In<br />

fact, 29% say they have never met with one.<br />

Even for those that do meet with an advisor,<br />

chances are they either don’t trust, or are<br />

indifferent to the advice they get (75% of<br />

consumers combined). This is particularly<br />

troublesome, given that the right advice is<br />

desperately needed - nearly 45% of people<br />

22


with debt say they have neither a budget, nor<br />

specific financial goals. Lenders surveyed<br />

who work in fintech take an overly ‘sales<br />

first’ view of their companies compared with<br />

peers, and are significantly less likely to view<br />

the primary focus of their company as helping<br />

people (21%), when compared to 35% at banks,<br />

and 48% at credit unions. Perhaps there’s an<br />

opportunity to do both.<br />

Trust is a short-term opportunity, but longterm<br />

potential risk for fintech’s.<br />

Nearly as many Canadians distrust financial<br />

institutions as trust them, with a winnable 46%<br />

of consumers who are somewhere in the<br />

middle. Also consider that only 22% of big bank<br />

customers think they are getting a good deal<br />

on their financial service products; this should<br />

translate into opportunities for new entrants<br />

and alternatives to the big banks. The level of<br />

trust consumers have in fintech companies<br />

is generally similar to other lending options<br />

to start, but borrower experience becomes<br />

more negative post fulfillment. For example,<br />

fintech customers are more than twice as<br />

likely to respond that their debt has impacted<br />

their ability to afford basic health care services<br />

such as prescription drugs. Mitigating these<br />

risks has benefits for everyone.<br />

The <strong>Fintech</strong> sector has produced some<br />

amazing innovations, improving the way<br />

financial institutions are able to offer a<br />

range of services, facilitate transactions and<br />

understand customer needs. Extending this<br />

innovative thinking to focus on consumer<br />

experiences and well being is a natural fit.<br />

About:<br />

Keith Taylor<br />

Executive Director<br />

DUCA Financial Services Credit Union<br />

Keith Taylor is the Executive Director of the DUCA Impact<br />

Lab at DUCA Financial Services Credit Union, an innovation<br />

hub focused on building banking that benefits all. He works<br />

with a range of collaborators such as fintech’s, community<br />

organizations, academics and others to build and test solutions<br />

to inequity in the banking system.<br />

INSIDER VIEW<br />

Unlocking the potential<br />

of banking.<br />

DUCA believes that banking has the potential to<br />

solve a wide range of difficult problems. In order for<br />

this potential to be realized, financial institutions<br />

need a broader sense of social responsibility.<br />

That’s why we created the DUCA Impact Lab.<br />

23


HERE<br />

IS WHY<br />

INSURTECH<br />

IS HEATING<br />

UP AS AN<br />

INVESTMENT<br />

CATEGORY<br />

The global InsurTech startup ecosystem<br />

saw record-breaking level of investments<br />

of US$2.5 billion in Q3 <strong>2020</strong> 1 . Despite a slow<br />

start in the first quarter of the year, due to<br />

the impacts of COVID-19, global InsurTech<br />

funding for <strong>2020</strong> has already surpassed $5<br />

billion and is likely on track to match the 2019<br />

figure of $6.3 billion.<br />

Annual InsurTech funding trends: Deal and funding volume (US$ million), 2012 – Q3 <strong>2020</strong><br />

Dollars<br />

Deals<br />

Funding (US$million)<br />

7,000<br />

6,000<br />

5,000<br />

4,000<br />

3,000<br />

2,000<br />

1,000<br />

0<br />

46<br />

66<br />

348 276<br />

94<br />

868<br />

132<br />

2,721<br />

176<br />

1,742<br />

2012 2013 2014 2015 2016 2017 2018 2019 <strong>2020</strong><br />

218<br />

2,274<br />

262<br />

Figure: Global InsurTech funding volume and deals as of Q3 <strong>2020</strong><br />

Source: Quarterly InsurTech Briefing Q3 <strong>2020</strong> by Willis Re<br />

4,167<br />

314<br />

6,348<br />

275<br />

5,028<br />

350<br />

300<br />

250<br />

200<br />

150<br />

100<br />

0<br />

Deals<br />

1<br />

Quarterly InsurTech Briefing Q3 <strong>2020</strong> by Willis Tower Watson.<br />

24


Our Luge Capital data for Canada, presented<br />

in our Status of the Canadian InsurTech<br />

Landscape report, shows that $1.2 billion of<br />

venture capital has been invested in InsurTech<br />

startups headquartered or operating in<br />

Canada between 2011 and H1<strong>2020</strong>. The<br />

number of InsurTech startups founded in the<br />

last few years has also picked up significantly.<br />

INSIDER VIEW<br />

Figure: InsurTech Startups Headquartered or Operational in Canada by Year Founded<br />

Source: Status of the Canadian InsurTech Landscape by Luge Capital<br />

So why is there so much buzz about InsurTech?<br />

Why are entrepreneurs choosing to dedicate<br />

their resources to build solutions for this industry?<br />

Why are investors bullish on this category?<br />

Some of the key drivers of heightened activity<br />

in this sector are discussed below.<br />

Massive industry<br />

The Canadian insurance industry wrote in<br />

excess of $187 billion in premiums through<br />

Property & Casualty (P&C) 2 and Life & Health<br />

(L&H) 3 in 2019 4 . Together, the P&C and L&H<br />

insurance sectors paid out $144.5 billion in<br />

claims or benefits to Canadians in the same<br />

year. Globally, the industry placed more than<br />

US$6 trillion in premium in 2019 5 . The sheer<br />

size of the industry in itself attracts both<br />

entrepreneurs and investors aspiring to build<br />

massive businesses.<br />

Legacy technology and cost-centre<br />

mindset Many insurers still have legacy core<br />

systems built on monolithic, on-premise<br />

applications. This poses several challenges<br />

including time-consuming maintenance,<br />

lack of scalability and an inability to be fast<br />

and nimble. Today’s customer expectations<br />

demand rapid innovation, and this is<br />

difficult to achieve with siloed databases<br />

and inflexible core systems. In addition,<br />

historically, IT spend has been viewed by<br />

many insurance leaders as a cost-centre 6 .<br />

The industry is being forced to completely<br />

shift its mindset to view technology as<br />

an avenue for faster time to market and<br />

superior customer experience. But this is<br />

not going to happen overnight.<br />

Enter InsurTech startups, who take a<br />

technology-first approach to insurance<br />

and build their software on cloud-based<br />

architectures, allowing them to go to market<br />

fast and innovate quickly.<br />

Expectations of Amazon-like experience<br />

Entrepreneurs have identified an opportunity<br />

to make the process of buying and keeping<br />

insurance suitable for today’s consumers,<br />

who now expect Google, Amazon and<br />

Uber-like experiences. Other entrepreneurs<br />

and investors see the opportunity to help<br />

incumbent players such as insurers and<br />

brokers bring their customer experiences up<br />

to par.<br />

2<br />

<strong>2020</strong> Facts of the Property and Casualty Insurance Industry in Canada .<br />

3<br />

Canadian Life & Health Insurance Facts <strong>2020</strong> Edition .<br />

4<br />

Including property, auto, commercial, liability, specialized, accident & sickness, life, health, annuities and segregated funds markets.<br />

5<br />

World Insurance Marketplace by Insurance Information Institute.<br />

6<br />

Insurers Face A Crisis. Now, Innovation Is No Longer Optional.<br />

25


Yet other startups are helping insurers with<br />

automating their internal processes, and<br />

improving their underwriting and claims<br />

functions. Gartner expects the global IT<br />

spending of insurance companies to be<br />

US$222 billion in <strong>2020</strong> and forecasts the IT<br />

software sub-segment to grow at 8.4% CAGR<br />

between 2019-2024 7 . This demonstrates the<br />

growing demand for software from insurers.<br />

Whether it’s in distribution, process<br />

automation, underwriting or claims, there is<br />

an opportunity for technology startups to<br />

drive innovation in the industry.<br />

Data = oxygen<br />

Data and underwriting are the lifeblood of<br />

insurance. Yet, historically, insurers have<br />

used a pre-defined and limited set of data to<br />

underwrite policies. This worked fine for the<br />

last 100 years. However, today’s consumers<br />

want significant personalization, which can<br />

only be provided with the use of contextual<br />

data. Increased access to alternative data as<br />

well as structured data have opened up a<br />

whole world of possibilities when it comes to<br />

better personalization of insurance products<br />

and experiences. To that end, InsurTech<br />

startups have identified an opportunity<br />

to either become the provider of such<br />

alternative data to incumbent insurers, or<br />

compete head-on against such incumbents<br />

to use contextualized data and provide a<br />

better experience themselves.<br />

Shift in talent demographics<br />

The average age of a life insurance agent<br />

in the U.S. is 59 8 and this is comparable to<br />

the talent demographic in the Canadian<br />

insurance industry. As a large part of<br />

the insurance workforce starts to enter<br />

retirement, the industry is facing growing<br />

challenges with replacing that talent. There<br />

is an opportunity for technology companies<br />

to help insurers and brokers continue to<br />

deliver their topline numbers in a scalable<br />

way with a smaller workforce. In fact, the use<br />

of modern technologies may even work to<br />

attract a younger talent demographic to this<br />

industry.<br />

Commoditization of core product and need<br />

for standout brand<br />

As the ease of insurance product distribution<br />

accelerates with the help of technology, we<br />

may eventually reach a point where insurance<br />

products themselves become commoditized<br />

due to competitive pressures. Insurers will<br />

need to find other ways to differentiate from<br />

competitors by offering superior customer<br />

service, smooth claims experience and addon<br />

services. Many InsurTech startups are<br />

building technology solutions to help insurers<br />

differentiate in those respects and build brand<br />

loyalty.<br />

Exits<br />

The InsurTech space is beginning to see<br />

some mid-to-large startup exits. To make<br />

matters even more interesting, some of these<br />

startup exits have happened within just a few<br />

years of operations. For example, earlier this<br />

year, Lemonade went public with a valuation<br />

of US$1.6 billion and the shares soared 139%<br />

on the first day of trading 9 . Prudential acquired<br />

Assurance IQ for US$2.35 billion last year 10 .<br />

As investors, we believe that the industry<br />

will continue to see more acquisitions as<br />

incumbent players use M&A as a strategy to<br />

add new technologies and revenue.<br />

These are some of the key factors driving<br />

innovation and venture funding in InsurTech.<br />

We expect this category to continue to grow<br />

from a funding and M&A perspective for the<br />

next few years.<br />

Co-Authors<br />

Karim Gillani<br />

General Partner<br />

Luge Capital<br />

Laviva Mazhar<br />

Investment Associate<br />

Luge Capital<br />

26<br />

7<br />

Forecast: Enterprise IT Spending for the Insurance Market, Worldwide, 2018-2024, 3Q20 Update .<br />

8<br />

The insurance sales gap is widening. This is how we can close it.<br />

9<br />

Understanding Hippo’s valuation in a post-Lemonade IPO world .<br />

10<br />

Prudential buys Assurance IQ for $2.35 billion in new tech bet .


27<br />

INSIDER VIEW


THE<br />

OSC’S NEW<br />

INNOVATION<br />

CHARTER:<br />

IS THIS<br />

REALLY A<br />

‘NEW MODEL’?<br />

The OSC has recently announced a Charter<br />

for a new Office of Economic Growth &<br />

Innovation (Innovation Office): release and<br />

innovation office charter.<br />

The <strong>NCFA</strong> welcomes the announcement but<br />

remains skeptical. Is this really a “new model”<br />

or merely window dressing?<br />

1. An Innovation Office alone will not make<br />

the OSC more “innovative”. Innovation<br />

requires a lot more than a mere reference<br />

to these words. The Charter points towards<br />

“fostering a culture that encourages<br />

experimentation, embraces failures as<br />

necessary learning steps and allows for a<br />

quick pivot to the next idea” and playing a<br />

role in the “OSC’s ongoing modernization,<br />

which includes adopting a more flexible<br />

regulatory approach, making investments<br />

in technology and simplifying our rules<br />

and processes”. Do the OSC leaders (and<br />

the Ontario Government) understand how<br />

difficult this essential culture change will<br />

be?<br />

What does “modernize how we formulate<br />

policy and new regulations” mean? Does it<br />

involve, for example, more disciplined decision<br />

making, better analysis and use of data<br />

(including collecting or enabling much better<br />

capital markets data generally in Canada),<br />

extensive staff training, learning to better<br />

manage risk? We need more information<br />

so that industry participants can have greater<br />

comfort about what the OSC proposes and<br />

what is likely actually to be achieved.<br />

Related to this, the vision for the Innovation<br />

Office seems odd. “To be recognized as<br />

a catalyst in innovative regulation that<br />

promotes confidence and economic growth.”<br />

Why would the OSC want the Office only to<br />

be “recognized”? Normally one would expect<br />

to see a vision for a more cost-effective<br />

regulator in a dynamic regulatory ecosystem<br />

supporting a healthy economy, eg, ‘OSC is a<br />

world class regulator in a dynamic, innovative<br />

economic environment’, or ‘OSC is a key<br />

partner in building a healthy Ontario economy<br />

that enables innovation and provides jobs’.<br />

28


The vision would be followed by a mission<br />

statement that sets out how the Office/<br />

OSC itself would work towards the vision<br />

(perhaps by “accelerating innovation,<br />

bolstering capital formation and reducing<br />

regulatory burden”?), followed by the<br />

strategic priorities to achieve the mission<br />

as set out in the Charter.<br />

Links to recent <strong>NCFA</strong> advocacy on behalf of<br />

the <strong>Fintech</strong> & Funding industry<br />

<strong>NCFA</strong> Response to Ontario’s Capital Markets<br />

Modernization Taskforce Consultation (Sep 7, <strong>2020</strong>)<br />

<strong>NCFA</strong> Response to CSA on NI 45-110 Harmonized<br />

Securities Crowdfunding Rules (May 27, <strong>2020</strong>)<br />

2. There appears to be a willingness<br />

to “deepen engagement” with<br />

stakeholders, which may not have<br />

existed in the past. This is always<br />

positive, but will the OSC really listen?<br />

The <strong>NCFA</strong> has been very clear for years<br />

about what is needed. See https://<br />

ncfacanada.org/advocacy/. Our views<br />

are well supported by the fintech<br />

sector, academia, investors, and others.<br />

Little has changed. What does the OSC<br />

want from stakeholders?<br />

<strong>NCFA</strong> Open Letter: Government should collaborate with<br />

<strong>Fintech</strong>s during the COVID-19 pandemic to give Startups<br />

and SMEs a Fighting Chance on April 15, <strong>2020</strong><br />

<strong>NCFA</strong> Response to ASC Consultation Paper 11-701:<br />

Energizing Alberta’s Capital Market on Sep 22, 2019<br />

<strong>NCFA</strong> Comments: CSA/IIROC Joint Consultation Paper<br />

21-402: Proposed Framework for Crypto-Asset Trading<br />

Platforms on May 2019<br />

<strong>NCFA</strong> Submission to the Ontario Securities Commission<br />

on Regulatory Burden on Mar 1, 2019<br />

INSIDER VIEW<br />

3. Overlapping issues like data and privacy<br />

protection, competition, and IP, while<br />

perhaps not directly within the OSC’s<br />

jurisdiction, are becoming increasingly<br />

urgent,. And yet there is nothing in the<br />

announcement about collaboration<br />

with other regulators and entities like<br />

the Standards Council. There is no<br />

mention of the Canadian Securities<br />

Administrators (CSA) who must be<br />

involved if the OSC is to become a<br />

cost-effective, world class regulator<br />

and a key partner in building a healthy<br />

Ontario economy. Does the OSC<br />

view the CSA as a mere “stakeholder”<br />

to which the OSC may listen, or as a<br />

partner?<br />

Conclusion<br />

The <strong>NCFA</strong> looks forward to further<br />

details on this project which we hope<br />

will address some of our concerns.<br />

There are many barriers to innovation in<br />

Ontario, and elsewhere in Canada. Many<br />

stakeholders think that the main barrier<br />

is the regulatory culture of the OSC<br />

itself. To the extent that this is so, the<br />

OSC faces a big challenge - one that the<br />

incoming OSC Chair must tackle full on<br />

for impactful regulatory change .<br />

<strong>NCFA</strong> submission to Ontario Minister of Finance: Urgent<br />

Need for Regulatory Change (report | summary) on Oct<br />

18 2017<br />

By <strong>NCFA</strong> Community<br />

29


AS FINANCIAL<br />

INSTITUTIONS<br />

BUY INTO AI, THESE<br />

FACTORS WILL BE<br />

KEY TO SUCCESSFUL<br />

TRANSFORMATIONS<br />

When the Canadian government unveiled<br />

a world-first national artificial intelligence<br />

strategy, it was a signal for homegrown<br />

companies to start paying to this emerging<br />

technology, no matter the industry — and<br />

financial institutions heard the call.<br />

Financial institutions are particularly suited to<br />

benefit from AI, with massive amounts of data<br />

that can be used to automate processes and<br />

the resources to make solutions more secure.<br />

But what does success look like? That’s the<br />

question MNP thought leaders and other<br />

panelists explored during a session on how<br />

AI is transforming interactions with financial<br />

institutions at FFCON’s digital summit.<br />

The scope of AI transformations is enormous<br />

“Financial services providers are adopting AI<br />

for everything from mundane task automation,<br />

to creating consistent customer services<br />

and experiences, diving deep into behavior<br />

analysis, as well as delivering efficient fraud<br />

prevention and detection,” says Massimo<br />

Iamello, an assurance and accounting partner<br />

at MNP. “They also need to manage the risks<br />

and concerns that arise along the journey of<br />

transformation.”<br />

The rise in cloud technology has allowed AI<br />

applications to flourish, and financial institutions<br />

are taking advantage as they slowly migrate<br />

from on-premise legacy systems. Dev Mishra,<br />

MNP’s solution lead for data engineering, AI<br />

and machine learning, says the cloud has<br />

enabled businesses to start up AI initiatives<br />

more quickly — meaning more customer data<br />

can inform AI applications as it’s generated. In<br />

the past, businesses had to rely on manual<br />

surveys, which aren’t always accurate.<br />

Financial institutions are also making<br />

acquisitions for tech talent who can<br />

immediately put valuable customer data to<br />

use. MNP recently acquired T4G, a 25-yearold<br />

Canadian company that helps businesses<br />

collect, organize, and use their data for<br />

business insights and applications.<br />

MNP has the base, the<br />

experience and employees<br />

with potential backing, while<br />

T4G is on the cutting edge with<br />

very senior and experienced<br />

consultants who’ve worked<br />

exclusively in the data space<br />

for decades,” says Mishra.<br />

“They were just lacking the<br />

scale and the firepower.<br />

30


Freeing humans for more complex tasks<br />

Mishra summarizes the use of AI in financial<br />

services in three ways: adding new revenue<br />

streams, reducing operational costs and<br />

improving the customer experience.<br />

The growing accuracy of AI voice recognition<br />

means bots can now verify your personal<br />

information. Customers can speak naturally<br />

to bots about problems like password resets,<br />

which are easier to automate, leaving room<br />

for human customer service agents to answer<br />

more complex questions.<br />

The days of IVR [interactive<br />

voice recognition], where<br />

you have to press one or two,<br />

are gone; now you just talk<br />

naturally like you’d speak to a<br />

human being, says Mishra.<br />

While AI can automate simple tasks, it can also<br />

be used to enhance security. As technology<br />

evolves, so does the ability of fraudsters, and<br />

Mishra says AI has strong use cases in fraud<br />

detection. MNP worked with a Canadian<br />

government body to automate auditing of<br />

employee insurance and travel claims, which<br />

reached up to 70,000 claims a year. The<br />

AI MNP developed could track anomalies<br />

like duplicate claims, saving the client up to<br />

$3 million a year and reducing time spent<br />

reconciling the claims for weeks to hours.<br />

“Imagine you predicted a woman’s score is<br />

dependent on her gender, but did not factor<br />

in the same correlation for men. You’ve<br />

introduced a bias without knowing,” he says.<br />

“However, if you’re predicting whether you<br />

have COVID, that is a medical use case. It<br />

is maybe more prone to males, so gender<br />

becomes a critical variable.”<br />

Many banks may start to use facial recognition<br />

to verify the age of potential customers. If<br />

some groups of people aren’t adequately<br />

represented in a dataset, the AI could<br />

categorize people from some ethnicities<br />

are younger or older than they are. “It’s very<br />

important for data scientists building these<br />

models to understand the models and<br />

remove bias,” Mishra says.<br />

Keeping security front of mind<br />

For financial institutions thinking of exploring AI,<br />

Mishra says security, privacy and compliance<br />

with policies is critical. While major cloud<br />

providers like Microsoft invest billions into<br />

cyber security, financial institutions must also<br />

have the right governance processes in place.<br />

“Cloud as a platform offers security, but it’s<br />

the governance around cloud that will decide<br />

whether the application is secure,” says<br />

Mishra.<br />

For more information on how you can leverage<br />

AI in your organization, contact Dev Mishra<br />

MBA, MBAN, BEng, at 416.596.1711 or dev.<br />

mishra@mnp.ca<br />

INSIDER VIEW<br />

Biased algorithms a growing concern<br />

Mishra notes the importance of ensuring<br />

enterprises create unbiased AI applications.<br />

Machine learning, which uses data and<br />

algorithms to make predictions, requires<br />

datasets to train itself. If those datasets<br />

already have bias present, it could build an<br />

application that is itself biased.<br />

For this reason, many large companies have<br />

responsible AI frameworks to ensure they use<br />

AI in an ethical and responsible way. Mishra<br />

provides an example of predicting students’<br />

SAT scores where gender is included as a<br />

variable for prediction.<br />

Dev Mishra<br />

National Practice Lead<br />

Data Engineering, AI and ML at<br />

MNP<br />

31


BUSINESSES<br />

COMPETING<br />

ON SOCIAL<br />

VALUES USE<br />

FINTECH TO<br />

GAIN AN<br />

EDGE<br />

Competition in business is a given. If you<br />

don’t have competition, you probably aren’t in<br />

a mature market or have much of a market<br />

opportunity.<br />

Over time, businesses have learned to<br />

compete on features and capabilities, on<br />

price and on customer service. We’ve learned<br />

to tune our products to customer needs.<br />

Optimized our supply chains and operations<br />

to reduce costs and create margin advantage.<br />

Invested in our people and systems to deliver<br />

the experience customers want. Built our<br />

brands so that customers know what to<br />

expect from us.<br />

But. Our competitors did the same and, with<br />

the Internet enabling global competition, it<br />

has become harder than ever to establish<br />

and maintain a competitive advantage. The<br />

differences between product and service<br />

offerings have dwindled. Sales processes<br />

have elongated. Win ratios are threatened.<br />

Margins are eroding.<br />

To make things more difficult, customers<br />

have started to demand that their suppliers<br />

share their business values: Respect for<br />

the environment. Fair trade supply chains.<br />

Respect for diversity in their communities and<br />

employees.<br />

At the same time, the competition for<br />

employee talent has increased. Millennial<br />

and younger generations want to work for<br />

companies that share their values. They<br />

express, over and over, that they prefer to<br />

work at companies that care. Companies that<br />

make a difference. Companies that improve<br />

the world.<br />

A standard response to this situation<br />

has been for companies to implement<br />

corporate social responsibility (CSR)<br />

programs. These integrate social and<br />

environmental concerns into business<br />

operations and interactions with corporate<br />

stakeholders. They provide businesses<br />

a framework to evaluate the costs and<br />

impacts of their programs. It works.<br />

Companies with successful CSR programs<br />

visibly demonstrate their commitment to<br />

social and environmental issues and win<br />

more business because of it.<br />

32


Unfortunately, CSR programs are typically<br />

complex to understand. This makes it hard to<br />

use them for lead generation. Or, to acquire<br />

and retain employees who say, “Sounds good.<br />

Show me.” It is burdensome to demonstrate<br />

how the customer or employee impacts the<br />

CSR program. And even harder to implement<br />

using traditional payroll deduction employee<br />

giving programs as they don’t enable<br />

customer participation at all.<br />

To solve this complex problem, companies<br />

are increasingly turning to social fintech<br />

to implement components of their CSR<br />

programs. Recent innovations in social<br />

fundraising (crowdfunding) solutions enable<br />

companies to cost-effectively run their own<br />

highly visible social / environmental impact<br />

generation programs. These programs<br />

demonstrate corporate commitment to the<br />

values in their CSR statements. But more<br />

importantly, they provide an opportunity for<br />

employees, customers and supply chain<br />

partners to participate in making the impact,<br />

not just watching it.<br />

For example, Ernst & Young, a global<br />

consultancy, runs an enterprise<br />

crowdfunding program to encourage<br />

employees and customers to contribute<br />

to multiple civil rights charities. These<br />

contributions are matched by the company<br />

which helps participants feel like they are<br />

directing company resources to causes they<br />

personally care about, increasing loyalty<br />

and satisfaction. Through participant’s social<br />

sharing of their support for the causes,<br />

Ernst & Young receives earned social<br />

media coverage and measurable brand<br />

lift and reach. This style of authentic brand<br />

amplification resonates with existing and<br />

potential employees and customers.<br />

Ernst & Young appreciates their ability to<br />

independently run their own crowdfunding<br />

initiatives without charity involvement. This<br />

provides maximum opportunity for brand<br />

alignment through the choice of any number<br />

of beneficiary charities. Central control of<br />

financial workflows ensures accountability.<br />

Their ability to run multiple, simultaneous,<br />

geographically targeted campaigns satisfies<br />

their regional offices’ need to focus on local<br />

causes.<br />

Other examples show how these programs<br />

align with corporate positioning. Nature’s Path,<br />

a fast-growing producer of organic foods,<br />

uses matching contributions to encourage<br />

their employees and customers to support<br />

10 food security charities in North America.<br />

AG Hair, a manufacturer of high-quality<br />

hair care products, engages their supply<br />

and distribution chains in supporting girls’<br />

education in developing countries, increasing<br />

brand loyalty in their predominantly female<br />

customer and employee base. Vancouver<br />

Sun, a newspaper division of Post Media,<br />

demonstrates their commitment to child<br />

welfare by encouraging readers to support<br />

children’s food programs in schools across<br />

BC.<br />

In all of these examples, employees and<br />

customers express feelings of empowerment,<br />

values alignment, and satisfaction through<br />

collaboration. Together, these feelings create<br />

loyalty to the company and the brand. Recent<br />

surveys have shown that, when features,<br />

price and service levels are comparable,<br />

customers will invariably make their purchase<br />

based on their core values. Powerful brand<br />

alignment with these values not only helps<br />

acquire customers but helps keep them<br />

despite competitive pressure. Social fintech is<br />

an easy path to creating brand alignment and<br />

loyalty.<br />

About:<br />

Daryl Hatton<br />

Founder and CEO<br />

FundRazr<br />

Daryl Hatton is a founder and CEO of FundRazr, an innovative,<br />

award-winning global crowdfunding platform. Daryl is an<br />

international speaker and thought leader in online giving and<br />

philanthropy. A serial entrepreneur who loves the challenge<br />

of building companies from scratch, he has founded multiple<br />

start-ups and helped bring one, Optio Software, to a successful<br />

NASDAQ IPO in 1999. Today he serves as board member of<br />

PayPal Giving Fund Canada as well as an advisor to multiple<br />

Canadian and Silicon Valley based start-ups.<br />

CULTURE<br />

33


CULTURE AND<br />

DIVERSITY<br />

LEADERSHIP<br />

TALE OF<br />

TWO DOORS<br />

The ‘Tale of Two Doors’ is part of a culture and<br />

diversity interview that took place on July 30,<br />

<strong>2020</strong> at FFCON20: RISE digital conference<br />

between moderator Fatima Zaidi, CEO and Cofounder,<br />

Quill Inc. and Glenn Lundy, Author,<br />

Speaker, Host #RiseAndGrind. The entire<br />

session can be viewed here – enjoy!<br />

Fatima Zaidi: For those who have not had<br />

the pleasure of tuning into Glenn Lundy’s<br />

extremely popular Rise & Grind podcast - you<br />

absolutely should! Glenn is a keynote speaker,<br />

author and has been seen at places like Hustle<br />

and Grind, Grow Your Business, for God’s sake,<br />

and stages across the country. He is also been<br />

spotlighted on channels and publications like<br />

ABC, NBC and CBS. So, I am so thrilled to be<br />

interviewing you today – can you tell us a little<br />

bit more about your background and how it<br />

relates to the topic of Tale of Two Doors?<br />

Glenn Lundy: Yeah, absolutely. So, I grew<br />

up in a really interesting environment. My<br />

dad is black, and my mom is white. They got<br />

divorced when I was roughly 11 years old and<br />

after their divorce, my dad got remarried to a<br />

black woman and my mom got remarried to a<br />

white man and they ended up moving in two<br />

doors apart in a green little garden apartment<br />

complex in Flagstaff, Arizona. So my dad and<br />

his new wife (and her four kids) all lived in<br />

apartment #30, and I lived with my mom and<br />

my sister in apartment 28 with her new husband.<br />

And what was so crazy about it was that every<br />

stereotype you could think of existed in these<br />

two houses. In my Dad’s house it was collard<br />

greens, gospel music, hip hop, Motown, sports<br />

on every television. It was loud. It was it was just<br />

that whole entire environment. And then Mom’s<br />

house was more like country music, maybe a<br />

little rock and roll. She’d be sitting on the couch<br />

reading a book. It was crazy, the differences<br />

between these two environments. And so I<br />

had what I now see as the gift of being able to<br />

grow up with both cultures, and understanding<br />

the different mindsets that come with that.<br />

Fatima Zaidi: I’m sure that everywhere you<br />

go, you can see, hear and feel stereotypes. So<br />

how do we break those down and encourage<br />

different ways of thinking and different<br />

behaviors? And particularly, how do you<br />

respond to those stereotypes?<br />

Glenn Lundy: So I think, you know, right now is<br />

a very interesting season and a lot of eyes have<br />

been opened. And really what I think it comes<br />

down to is an acronym that I use all of the time<br />

called L-E-A-D-D spelt with two D’s. Because<br />

if you break it down, this is what I think it takes.<br />

The L stands for Listen: we have two years,<br />

one mouth. So let’s listen first to whatever<br />

relationship we’re trying to increase or<br />

whatever gap we’re trying to bridge. It all starts<br />

with listening. Listen to what they need, to what<br />

they’re saying, and to what they’re feeling.<br />

E stands for Encourage: and I think too many<br />

people missed this step. They listen only in<br />

hopes to defend or respond. I don’t want you<br />

to listen, to respond. I want you to listen to try<br />

to find something that you can encourage in<br />

that person, something that you can highlight<br />

about what they’re sharing with you.<br />

A is for advice: We’ve created a relationship<br />

where now the other person goes I’m willing to<br />

learn from them because they listened to me<br />

first, and they encouraged me and made me<br />

feel like I have value and I have worth.<br />

D is for Develop: we have to take the time to<br />

lead by development. We can’t just telling<br />

someone what to do, but not showing them,<br />

holding their hand, spending time to nurture<br />

34


and develop skills and abilities, otherwise it<br />

won’t work.<br />

The second D is for Daily: This is something<br />

that we have to do daily. So I think the only<br />

way to really bridge that gap is to follow this<br />

process of L-E-A-D-D. Really start to listen to<br />

these different groups of people, the different<br />

cultural backgrounds. Let’s encourage the<br />

things that are positive there. Let’s advise them<br />

on ways we can do things a little bit better, and<br />

then let’s commit to developing a long-term<br />

relationship so that we can ultimately make<br />

long term change.<br />

Fatima Zaidi: Beautifully said, so on that<br />

note, would you say that or have you ever<br />

encountered a pervasive belief that diversity<br />

and excellence are somehow in conflict?<br />

And John Maxwell was like, it doesn’t make<br />

any sense. Why would cutting the end off<br />

the roast make it better? So, she said, that’s<br />

the way my mom does it. So, he went to her<br />

mom and was like, hey, why do you cut the<br />

end off the roast? Her mom said it makes it<br />

juicier and gives it more flavor, and that’s the<br />

way my mom does it. And so Maxwell was like<br />

this still doesn’t make any sense. So, he went<br />

to his wife’s mom’s mom and asked, ‘why do<br />

you cut the end off the roast. Why do you do<br />

that?’ And she was like, John, back where we<br />

used to live, we had a small stove, and so I had<br />

to cut the end of the roast to get it to fit in the<br />

stove. So, it wasn’t anything to do with flavor or<br />

seasoning and just had to do with the condition<br />

in the environment that they were in at that<br />

particular time. And now it’s been passed down<br />

to generation to generation to generation.<br />

CULTURE<br />

Glenn Lundy: I don’t think it’s necessarily a<br />

conflict, diversity and excellence. There’s a<br />

different kind of definition of what excellence<br />

looks like. For example, if I am an African-<br />

American and I grew up on the streets and in<br />

the hood, my definition of excellence might<br />

mean that I make thirty thousand dollars a year,<br />

and can actually pay my bills on time. Whereas<br />

someone else who maybe grew up in a different<br />

environment with a different upbringing, that<br />

definition of excellence can be so much higher.<br />

It’s just a cultural misunderstanding of the<br />

different levels of excellence and something<br />

that we need to communicate and understand.<br />

What’s considered successful for one person<br />

is not necessarily the definition of success on<br />

the other side.<br />

Fatima Zaidi: And so what advice would you<br />

provide to CEOs, founders, leaders in their<br />

respective areas, who are trying to build a<br />

more inclusive and diverse workplace How<br />

should they be supporting people of color and<br />

otherwise?<br />

Glenn Lundy: It has to be a drastic cultural<br />

shift. I’ll use an example by John Maxwell, one<br />

of the greatest authors of leadership books in<br />

history. He was at a Thanksgiving dinner and<br />

his wife was cutting the end off the roast, and<br />

he said, why are you cutting the end off the<br />

roast? And she said, it makes the roast juicier.<br />

It gives it more flavor. It just makes it so much<br />

better.<br />

Ultimately, as leaders today, we have to<br />

understand that this cultural impact has been<br />

put in place over decades and so there isn’t a<br />

quick fix. We have to put education systems<br />

in place that over time can start to reprogram<br />

some of these cultural thoughts, biases,<br />

and limitations that were passed down and<br />

accepted over decades. With long term,<br />

consistent education that breaks that cultural<br />

mindset that currently exists, and over time, we<br />

can shift it.<br />

Fatima Zaidi<br />

CEO and Co-founder<br />

Quill Inc.<br />

Glenn Lundy<br />

Author, Speaker<br />

Host #RiseAndGrind<br />

35


THREE<br />

HUMAN-<br />

CENTRIC<br />

PRACTICES<br />

TO BECOME<br />

A BETTER<br />

AI FINTECH<br />

LEADER<br />

You’ve seen them before - robo-advisors,<br />

virtual agents, smart banking “platforms”<br />

- yet with each new product launch and<br />

press release, doesn’t it seem that artificially<br />

intelligent tools aren’t living up to their selfproclaimed<br />

smarts?<br />

It happens with every technology wave, and<br />

as far as tech waves go, AI is a tsunami. It goes<br />

a little something like this: new technology<br />

evolves, executives insist it’s just a fad, their<br />

competitors embrace the tech, and then<br />

everyone plays catchup. Generally, endusers<br />

are the ones who feel the impacts of<br />

this cycle, left with an endless barrage of<br />

apps & platforms that don’t solve meaningful<br />

problems.<br />

At this point, I may sound quite pessimistic<br />

about the potential of AI to create<br />

meaningful and measurable value in<br />

the FinTech sector. I’m not! In fact, quite<br />

the opposite - I believe that machine<br />

intelligence has the potential to transform<br />

the banking industry - if we take a humancentric<br />

approach to designing solutions<br />

(while we’re at it, let’s stop creating apps &<br />

platforms and all agree to design solutions<br />

instead).<br />

There are three practices that FinTech leaders<br />

can adopt to bring aspects of a more humancentric<br />

design lens into how they develop<br />

new AI-enabled solutions.<br />

1 - Understand Data Bias<br />

We all have biases. It’s true. They don’t make<br />

you a bad person, in fact, one could argue<br />

that it makes you human. It’s not recognizing<br />

our own biases that can lead to bad decision<br />

making and the same can be said for the data<br />

we work with.<br />

Beyond just collecting and analyzing data,<br />

organizations need to uncover how data<br />

bias can influence the accuracy or reliability<br />

of predictive systems. A comprehensive<br />

understanding of the role that data bias can<br />

play is crucial in building the next generation<br />

of intelligent FinTech solutions. As powerful<br />

as AI and machine learning tools are, they<br />

36


have the potential to also amplify biases that<br />

exist in our data.<br />

positioned to help design clever, impactful<br />

solutions.<br />

A simple experiment to see how bias can<br />

rear its head in an AI-enabled system can be<br />

demonstrated with a Google Images search<br />

for the term “CEO”. Do the results look like<br />

what you’d expect? While at first glance, the<br />

results may be surprising, it’s worth noting that<br />

as of May, <strong>2020</strong>, the Fortune 500 included<br />

only 37 female CEOs - a little over 7%.<br />

Data bias can be amplified by algorithms and<br />

it’s important to develop a deep understanding<br />

of how this risk can be mitigated.<br />

2 - Be Curious!<br />

A person’s IQ is of course their “intelligence<br />

quotient” and their EQ their “emotional<br />

quotient” - but what about CQ? CQ, or a<br />

person’s “curiosity quotient”, has been<br />

described by Dr. Tomas Chamorro-<br />

Premuzic as “the ultimate tool to produce<br />

simple solutions for complex problems.”<br />

Given the complexity of working with<br />

an emerging technology such as AI,<br />

individuals with a high CQ are perfectly<br />

Curiosity begins with asking the right questions<br />

and similarly, human-centered design begins<br />

with understanding who you’re designing<br />

for and what problem you’re trying to solve.<br />

Curiosity is a core competency for leaders<br />

wanting to leverage the full potential that AI has<br />

to offer in creating scalable FinTech platforms.<br />

3 - Focus on KPIs Over FYIs<br />

AI gives us the remarkable ability to predict<br />

future outcomes or find proverbial needles in<br />

our data haystacks, but too often organizations<br />

focus on data that doesn’t really matter. Most<br />

executive dashboards bring together data<br />

from across the organization but rarely are<br />

these data points actionable and usually<br />

they are just FYIs. Interesting insights that<br />

give leaders little to no ability to make future<br />

decisions from.<br />

KPIs instead are the data insights that allow<br />

leaders to make strategic decisions, in (near)<br />

real-time, that positively impact the future of<br />

the organization.<br />

CULTURE<br />

FYI - For Your Information<br />

Last quarter or month’s sales performance against<br />

target<br />

Current warehouse inventory levels across distribution<br />

centres<br />

KPI - Key Performance Indicators<br />

Last quarter or month’s requests for support from<br />

internal pre-sales engineers which gives insight into<br />

future sales performance<br />

Social media data to predict future product demand (or<br />

lack thereof)<br />

The latter example was made famous by<br />

PepsiCo who used social media trend data to<br />

forecast changes in consumer behaviour and<br />

a decreased demand for sugar-loaded drinks.<br />

True KPIs (maybe they should be called Key<br />

Performance Levers or KPLs) give business<br />

leaders a true insight, based on which resources<br />

can be allocated and investments made. When<br />

used correctly, AI can be a powerful tool in the<br />

FinTech toolbelt for unpacking and making<br />

sense of complex data.<br />

Just as the Design Value Index showed that<br />

organizations that focus on design outperformed<br />

the S&P by 211% over a 10 year period, this<br />

mindset can give AI <strong>Fintech</strong> leaders a similar<br />

advantage. The practices outlined above are<br />

the starting point for a repeatable framework for<br />

designing better AI-enabled FinTech solutions.<br />

About:<br />

Ramy Nassar<br />

Head of Experience Design<br />

Olive Group<br />

Ramy is the Head of Design at Olive, the Founder of 1000 Days<br />

Out, and author of the upcoming AI Product Design Handbook.<br />

As the former Head of Innovation for Mattel, he has led teams<br />

in the creation of disruptive digital products & platforms. Ramy<br />

teaches Design Thinking at McMaster and Entrepreneurship at<br />

Ryerson University.<br />

37


GEN Z:<br />

THE END OF<br />

STATUS QUO<br />

BANKING?<br />

Canadians are notoriously loyal to their<br />

financial institution (FI). Only 3% of them jump<br />

ship every year because switching costs act<br />

as a silent yet strong deterrent in banking.<br />

Imagine having to transfer all your recurring<br />

payments and deposits to a new chequing<br />

account. Fears of complications set in, and<br />

you resign yourself to the status quo.<br />

While family and friends are still determining<br />

factors when choosing a lifelong financial<br />

service provider, relying on a history of apathy<br />

simply will not cut it nowadays. Establishing a<br />

meaningful relationship based on true added<br />

value is thus critical for FIs to capture and<br />

retain Generation Z’s attention.<br />

SAME SAME, BUT DIFFERENT<br />

In some ways, Gen Z is no different than<br />

previous cohorts. They want their money to<br />

be safe and make better financial decisions.<br />

Surprisingly, they also value things like branch<br />

proximity and greater trust levels associated<br />

with well-established FIs.<br />

Yet, Gen Z members are a different breed<br />

evolving in new technological times. Word of<br />

mouth defines brand adoption for products<br />

that need to be social, digital, educational,<br />

and offer value over time. If a relevant added<br />

value is not there, this tech-savvy, mobile-first<br />

generation will go somewhere else.<br />

A GAP TO BE FILLED<br />

Current technological shifts have created a<br />

void - some Gen Zers get cell phones before<br />

10 years old and are active on social media by<br />

the time they are 12. Yet, a lot of them do not<br />

have payment cards or bank accounts until<br />

they are 18.<br />

That does not mean that teens will abstain<br />

from mobile banking during those years. It<br />

just means that, in an era where hard cash is<br />

no longer king and online shopping is a must,<br />

traditional banking methods have failed them.<br />

CONNECT EARLY<br />

Financial habits are set as early as seven years<br />

old, which often coincides when parents start<br />

giving an allowance. Remarkably, a lot of<br />

big banks have overlooked the impact Gen<br />

Z will have on their line of business. If FIs do<br />

not connect during this current window of<br />

opportunity, someone else will.<br />

38


As fintech and big tech<br />

players expand their payment<br />

functionality, banks will need to<br />

be invested in teen banking —<br />

or risk being left behind.<br />

In Canada, we can just look to Europe for<br />

a glimpse into the future. Open banking,<br />

neobanks, consumer-friendly legislation and<br />

services like the UK’s Current Account Switch<br />

Service will eventually come to Canada.<br />

And if there is one lesson to be learned, it is<br />

that embracing those changes is crucial. FIs<br />

who were adequately prepared are thriving<br />

in this new environment. By doing nothing,<br />

Canada is at risk of becoming a net importer<br />

of financial technology for teens.<br />

BE RELEVANT<br />

- Morgan Stanley Research<br />

In the end, it all comes down to being relevant<br />

for tomorrow’s mass customers, Generation Z,<br />

right NOW. Gen Z’s appetite for new payment<br />

products and experiences is a no-brainer.<br />

There are clear signs that their demands for<br />

alternative cashless, context-relevant and<br />

rewarding mobile experiences are unmet.<br />

This technologically savvy cohort represents<br />

a massive opportunity for FIs willing to provide<br />

products tailored to their needs. Those FIs<br />

looking for ways to drive meaningful mobile<br />

engagement for Gen Z can rely on <strong>Fintech</strong>s<br />

such as WALO.<br />

An early value-added relationship between<br />

the youth and FIs will pave the way for loyal<br />

and lucrative lifelong relationships.<br />

About:<br />

Rim Charkani<br />

Co-Founder & CEO<br />

WALO<br />

Rim Charkani is the co-founder and CEO of WALO, a fintech on<br />

a mission to ensure the financial health of future generations.<br />

Prior to founding WALO, Rim has held multiple key roles such<br />

as senior corporate strategy advisor at the Desjardins Group,<br />

Strategy Consulting manager at KPMG Canada, and Digital<br />

Consulting manager at KPMG Australia. Rim holds an MBA in<br />

Information Technology Management from Laval University<br />

and a Master’s degree in Management from EDHEC Business<br />

School (France).<br />

CULTURE<br />

39


HOW<br />

BANKS,<br />

FINTECHS,<br />

AND<br />

CUSTOMERS<br />

WIN<br />

TOGETHER<br />

In our recently published book The Technological Revolution in Financial Services:<br />

How Banks, <strong>Fintech</strong>s, and Customers Win Together, a group of expert contributors<br />

from North America and Europe share their insights on how the financial services<br />

industry will evolve in the coming decade. The context is the ongoing transformation<br />

in the financial services industry, which is being driven by three structural forces:<br />

heightened regulation that followed the 2008-2009 Global Financial Crisis (GFC),<br />

innovation fueled by new technologies and entrepreneurial fintech startups, and<br />

demographic trends with the rise of millennials and the retirement of baby boomers.<br />

These forces are changing the competitive<br />

landscape of financial services, lowering<br />

barriers to entry and increasing competition<br />

from both inside and outside the industry. Our<br />

book outlines what we see as the successful<br />

strategies for financial technology (fintech)<br />

companies and incumbents, namely banks,<br />

insurance companies, and asset managers.<br />

While there is much to learn from our<br />

contributors, this article shares our main<br />

conclusion and a few key takeaways.<br />

We argue that the winning strategy for the<br />

coming decade will be for banks, insurance<br />

companies and asset managers to partner<br />

with fintech startups to deliver a superior<br />

experience to end-customers.<br />

The media has portrayed fintechs and<br />

financial incumbents as rivals. But the real<br />

threat over the coming is coming from outside<br />

the financial services industry – from large<br />

technology companies such as the Chinese<br />

techfins (Alibaba and Tencent) and North<br />

American bigtech companies (Amazon, Apple,<br />

Facebook, Google, and Shopify). These global<br />

players have platform ecosystems with large<br />

and loyal customer bases, massive datasets<br />

on customer behavior, and well-known<br />

brands. Techfins and bigtech are bundling<br />

financial services with non-financial products<br />

to provide end-customers with the delightful,<br />

easy, convenient and lower cost experiences<br />

they desire.<br />

Faced with these new entrants, we argue that<br />

incumbents need to partner with fintechs,<br />

combining their respective strengths to<br />

provide a better customer experience.<br />

• Banks, insurance companies and asset<br />

managers are product-centric. These<br />

incumbents have millions of customers,<br />

40


expertise in risk management and<br />

compliance, funding and scale. But they<br />

view the world in terms of deposits,<br />

loans, payments, and investments. They<br />

see technology as a tool to reduce costs<br />

and increase profitability while meeting<br />

increased regulatory requirements. They<br />

are more focused on their shareholders<br />

than on understanding their endcustomers.<br />

• <strong>Fintech</strong> companies are customer-centric.<br />

<strong>Fintech</strong>s are better at understanding<br />

the customer’s needs and their financial<br />

journey. <strong>Fintech</strong>s leverage technology<br />

to solve customer pain points and offer<br />

a better value proposition. They have<br />

access to talent and are employing design<br />

thinking to develop innovative solutions<br />

that provide a delightful user experience.<br />

So, the technological revolution highlighted in<br />

the title does not refer simply to the emergence<br />

of new technologies or the disruption from<br />

new entrants. It refers to a paradigm shift in<br />

financial services that refocuses on the endcustomer,<br />

their experience and their lifetime<br />

journey.<br />

Briefly, here are three more takeaways:<br />

Technology is not a strategy, it is a tool for<br />

the execution of strategy.<br />

Strategy is the answer to three questions:<br />

where is the organization today, where does<br />

it want to go in the future, and how will it get<br />

there. Technology can provide better tools<br />

for pursuing this strategy, but technological<br />

innovation is not the end goal of strategy<br />

itself. Technology does provide a sustainable<br />

competitive advantage; it is widely available<br />

and can be copied by competitors who are<br />

fast-followers. The biggest barrier to entry in<br />

banking is not technology or even regulation,<br />

but access to customers.<br />

Trust in banking is paramount, supported<br />

by data security and privacy.<br />

become the biggest operational risk. The<br />

approach must be a shift in mindset from “if<br />

we are hacked” to “when we are hacked”.<br />

Finding it fast, disclosing it and dealing with<br />

it immediately, and minimizing the impact on<br />

customers will be critical. Data privacy is a<br />

second critical issue. Consumers and privacy<br />

advocates are acutely aware of the mixed<br />

incentives created by the advertising- based<br />

business models of Facebook and Google.<br />

This is one area where technology (such as<br />

blockchain) and new services (such as digital<br />

identity) can promote trust, by protecting<br />

customer data, privacy, and identity.<br />

Open banking sits at the nexus of these concerns.<br />

We argue that the adoption of open banking<br />

-- in Canada and globally – will increase data<br />

security by putting in place a secure system<br />

for the transmission of data using application<br />

programming interfaces (APIs).<br />

Regulation and risk management remain<br />

pillars of financial services.<br />

Regulation is not going away, nor should<br />

we want it to. Leading financial players –<br />

whether fintechs or incumbents – support<br />

higher regulatory requirements to weed out<br />

bad actors. We argue that maintaining a level<br />

playing field and avoiding regulatory arbitrage<br />

are important. Effective risk management will<br />

continue to be a driver of success in financial<br />

services. Incumbents possess this expertise.<br />

<strong>Fintech</strong>s and other new entrants will inevitably<br />

need to invest in risk management and<br />

compliance to be successful.<br />

Michael R. King<br />

Lansdowne Chair in Finance<br />

Gustavson School of Business<br />

University of Victoria<br />

IN FOCUS<br />

The loss of trust in incumbents following<br />

the GFC opened the door to new entrants<br />

including fintechs. But trust in financial<br />

services is intertwined with cybersecurity<br />

and data privacy. Cybersecurity has clearly<br />

Richard W. Nesbitt<br />

CEO<br />

Global Risk Institute in Financial Services<br />

41


PRICE<br />

DISCOVERY<br />

IN DIGITAL<br />

CURRENCIES<br />

IS MATURING<br />

Crypto gives users some significant<br />

advantages. The asset doesn’t come from<br />

a government or a human being. You get<br />

a payment rail, anonymous transfer, and a<br />

distributed peer to peer network. And the<br />

network is secured by math.<br />

But how do you accurately price an<br />

asset where every user is distributed and<br />

international? How do you know the price you<br />

pay is the right one?<br />

Price discovery is a fundamental part of every<br />

secondary market on the planet. It helps to<br />

give an accurate value of any asset based on<br />

all known market information.<br />

Every Bitcoin holder and trader relies on price<br />

discovery for buying and selling decisions.<br />

They depend on it for measuring their<br />

performance, determining taxes, and for<br />

accurate payments. And through their trading<br />

activities, traders are also part of the process.<br />

Price discovery helps shape the entire altcoin<br />

and token market where ETH and BTC are<br />

used for purchases, funding, lending and<br />

staking. The elements of pricing come from<br />

an interplay of crypto financial products. One<br />

of these products is crypto derivatives.<br />

Price signals from options and futures<br />

The Bitcoin or Ether price you see on any<br />

crypto exchange represents the price for<br />

worldwide trading. It also represents an<br />

interplay between derivatives like futures,<br />

options, and stablecoin arbitrage flows.<br />

Sophisticated traders use futures and options<br />

to add exposure to cryptocurrencies and<br />

other assets. They also use them to hedge<br />

exposure. Activity at different strike prices and<br />

contract dates send pricing signals across<br />

the market. The pricing in these products<br />

reflects in part the interplay of hedgers and<br />

speculators.<br />

Today you will hear how options volume is<br />

bullish or bearish for BTC based on the put/<br />

call ratio. The press uses futures activity to<br />

extrapolate expectations about BTC’s next big<br />

move. These reports influence readers trading<br />

the spot or cash markets on exchanges.<br />

Stablecoins arbitrage out BTC price<br />

differences<br />

Stablecoins have played an important role in<br />

the price discovery in crypto as well. In the ICO<br />

boom period through 2017, trading provided<br />

large price disparities across international<br />

markets. Dan Matuszewski described how<br />

traders used Tether to quickly arbitrage from<br />

the US to China. In 2017, the market was still<br />

young and unsophisticated.<br />

By using stablecoins in this manner, price<br />

disparities in BTC were reduced around the<br />

42


globe. Today, stablecoins are among the<br />

fastest-growing crypto products, with USDC<br />

doubling its volume in August <strong>2020</strong> alone.<br />

Stablecoins provide faster access around<br />

the cryptosphere, making arbitrage more<br />

efficient. This reduces price differences in the<br />

leading cryptocurrencies around the world. On<br />

Ethereum, the platform is increasingly shaped<br />

by the various smart contract-based protocols.<br />

The explosion of stablecoins has increased<br />

traffic and fees on the platform. And the rapid<br />

expansion of DeFi and yield farming has also<br />

added significant demand shaping pricing.<br />

6,000 projects provide demand for ETH and<br />

BTC<br />

The explosion of DeFi is also part of the<br />

pricing environment. Over 6,000 token and<br />

altcoin projects typically trade pairs using<br />

BTC or ETH. This creates a demand-pull for<br />

ETH and BTC from centralized exchanges to<br />

DeFi. In DeFi, ETH and BTC are used to buy<br />

altcoins that are staked and lent to earn yields<br />

from automated market makers. Now there’s<br />

several billion roaming around this space. All<br />

this staking and lending makes DeFi a growing<br />

part of the crypto price discovery mechanism.<br />

DeFi provides a contrast to the more mature<br />

price discovery in Bitcoin. Various projects in<br />

the DeFi space like the infamous Yam goes<br />

to $150 one day and zero the next. Or the<br />

notorious SushiSwap saga where the integrity<br />

of the anonymous founder shaped pricing.<br />

constant but dwindling supply. A change in the<br />

mining rewards like the <strong>2020</strong> halvening helps<br />

to shape activity around the protocol. But it is<br />

the ongoing securing of the network without<br />

human intervention that adds confidence in<br />

the system. Confidence is an important factor<br />

in price discovery.<br />

The growing dynamism of crypto price<br />

discovery<br />

Prices aren’t simply supply and demand<br />

based. They are dynamic feedback loops<br />

involving an array of financial products and<br />

signals.<br />

Traditional markets have numerous elements<br />

that contribute to price transparency. These<br />

include interest rates, government debt, riskfree<br />

rates, equities, derivatives, and swaps.<br />

Cryptocurrency is quickly developing a similar<br />

structure. Every new crypto product and<br />

service becomes part of the growing nervous<br />

system for pricing.<br />

Accurate real-time pricing internationally<br />

gives clear signals of the value of crypto<br />

assets. Pricing helps with risk transfer from<br />

users to speculators. It helps with insurance<br />

pricing and a more accurate determination<br />

of yields. This, in turn, helps people make<br />

better, more accurate purchasing decisions.<br />

A mature pricing mechanism brings crypto<br />

that much closer to becoming mainstream<br />

finance.<br />

IN FOCUS<br />

The influence of BTC fund flows<br />

Funds are another source of price signaling.<br />

Fund flows indicate the expectation of some<br />

participants in the space. Greyscale’s fund<br />

family is an example of a fund providing<br />

price signaling. Demand for these funds, or<br />

movement out of them, can influence the<br />

demand and supply of the coins they trade.<br />

Other funds, like hedge funds, help to add<br />

another pricing dimension. There are the<br />

originals like Galaxy Digital, Pantera, and Travis<br />

Kling’s Ikigai. These are joined by many other<br />

investment and trading funds contributing to<br />

crypto price discovery.<br />

Crypto miners are the original contributors to<br />

the price discovery process. Mining rewards<br />

and the minting of new coins provide a<br />

Tristram Waye<br />

For Bitvo Exchange<br />

43


WHY IS AI<br />

REQUIRED FOR<br />

THE FUTURE OF<br />

MORTGAGE<br />

LENDING?<br />

The Mortgage Tsunami!<br />

Mortgage lending in <strong>2020</strong> is set to break previous<br />

records. An estimated volume of over $4 trillion<br />

of new mortgages will be signed across North<br />

America. This increase in mortgage volume is<br />

accompanied by massive growth in refinancing,<br />

which is estimated to reach $2.4 trillion, more<br />

than twice the total of last year.<br />

Considering the sheer volume of mortgage<br />

transactions, a vast amount of data is<br />

collected on the borrowers with each passing<br />

year. Mortgage lenders, no matter how big or<br />

small, need to harness the power of this data<br />

to make reliable predictions on the borrowers’<br />

future behaviour. Mortgage lenders rely on<br />

data to underwrite their loans, check eligibility,<br />

and detect fraud. The problem today is that it<br />

takes a significant amount of manual labour to<br />

extract data from paperwork. This lengthens<br />

the process and makes it costly.<br />

What role can AI play in pivoting the future<br />

of the mortgage industry?<br />

One of the main issues with traditional<br />

mortgage processing is its delayed response.<br />

Despite providing details up-front, a borrower<br />

must wait weeks for an approval. Analyzing<br />

customer responses and identifying the<br />

difficulties faced across different stages will<br />

help lenders streamline their application and<br />

approval process. Roughly 40% of lenders<br />

are already using AI in some capacity within<br />

their organization. We can expect automated<br />

underwriting systems to predict the probability<br />

of default for individual borrowers. The<br />

detailed review processes for loan approvals<br />

can be compressed into hours, facilitating a<br />

better decision-making process for lenders<br />

and other parties (such as insurance providers).<br />

Future AI programs will utilize data points and<br />

indicators outside the mortgage application<br />

process (such as social media activity, geolocation,<br />

browsing patterns, and other online<br />

behaviours) to assist in lending decisions.<br />

Streamlining and improving lending<br />

practices<br />

AI helps financial technology (fintech) lenders<br />

underwrite loans faster than their traditional<br />

counterparts, as revealed in a 2018 study<br />

conducted by the Federal Reserve Bank<br />

of New York. While most fintech firms don’t<br />

disclose the exact process, the following is<br />

what it may resemble.<br />

Machine learning allows lenders to capture<br />

and analyze vast amounts of accurate data<br />

and channel it through automated work<br />

processes. It also helps lenders identify<br />

discrepancies in data, assess loan quality<br />

and detect aberrations throughout the loan<br />

origination & due diligence process. This<br />

allows underwriters to minimize time spent on<br />

each file and invest more energy in managing<br />

exceptional cases. In the case of missing data,<br />

an automated system communicates directly<br />

with the borrowers, collecting the necessary<br />

information. The system may require human<br />

input, but as machine learning gets better<br />

trained by larger datasets, it will become<br />

more accurate. In short, machine learning will<br />

automate tasks that were once performed by<br />

their human counterparts.<br />

High-value datasets can be “sliced and<br />

diced” to obtain critical insights into current<br />

operations, design and implement workflow<br />

improvements, and eliminate potential<br />

problems related to lending practices.<br />

Intelligent capture technology will also allow<br />

44


mortgage lenders to address one of the most<br />

critical challenges: high staffing costs. With<br />

advanced AI tools, streamlined processes and<br />

staff efficiencies can substantially decrease<br />

the cost of loans while delivering a more<br />

satisfactory borrower experience. In the<br />

foreseeable future, sophisticated AI programs<br />

will facilitate automation of the decisionmaking<br />

process throughout the loan’s lifecycle.<br />

What does this mean for the future of<br />

mortgage lending?<br />

A personalized and superior customer<br />

experience! In addition to achieving<br />

operational efficiency, mortgage lenders will<br />

become consumer-friendly. Several financial<br />

institutions (traditional and fintech) are using<br />

AI to enhance customer experience. Using<br />

the right datasets, it is possible to create an<br />

application form that can respond intelligently<br />

to clients, adapting to previous answers.<br />

AI modelling can help predict which potential<br />

clients should receive more attention from<br />

their marketing team in order to close the<br />

sale. This helps boost revenues and brings<br />

down the cost per unit. Focusing on stronger<br />

opportunities allows for targeted resource<br />

allocation and eventually produces greater<br />

results at lower costs. The savings achieved<br />

through these efforts can be passed on to<br />

clients in the form of lower rates, which in turn<br />

can help lenders increase their market share.<br />

While AI has made substantial progress in the<br />

past decade, current technology is merely<br />

scratching the surface of innovation in the<br />

mortgage lending industry. The ongoing race<br />

to advance the AI-driven mortgage lending<br />

process is a big win for fintech, lenders and<br />

consumers.<br />

About:<br />

Chris Grimes<br />

CEO & Co-Founder<br />

FundMore.ai<br />

Chris Grimes has over 15 years of experience in the mortgage<br />

and lending space. Seeing an opportunity to automate many<br />

of the tasks within his company LoanDesk.ca, he realized that<br />

he could build a great aggregation tool that leveraged artificial<br />

intelligence and provide a full end-to-end lending platform.<br />

IN FOCUS<br />

Start Funding More Files Today<br />

Visit our website to learn more<br />

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45


CASE STUDY:<br />

TRANSFORMING<br />

A GLOBAL SAAS<br />

BUSINESS WITH<br />

DATA & AUTOMATION<br />

Challenge:<br />

RapidRatings’ disruptive approach of using<br />

sophisticated analytics to assess the financial<br />

health of companies showed its value during<br />

the 2008 global financial crisis, and the<br />

company has expanded quickly ever since.<br />

The business achieved a consistent 50%<br />

growth for each of the past few years and<br />

expanded its teams.<br />

Previously, the finance team wasted a lot<br />

of energy on error-prone, Excel-based<br />

workarounds and keeping the company’s<br />

Salesforce CRM system up-to-date. Their<br />

QuickBooks software simply wasn’t robust<br />

enough to support RapidRatings’ quoteto-cash,<br />

invoicing, currency conversion,<br />

commissions, or revenue recognition needs.<br />

These cumbersome processes created<br />

month-end bottlenecks that—along with the<br />

company’s increasingly complex reporting<br />

and budgeting needs—became more tedious<br />

as the business scaled, so the team decided<br />

to make the switch to Sage Intacct’s cloudbased<br />

financial management solution.<br />

Results with Sage Intacct:<br />

• Reduced DSO by 20%<br />

• Sped monthly close by 40%<br />

• Deeper insight to product roadmap<br />

• Kept finance headcount flat, despite<br />

50% year-over-year growth<br />

• Software paid for itself in


“We’re able to close billing and recognize<br />

revenue on the first day of every month..., sending<br />

out invoices three times faster whenever a<br />

new deal closes and have reduced days sales<br />

outstanding (DSO) by 20% for customers on<br />

standard contracts,” noted Goldman.<br />

expect to need any new hires. Goldman said,<br />

“We feel confident that we now have the<br />

system and processes in place to be able<br />

to scale with the company as it continues to<br />

expand internationally”.<br />

Results<br />

Contract Insight Drives Product Roadmap<br />

Decisions<br />

Sage Intacct’s dimensions functionality<br />

provides a flexible financial foundation that<br />

adapts to the way the business actually runs.<br />

Users simply “tag” transactions with relevant<br />

business contexts, such as department,<br />

location, product, or project, which makes it<br />

easy for finance to differentiate where costs<br />

are going, and get fast answers to a wide<br />

range of business questions.<br />

In particular, RapidRatings has benefited<br />

from strategic analysis and greater insights<br />

into SaaS contracts and predicted cash<br />

flow, which helps the company know when<br />

to accelerate its product roadmap. While<br />

RapidRatings has more than doubled overall<br />

headcount since adopting Sage Intacct, the<br />

finance team has excess capacity and doesn’t<br />

About:<br />

As a Sage and Acumatica Partner, The Answer Company<br />

offers a wide range of powerful & flexible ERP solutions and<br />

numerous complementary solutions, all backed by industry<br />

expertise. With offices across Canada, The Answer Company<br />

empowers companies to ask the right questions to find<br />

effective & intelligent solutions for their unique needs.<br />

About RapidRatings:<br />

Shawn Ostheimer<br />

Founder & President<br />

The Answer Company<br />

RapidRatings is the alternative rating, research and analytics<br />

firm that enables organizations to most effectively assess the<br />

financial health of their customers, suppliers and investments.<br />

The company’s financial rating and report generation services<br />

are intended to provide visibility and early warning of financial<br />

deterioration or improvement.<br />

IN FOCUS<br />

47


WHAT THE<br />

HECK IS SSI?<br />

(SELF-<br />

SOVEREIGN<br />

IDENTITY)<br />

What if I told you we are on the brink of<br />

another boom as big as the .com boom,<br />

creating a tectonic shift in how we live,<br />

how we do everyday activities, and how we<br />

interact with the world? The .com boom<br />

changed the game, as nearly every company<br />

in the world either created a website and<br />

built a new go-to-market strategy, or were<br />

put out of business by their competitors<br />

who did. I believe we are at the precipice<br />

of another shift, but this time, the consumer<br />

has the control. Every big name in the tech<br />

industry and financial world is racing to<br />

provide the Trust Layer that the internet so<br />

desperately needs.<br />

This Trust Layer has developed enough<br />

that a group of industry leaders have<br />

come together to form an open-source<br />

foundation: Trust over IP. The Trust over IP<br />

mission is to redefine our internet identities<br />

into cryptographically-verifiable digital<br />

credentials. Although there are other<br />

projects focused on digital identity, we<br />

believe that the open-source foundation will<br />

prevail, as only an open-source community<br />

could provide could live up to this definition<br />

for a Self-sovereign Digital Identity.<br />

Why is this important? What does it entail? It<br />

starts with bringing the concept of trust back<br />

to our digital interactions. Through verified<br />

credentials, people trust that it’s you on the<br />

other end and vice versa. This eliminates<br />

the barriers to getting to where you want<br />

to go on the internet and streamlines the<br />

verification process, forgoing the need for<br />

usernames and passwords. Another key<br />

element to SSI is the ability to transfer your<br />

digital identity across all platforms. The<br />

same way your license proves multiple<br />

credentials: it verifies you can drive, if you’re<br />

old enough to drink, if you’re a citizen, etc.,<br />

your digital identity carries and extends<br />

your credentials, preferences, and values<br />

across various platforms and ecosystems.<br />

However, taking it a step further, YOU are<br />

in control of which of those credentials gets<br />

shared on each platform you come across.<br />

This not only increases the users’ control<br />

and privacy of their information, it allows<br />

for higher quality data to be shared. If data<br />

works on a permission basis, that shared<br />

data is subsequently verified by the users<br />

themselves. Ownership of this data also<br />

entails the ability to monetize, putting the<br />

onus on the users as to whether they want<br />

a piece of data to remain private or be sold.<br />

It’s a win-win scenario.<br />

An essential ingredient for this upcoming<br />

boom is for government entities to get<br />

involved, and we’re beginning to see<br />

48


movement towards this phenomenon. On<br />

October 21, <strong>2020</strong>, Premier Doug Ford and<br />

Peter Bethenfalvy announced an action<br />

plan to introduce a secure digital identity for<br />

Ontarians by the end of 2021. (Link to Article)<br />

In the U.S., California is leading the way<br />

forward, as citizens voted yes on the Privacy<br />

Rights and Enforcement Act Initiative (Prop<br />

24) this past election to expand upon<br />

the California Consumer Privacy Act (CCPA),<br />

enhancing privacy rights and consumer<br />

protection to give citizens greater control of<br />

their personal data.<br />

The boom is coming and it starts with putting<br />

the power in consumers’ hands with a new,<br />

secure layer of trust on the internet. Change<br />

is in the air and we’re here to keep you up<br />

to date so you don’t get left in the dust. You<br />

can learn more by following KABN as we<br />

develop Liquid Avatar to be the foundation<br />

for SSI. Through our bank-grade verification<br />

platform, we will provide a digital credential.<br />

In the near future, we will be introducing<br />

networks that will accept this credential.<br />

Liquid Avatar is here to show you the path<br />

to SSI and give you control of your identity.<br />

Follow us on Twitter to stay current as the<br />

industry develops.<br />

About:<br />

RJ Reiser<br />

Chief Business Development Officer<br />

KABN Systems North America Inc.<br />

RJ is the Chief Business Development Officer at KABN. KABN<br />

is focused on leveraging Blockchain and Biometrics to protect<br />

Digital Identity in support of consumer protection regulations<br />

like GDPR, PIPEDA and CCPA. Mr. Reiser is known as a<br />

creative thinker and dynamic executive who brings new ideas<br />

to expand business and drive results. He is a self-starter and<br />

motivator who leads global teams to work together achieving<br />

technical and financial breakthroughs, while building innovative<br />

technological advances.<br />

IN FOCUS<br />

49


QR CODES<br />

THE TECH<br />

THAT<br />

CHANGED<br />

CHINA IS<br />

COMING<br />

CLOSER TO<br />

HOME<br />

An excerpt from<br />

“Cashless: China’s Digital<br />

Currency Revolution”<br />

Richard Turrin<br />

The humble QR code is at the heart of both<br />

Alipay and Pay’s systems and is the critical<br />

element of technology that allowed mobile<br />

payments to explode in China. Frankly, their<br />

simplicity and ability to receive payment without<br />

a digital connection that made these systems<br />

such a tremendous success. The big news of<br />

course is that QR codes are making a comeback<br />

closer to home with Apple, Square and PayPal<br />

all announcing the roll-out of QR code-based<br />

systems. So, let’s take a look at how China, the<br />

world’s expert in QR codes, uses them because<br />

you’ll be seeing a lot more of them.<br />

or receiving payment. There are two ways<br />

to pay using QR code systems to make a<br />

payment. You can pay by simply opening<br />

your phone to the payment screen, and your<br />

QR code appears on the screen. This code is<br />

captured by either another phone’s camera<br />

or the bar code scanning devices that exist at<br />

many stores. There is a ping once the scan is<br />

done, password or facial recognition entered,<br />

and your cell phone logs the purchase as<br />

complete. In this method, the investment in<br />

new technology is negligible. The software<br />

is designed to work on just about any lowgrade<br />

smartphones with a camera to make it<br />

easy to adopt, and if you are a retailer of some<br />

size, you already had the bar code scanning<br />

hardware on your point of sale devices.<br />

Mobile payment, no technology required.<br />

QR Codes are an elegant and straightforward<br />

solution for payment.<br />

QR codes are used by mobile payment systems<br />

to give each user a digital identity when paying<br />

Now for the second way to pay using these<br />

systems, and the reason why mobile payment<br />

conquered China. If you are a vendor or<br />

receiver of cash, you can make use of this<br />

system with -no- technology on your side<br />

of the transaction. That is correct; you don’t<br />

need anything electronic. All you need to do<br />

is print out your QR code so that the person<br />

paying can scan it with their mobile phone<br />

and send the money. This made accepting<br />

electronic payment within reach of everyone.<br />

A revolution in the making, and its most<br />

significant impact was on small vendors, who<br />

50


had been excluded from using debit cards<br />

because they lacked the fixed lines and pointof-sale<br />

devices.<br />

An electric bill, with WeChat Pay QR code printed on it.<br />

The magic of QR codes is their simplicity. Instructions:<br />

1) In WeChat click scan, 2) Payment complete after<br />

confirmed. You can print QR codes anywhere at no<br />

cost.<br />

An electric bill, with WeChat Pay QR code<br />

printed on it. The magic of QR codes is their<br />

simplicity. Instructions: 1) In WeChat click<br />

scan, 2) Payment complete after confirmed.<br />

You can print QR codes anywhere at no cost.<br />

TRENDING<br />

QR codes at a local noodle shop.<br />

Technology made simple.<br />

For simple shop keepers and dumpling sellers<br />

in small towns and villages, digital payments<br />

were suddenly and quite miraculously within<br />

reach. They were included in this solution<br />

because they didn’t need to invest anything<br />

more than the cost of going to a local<br />

photocopy shop and printing out their QR<br />

code, to become part of the digital world.<br />

Digital technology was finally at the service<br />

of all, including those -without- the resources<br />

to purchase access from banks. A phone was<br />

all that was needed. It was a revolution in that<br />

it allowed everyone, no matter how humble,<br />

to participate, and was the embodiment of<br />

the high ideals that both the government and<br />

private sector had for it at launch.<br />

QR codes are so simple that you can print<br />

them out on just about anything, from electric<br />

bills to tables at restaurants. There is no<br />

limit to what could have a QR code printed<br />

on it, and this contributed significantly to the<br />

creation of the ecosystem for WeChat and<br />

Alipay that I mentioned earlier. As you walk<br />

around Shanghai, the adoption is so incredible<br />

that almost -any- financial transaction can be<br />

done with mobile payment, and a shocking<br />

array of things have QR codes printed on<br />

them.<br />

The key to such widespread adoption is<br />

that with QR codes, inanimate non-digital<br />

objects can join the digital world to build an<br />

ecosystem. Consider a bill you receive in the<br />

mail from a public utility. Their investment to<br />

make use of digital payments is small. They<br />

simply need to print the QR code for your<br />

account on the bill and add some software<br />

in the backend of their systems to link their<br />

accounts to either WeChat Pay or Alipay.<br />

Restaurants could glue a plastic tag with a<br />

QR code directly on the table to allow you to<br />

order and pay without a server. Within two<br />

years, digital payments exploded in China<br />

because building an ecosystem was cheap,<br />

easy, and useful.<br />

NFC payments<br />

Now compare this to Apple and Google<br />

Pay’s rollout in the US market. If you<br />

were an early adopter, both technologies<br />

required you to upgrade your phone to<br />

near field communication (NFC) enabled<br />

versions. Apple even launched Apple Pay in<br />

conjunction with the launch of the newly NFC<br />

enabled iPhone 6. A not so subtle message to<br />

owners of earlier versions of iPhone that they<br />

would have to upgrade and buy into using the<br />

cashless lifestyle.<br />

Both Apple and Google Pay also required<br />

that shopkeepers update their point of sale<br />

51


52


systems to include the appropriate readers.<br />

The outlay in cash for both sides of the<br />

mobile payment revolution was substantial,<br />

and many smartphone users without NFC<br />

enabled phones were simply left out. During<br />

the early years, your Starbucks may have<br />

had mobile payment, but did you notice that<br />

your smaller local coffee shop didn’t? The<br />

reason is that switching to mobile payments<br />

was expensive for smaller shops, who had<br />

to wait for the price to come down and user<br />

demand to go up. It was as if the technology<br />

manufacturers were intentionally limiting the<br />

digital payment dream to those who could<br />

afford it, rather than inviting everyone to<br />

participate.<br />

Starbucks and QR Codes<br />

Starbucks’ launch of its mobile app in 2009<br />

provides a fabulously successful example of<br />

how QR codes were trialed in the US but flew<br />

beneath the radar for many. It also shows<br />

how early adoption of mobile payment via<br />

an agnostic app helped make Starbucks a<br />

surprise giant in mobile payments. Just like<br />

China, Starbucks designed its app to embrace<br />

Apple, Android, and Blackberry users alike,<br />

and went with QR codes to defray the cost<br />

of launching the system.<br />

To be specific, Starbucks chose QR codes<br />

to digitize its physical card system by using<br />

their existing bar code scanners. No new<br />

hardware was required, and just like WeChat<br />

and Alipay, you could use the app on any<br />

phone. No new phone required for users, no<br />

new tech for Starbucks. It was a win-win for<br />

all.<br />

QR Codes are Coming!<br />

By now it’s clear that QR codes are technology<br />

that simply works! So, it should be no surprise<br />

that both PayPal and Square are rolling out<br />

QR code-based systems. Inspired by the<br />

pandemic and people’s desire for completely<br />

touch free payment, PayPal rolled out QR<br />

codes this year. In PayPal’s words, “a fast,<br />

touch-free way to accept payments in<br />

person.” Not to be outdone, Square launched<br />

a restaurant focused payment system that<br />

allows completely contact free ordering and<br />

payment using QR codes. The system closely<br />

matches a system rolled out by WeChat some<br />

years ago in China and is in use at most fastfood<br />

restaurants.<br />

But the biggest news for QR codes comes<br />

from Apple, which is making all things old<br />

new again, and ensuring QR codes’ longevity<br />

with its Alternate Reality (AR) app Gobi. AR<br />

superimposes virtual information over the<br />

real world, and what better way to trigger an<br />

AR advertisement or notification than with a<br />

QR code. With AR, you use your camera to<br />

scan your surroundings, and when it finds a<br />

QR code, it triggers the AR event. QR’s magic<br />

ingredient for our new AR world is that you<br />

can print it out and paste one wherever you<br />

wish. Just like my local dumpling shop.<br />

TRENDING<br />

Starbucks’ payment system was so<br />

successful that it eclipsed the number of<br />

mobile users of Apple and Google Pay until<br />

Q3 of 2019, when Apple Pay finally overtook<br />

them. Critically, Starbucks was not held back<br />

by the slow rollout of new NFC enabled POS<br />

systems. Starbucks launched its app in 2009,<br />

while the first NFC enabled iPhone 6 models<br />

launched in 2014. The company had a 5-year<br />

lead in collecting digital users, something<br />

truly unheard of in the technology space.<br />

Who says QR codes never made their mark<br />

in the US payment space?<br />

About:<br />

Richard Turrin<br />

<strong>Fintech</strong> and AI Consultant<br />

Author of Best Selling “Innovation Lab<br />

Excellence: Digital Transformation from<br />

Within”<br />

Rich Turrin is the international best-selling author of “Innovation<br />

Lab Excellence” and soon to be published “Cashless - China’s<br />

Digital Currency Revolution.” He is an award-winning executive<br />

previously heading fintech teams at IBM following a twentyyear<br />

career in investment banking. Living in Shanghai for the<br />

last decade, Rich experienced China going cashless first-hand.<br />

53


CIPO<br />

ISSUES<br />

A NEW<br />

PRACTICE<br />

NOTE FOR<br />

COMPUTER-<br />

IMPLEMENTED<br />

INVENTIONS<br />

Major activity in the <strong>Fintech</strong> space is increasingly<br />

making headlines that cause even the most<br />

casual observer to take notice. In Canada, the buzz<br />

surrounding <strong>Fintech</strong>’s most promising solutions<br />

has reached a new pitch with the news of the<br />

NASDAQ’s acquisition of Newfoundland and<br />

Labrador based company Verafin, a company<br />

specializing in fraud detection systems, on<br />

November 19, <strong>2020</strong> for a cool $2.75 billion USD. 1<br />

<strong>Fintech</strong>’s prominence on the national stage,<br />

as well as the economic potential it clearly<br />

represents, is set to only continue rising. Not<br />

only has use of <strong>Fintech</strong> in Canada increased<br />

from 8 percent in 2015 to 50 percent in 2019, 2<br />

but research has also recently suggested that<br />

“<strong>Fintech</strong> innovations yield substantial value to<br />

innovators, with blockchain 3 being particularly<br />

valuable.” 4<br />

These innovations consist of proprietary<br />

analytic systems (e.g., facial detection systems,<br />

fraud detection systems, etc.), and are more<br />

often than not designed by technologically<br />

driven companies rather than the traditional<br />

well-established financial institutions.<br />

Governments are racing to get up to speed, to<br />

both understand the technology and protect<br />

consumers (e.g., data privacy). At the same<br />

time, they are striving to create the conditions<br />

for innovation and competition that will<br />

encourage the growth of an industry with the<br />

potential to create millions of jobs and solve<br />

some the world’s most intractable problems. 5<br />

Securing IP rights and ensuring<br />

confidentiality<br />

As Canada strives to adapt innovation<br />

policies and achieve these goals, securing<br />

IP rights on its homegrown innovation will<br />

become an indispensable piece of the<br />

puzzle. <strong>Fintech</strong> companies will and have<br />

been encouraged to adopt IP strategies<br />

early on. These include filing patent<br />

applications, registering trademarks and/or<br />

copyright, and ensuring the confidentiality<br />

of data as well as trade secrets, if any.<br />

Verafin, for example, is the registered owner<br />

of intellectual property portfolio, including<br />

U.S. Pat. No. 9,792,609 B2, Canadian patent<br />

application No. 2,860,179 A1 and couple<br />

of registered trademarks in Canada and<br />

the United States, all of which are and<br />

were crucial to protecting its proprietary<br />

innovations and solidifying its image as a<br />

reliable fintech player.<br />

54<br />

1<br />

https://www.nasdaq.com/press-release/nasdaq-to-acquire-verafin-creating-a-global-leader-in-the-fight-against-financial (Press release of<br />

November 19, <strong>2020</strong>).<br />

2<br />

https://globaladvantageconsulting.com/how-canada-is-adopting-fintech/<br />

3<br />

https://cointelegraph.com/news/what-is-the-difference-between-blockchain-and-dlt<br />

4<br />

Chen et als., How Valuable Is FinTech Innovation? The Review of Financial Studies, Volume 32, <strong>Issue</strong> 5, May 2019, Pages 2062–2106, https://<br />

doi.org/10.1093/rfs/hhy130, available at: https://academic.oup.com/rfs/article/32/5/2062/5427776.<br />

5<br />

https://wedocs.unep.org/bitstream/handle/20.500.11822/20724/<strong>Fintech</strong>_and_Sustainable_Development_Assessing_the_Implications_<br />

Summary.pdf?sequence=1&amp%3BisAllowed=


In the <strong>Fintech</strong> context, it is important<br />

understand what some of these categories<br />

refer to. Copyright indeed covers all<br />

visual, audio, and video material, but most<br />

relevantly, also extends to computer code<br />

(e.g., source code, pseudo code, machine<br />

code, etc.). Awareness and solid policies for<br />

developers are critical, because the inclusion<br />

of copyrighted source code (or even open<br />

source), even unknowingly, could jeopardize<br />

ownership of a technology. Trademarks can<br />

include a combination of words, sounds,<br />

designs or other forms that distinguish one<br />

company’s goods or services another’s. 6<br />

These serve as a foundation for building<br />

the credibility required by customers before<br />

they entrust their most precious data to a<br />

company. In a world where consumers are<br />

being trained to treat any unknown online<br />

entity as a potential scam, a recognizable<br />

trademark will be what allows many brands<br />

to sink or swim. They are also an invaluable<br />

tool for distinguishing a company or service,<br />

especially as the market floods with new<br />

players.<br />

Patents and the “shifting sands” of<br />

patentable subject matter<br />

Patents, however, represent a particular<br />

challenge. We know that patents are granted<br />

for new, useful and non-obvious inventions,<br />

but <strong>Fintech</strong>-related patent applications are<br />

often rejected, as they are frequently fall into<br />

the legal grey area of “non-statutory patentable<br />

subject matter”. In essence, what this means<br />

is that if the computer is found to be a nonessential<br />

component of the invention (e.g., can<br />

be substituted by something else), and the only<br />

remaining essential elements are non-patentable<br />

(e.g. an abstract theorem, mathematical formula<br />

(algorithm), etc.), the application would most<br />

likely be rejected by the patent examiner on the<br />

basis of non-patentable subject matter. On the<br />

other hand, if the computer is considered to be<br />

essential to the invention, the claims may define<br />

patentable subject matter.<br />

Distinguishing between what constitutes<br />

patentable and non-patentable subject<br />

matter is no easy feat, and has been the<br />

object of many fierce debates and legal<br />

disputes. 7 Following each of the Amazon.com<br />

and Choueifaty decisions rendered against<br />

Canadian Intellectual Property Office (CIPO),<br />

the CIPO issued in the month of November<br />

<strong>2020</strong>, a practice note on how to deal with “[p]<br />

atentable subject-matter under the Patent<br />

Act”. 8 This new guidance is expected to<br />

align the patent application examination<br />

process closer to the legal principles set<br />

forth in relevant case law, as well as facilitate<br />

the recognition of eligible subject-matter<br />

related to business methods and computerimplemented<br />

inventions, amongst others.<br />

As <strong>Fintech</strong> entrepreneurs innovate new<br />

solutions for the purposes of digital identity 9 ,<br />

AML/KYC, digital onboarding, crypto-asset 10 ,<br />

payment (MasterCard, Bank of America,<br />

Walmart, etc.) 11 , they must keep a close eye<br />

on the legislative developments that will bear<br />

significantly on the proliferation and speed of<br />

adoption of <strong>Fintech</strong> solutions. The best way<br />

for companies to protect their competitive<br />

advantage is to invest in a strong IP strategy<br />

that will put them in a position to protect their<br />

innovations, strengthen their reputation, and<br />

comply with existing (andfuture) policies.<br />

About:<br />

David Durand<br />

Member of the Quebec Bar and advisor<br />

to the <strong>NCFA</strong><br />

Durand Lawyers<br />

David Durand is a member of the Quebec Bar and advisor to<br />

the <strong>NCFA</strong>. Durand Lawyers brings Law & Business Together. It<br />

is a law and business advisory firm specialized in intellectual<br />

property, business strategy, as well as civil and corporate<br />

law. Durand Lawyers is uniquely positioned to help clients in<br />

emerging technology industries, including <strong>Fintech</strong>, employing<br />

both lawyers and experienced entrepreneur(s). For more<br />

information visit our website at: www.durand-lex.com.Not<br />

legal advice and hyperlinksThis content is provided solely for<br />

information purposes and does not constitute legal advice,<br />

professional advice or similar opinion. If you believe you<br />

require legal assistance, do not hesitate to contact us. The links<br />

contained on this web site which link to third party web sites<br />

are not monitored by Durand Lawyers. Links are provided for<br />

information and convenience only.<br />

TRENDING<br />

6<br />

http://www.ic.gc.ca/eic/site/cipointernet-Internetopic.nsf/eng/wr03718.html.<br />

7<br />

Schlumberger Canada Ltd v. Canada (Commissioner of Patents) (1981), 56 CPR (2d) 204; Re Application No. 2,246,933 of Amazon.Com<br />

(2009) C.D. 1290, Amazon Inc. v. Canada (Attorney General), 2010 FC 1011, and Canada (Attorney General) v. Amazon.com, Inc., 2011 FCA 328<br />

[collectively “Amazon.com”]; and Choueifaty v. Canada (Attorney General), <strong>2020</strong> FC 837, available at: http://canlii.ca/t/j9bxg [“Choueifaty”].<br />

8<br />

http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr04860.html (published on November 3rd, <strong>2020</strong>).<br />

9<br />

https://patents.google.com/patent/US10325084B1/en.<br />

10<br />

Fran Casino, Thomas K. Dasaklis, Constantinos Patsakis, A systematic literature review of blockchain-based applications: Current status,<br />

classification and open issues, Telematics and Informatics, vol. 36, 2019, pages 55-81, available at : http://www.sciencedirect.com/science/<br />

article/pii/S0736585318306324.<br />

11<br />

https://www.paymentssource.com/list/6-fintech-patents-to-watch.<br />

55


<strong>Fintech</strong><br />

in Atlantic<br />

Canada<br />

The history of the financial services industry in Atlantic Canada goes back to<br />

the early 1800s with the establishment in 1820 of the first chartered bank in<br />

Canada, the Bank of New Brunswick, later followed by the founding in Halifax<br />

of two of present Canada’s largest banks: Bank of Nova Scotia (1832) and<br />

Royal Bank of Canada (1864).<br />

Today, Atlantic Canada is witnessing the<br />

emergence of a unique fintech ecosystem,<br />

powered by key communication infrastructure<br />

and deep expertise in back-office operations.<br />

Venn Innovation has identified over 100<br />

financial technology startups, with products<br />

ranging from cybersecurity, blockchain,<br />

and machine learning to robotics process<br />

automation, AI and data analytics, that are<br />

bringing new life into the region while serving<br />

clients around the world. Atlantic Canada has<br />

been known for its quality of life and costcompetitive<br />

business environment, but now,<br />

during this global pandemic, the region has<br />

proven to be one of the safest places in the<br />

world, adding to these advantages the fast<br />

economic recovery of its companies.<br />

Atlantic Canada has strengths that are<br />

clearly complementary to the financial<br />

industry and can support the growth of this<br />

high impact sector with intentional effort<br />

and focus, gaining a share of this growing<br />

global industry. In NB alone, back office<br />

operations of financial institutions, insurance<br />

companies and communications, employ<br />

some 18,000 people, representing $1.5B for<br />

the economy 1 .<br />

How we identify <strong>Fintech</strong> companies?<br />

1<br />

https://contactnb.ca/<br />

The fintech sector in<br />

Atlantic Canada includes,<br />

for example, leaders like<br />

Verafin, which launched<br />

in 2003 and raised $515<br />

million in 2019, the<br />

largest tech funding<br />

deal ever in Canada, and<br />

emerging companies like<br />

ProcedureFlow, Oliver POS<br />

(which recently secured a<br />

seed financing round from<br />

European investors), and<br />

SnapAP, which recently<br />

partnered with Oracle and<br />

Sage.<br />

56


<strong>Fintech</strong> companies in our region have<br />

unique characteristics that largely contribute<br />

to the competitiveness of the region: as the<br />

investment environment is different from<br />

places like Silicon Valley or Tel Aviv, these<br />

companies often do more with less; they<br />

tend to be very lean, have a resourceful team,<br />

be real-world problem-solving focused<br />

and, as a result, provide more customeroriented<br />

value propositions. On the other<br />

hand, it is exciting to notice that we have a<br />

lot in common with many of the world’s top<br />

fintech ecosystems. Compared to places like<br />

Singapore, Sydney, Tel Aviv and others, we<br />

have comparable technology, and a focus<br />

on non-local markets. The high-impact<br />

meetings with industry leaders and the warm<br />

reception our Atlantic Canada delegation<br />

was so fortunate to enjoy at Money<strong>2020</strong> last<br />

year are clear testimony to our international<br />

attractiveness.<br />

restrictions imposed by the pandemic, this<br />

initiative now counts participants from coast<br />

to coast. It is also encouraging to note that<br />

Dalhousie University started offering the only<br />

university fintech course in the region last<br />

year. The course focuses on understanding<br />

the landscape in which fintech companies<br />

emerge, grow and compete, and gaining<br />

practical experience by interacting with<br />

fintech companies and entrepreneurs from<br />

the region. Dr. Maria Pacurar works with<br />

undergraduate students from across the<br />

university to inspire the next generation<br />

of fintech leaders. She has also been<br />

collaborating with Alicia Roisman Ismach, of<br />

Venn Innovation and Atlantic <strong>Fintech</strong>. Their<br />

dream: build the next Singapore or Tel Aviv,<br />

but right here in Canada—on the East Coast.<br />

TRENDING<br />

It’s been exciting to see the evolution of<br />

these companies since then, including the<br />

meaningful progress of solutions like Black<br />

Arcs, which can simplify complex decisionmaking<br />

through its analytics platform for an<br />

array of customers, and Four Eyes Financial,<br />

which offers financial compliance software<br />

from the institutional level to end-users.<br />

Of course, we have to focus on the next<br />

generation. Given the strong pool of talent<br />

in an array of functional areas coupled with<br />

a considerable influx of highly educated<br />

immigrants, excellent quality of life,<br />

affordable cost of living, natural beauty and,<br />

of course, the growing tech ecosystem,<br />

there is no doubt that Atlantic Canada will<br />

see an increased international appeal. But<br />

what about the future? Where and how are<br />

we getting our next generation of talent?<br />

The region’s 16 universities graduating<br />

nearly 18,500 degree holders annually and<br />

performing nearly 60% of the region’s R&D<br />

(more than $200 million annually) 2 are an<br />

important driver in this innovation ecosystem.<br />

This fall, both the Faculty of Management<br />

at Dalhousie University and Venn Innovation<br />

partnered with Coopérathon, the largest<br />

Open Innovation challenge in Canada. Run<br />

digitally for the first time because of the<br />

About:<br />

About:<br />

Maria Pacurar<br />

Associate Professor of Finance<br />

Rowe School of Business<br />

Professor Maria Pacurar is an Associate Professor of Finance in<br />

the Rowe School of Business and Vice-Chair of Senate (Student<br />

Affairs) at Dalhousie University. An award-winning instructor<br />

and researcher, Maria teaches fintech, risk management for<br />

financial institutions, and corporate finance courses in the<br />

regular and executive education programs. She holds a Ph.D.<br />

in Finance from HEC Montréal.<br />

Alicia Roisman Ismach<br />

Head of Atlantic <strong>Fintech</strong><br />

Venn Innovation<br />

Alicia Roisman Ismach is a serial entrepreneur and fintech<br />

expert with over 20 years leadership in the industry. Alicia is<br />

a member of the Technology Committee of the Electronic<br />

Transaction Association, Entrepreneur in Residence at Venn<br />

Innovation and leads the fintech initiative in Atlantic Canada.<br />

Alicia holds a Master in Entrepreneurship & Innovation from<br />

Swinburne University of Technology.<br />

2<br />

https://www.atlanticuniversities.ca/<br />

57


THE<br />

RISE<br />

IN BIG<br />

TECH AND<br />

FINTECH<br />

CREDIT<br />

As a Gen Z, technology has played a big role<br />

in my everyday life ever since I was young and<br />

now as a remote intern at <strong>NCFA</strong>, I’m excited<br />

to share some research and insights on Big<br />

Tech and <strong>Fintech</strong> credit markets.<br />

Big Tech and its expanding dominance<br />

Lending institutions such as banks and credit<br />

unions have traditionally been the chief sources<br />

of finance in most economies in the world,<br />

however large technology firms are uniquely<br />

positioned to capitalize on a technologyfocused<br />

alternative to financial services. Their<br />

advanced AI and machine learning capabilities<br />

allow these companies to utilize the swaths<br />

of data that their user base generates to<br />

tailor prices, determine creditworthiness, and<br />

screen loans. Amazon’s e-commerce sales for<br />

example, reached a staggering $416.48 billion<br />

in <strong>2020</strong>. As online channels expand due to<br />

general trends and the global pandemic, they<br />

pose an existential thread to traditional brick<br />

and mortar models. UBS analysts estimate<br />

that 75,000 brick-and-mortar stores could be<br />

forced into closure by 2026.<br />

Companies like Walmart have seen their<br />

supply-side economies of scale diminished by<br />

competing and efficient online marketplaces<br />

that operate with lower overheads forcing<br />

them to integrate more technology into their<br />

business model. Walmart has already taken<br />

several steps in the <strong>Fintech</strong> credit direction.<br />

One is the creation of Walmart Pay, a payment<br />

app that enables shoppers to transact at the<br />

register via QR code. Other methods adopted<br />

include a prepaid card plan with Walmart<br />

MoneyCard and a money transfer service<br />

with Walmart2Walmart.<br />

Global Alternative Credit Trends<br />

As illustrated in the chart below, there has<br />

been a surge in popularity in <strong>Fintech</strong> and Big<br />

Tech credit – collectively known as alternative<br />

credit – reaching an estimate of 795 billion USD<br />

globally in 2019. While alternative credit has<br />

been on rise collectively, the data shows that<br />

global <strong>Fintech</strong> credit volumes have declined<br />

between 2017-2019 from an estimate of 410<br />

billion to 223 billion USD. One major factor for<br />

this decline is due to the greater regulatory<br />

developments in China. In the same period,<br />

Big Tech credit growth has surged at a more<br />

rapid pace than the previous years, rising from<br />

an estimate of 197 billion in 2017 to 572 billion<br />

USD in 2019.<br />

58


TRENDING<br />

P2P Lending and <strong>Fintech</strong> Credit in the U.S.<br />

Interestingly while Big Tech seems to be<br />

the dominant player globally in recent years,<br />

<strong>Fintech</strong> credit is much more prevalent in<br />

the US, accounting for nearly 89% of the<br />

total US alternative credit. Research shows<br />

that the <strong>Fintech</strong> credit market in the US<br />

is primarily made up of P2P/marketplace<br />

consumer lending with investment coming<br />

predominantly from institutional investors<br />

rather than individual lenders.<br />

<strong>Fintech</strong> credit describes credit activity<br />

facilitated by online platforms that are not<br />

operated by commercial banks. One popular<br />

form of <strong>Fintech</strong> credit is peer-to-peer (P2P)<br />

lending, where borrowers are matched<br />

directly with investors through a lending<br />

platform.<br />

Traditionally, one’s FICO score has been the<br />

gold standard of credit bureaus in determining<br />

one’s ability to open a bank account, obtain a<br />

loan, or get a credit card. Now, with the ability to<br />

process lots of data at high levels of efficiency<br />

thanks to machines, <strong>Fintech</strong> companies are<br />

creating more holistic creditworthiness rating<br />

systems that help alternative lenders better<br />

assess risks and serve up loans to a segment<br />

59


of the population that traditionally has been<br />

shut out of markets.<br />

Prediction for Future<br />

Given Big Tech and <strong>Fintech</strong>’s competitive<br />

advantages with machine learning and AI, I<br />

believe that they will play an inevitable role<br />

in the future of financial services. This type of<br />

competitive edge that Big Tech companies<br />

have make them ideally positioned to serve<br />

the role of a Techfin, a term coined by Jack<br />

Ma describing tech companies that provide<br />

financial services with a more customer &<br />

technology centric approach.<br />

The COVID-19 pandemic has only exacerbated<br />

the paradigm shift in the financial technology<br />

space. Growing numbers of people consider<br />

the adoption of contactless payment as a<br />

basic need to prevent the spread of the virus,<br />

and I predict the rise of many forms of <strong>Fintech</strong><br />

innovations like mobile wallets replacing<br />

physical wallets.<br />

Given the size, resources and efficiencies of Big<br />

Tech and the increasing potential of <strong>Fintech</strong>,<br />

incumbent institutions are likely feeling the<br />

heat to re-align their products and services<br />

to benefit tech-savvy consumers across<br />

the board, not just us Gen Zs. Incumbents<br />

like Chase have already taken steps in this<br />

direction by investing heavily in their digital<br />

space to offer a more unified experience for<br />

the customer. As a passionate technology<br />

user, I am eager to see what the future has<br />

in store.<br />

About:<br />

Samuel He<br />

<strong>NCFA</strong> Intern<br />

<strong>NCFA</strong><br />

Samuel is currently a senior at Northeastern University studying<br />

finance and mathematics. He is interested in economics and<br />

programming and hopes to pursue a career in data analytics.<br />

60


61<br />

TRENDING


CRYPTO-<br />

CURRENCIES<br />

AREN’T AN<br />

ALTERNATIVE.<br />

THEY’RE HERE<br />

TO STAY.<br />

<strong>2020</strong> is winding down and it’s been a hectic<br />

(and often tragic) time for so many of us around<br />

the world. Throughout the year, we’ve seen<br />

some industries struggle while others thrived.<br />

Out of this uncertain time, it’s important to<br />

note the incredible shift toward technologyenabled<br />

financial services. As a longtime<br />

payments and blockchain entrepreneur, I’m<br />

convinced we’ve reached a real moment<br />

in driving awareness and adoption in digital<br />

currencies as more people live their lives<br />

increasingly online.<br />

This year alone, we’ve seen massive progress<br />

in the multi-billion dollar crypto market that<br />

can no longer be ignored: bitcoin soaring<br />

above US$15,000, leading fiat payment<br />

processors jumping on the crypto bandwagon<br />

and rising use among people from every part<br />

of the world.<br />

It’s called the “future of money” for a reason.<br />

Cryptocurrencies have cemented themselves<br />

as a means of exchange for our global, digital<br />

economy.<br />

Better regulatory frameworks, better<br />

processes<br />

Historically, one of the biggest barriers to<br />

entry for cryptocurrencies has been mistrust<br />

and a lack of knowledge among regulators.<br />

It’s understandable. With more than 2,000<br />

different types of cryptocurrencies now on<br />

the market, ambiguous and unclear guidance<br />

from governments has resulted in slow<br />

institutional adoption. But that tide is turning.<br />

With broader global adoption and a better<br />

understanding of the technology behind<br />

cryptocurrencies, regulators are now<br />

equipped to build solid frameworks that<br />

actually work for the crypto community.<br />

Take KYC (Know-Your-Customer) processes<br />

as an example. Early on, there was a strong<br />

perception that KYC would only hinder (and<br />

not help) sales because it added another<br />

layer to the buying process. Instead, we’ve<br />

seen the opposite through streamlined and<br />

straightforward KYC.<br />

62


That is why we have put security and<br />

transparency at the heart of our agenda to<br />

build a fully compliant platform and more<br />

importantly, to pave the way for mass adoption<br />

in a sustainable way.<br />

The crypto community drives choice<br />

Freedom of choice is a significant part of<br />

the crypto community and it has shifted<br />

the balance of power into the hands of the<br />

consumer. At CoinPayments, we work hard<br />

to meet that need by supporting more than<br />

1,900 cryptocurrencies. We feel it’s a critical<br />

part of how we drive adoption among an<br />

increasingly diverse user base.<br />

Just look at this chart below. While bitcoin still<br />

represents approximately 85% of transactions,<br />

we are seeing an increased interest in<br />

stablecoins, both globally and in the U.S.<br />

In APAC, 50% of CoinPayments merchant<br />

transactions were in stablecoins over the last<br />

year.<br />

TRENDING<br />

Fortunately, major fintech players including<br />

PayPal, Square, Revolut, and Robinhood are<br />

taking notice. Even Visa is moving into the<br />

space with its Ternio and ZenGo partnerships.<br />

This is the type of traction that will drive a<br />

rapidly rising level of adoption.<br />

The next adoption wave<br />

It’s only a matter of time before the biggest<br />

ecommerce platforms like Amazon and eBay<br />

embrace digital currencies. This is the moment<br />

we’re all waiting for within the payments<br />

industry and it’s happening at a lightning-fast<br />

pace. It’s hard to believe credit cards took<br />

50 years to gain mass market appeal while<br />

bitcoin is just 11 years old.<br />

Take this chart from a recent report on<br />

CoinPayments merchant activity:<br />

63


This is the story of cryptocurrencies as a<br />

form of payment right now. Will the trend<br />

always be up? Likely no, but we have a<br />

long way to go before it slows. Continue to<br />

watch for major announcements around new<br />

ecommerce platforms and brands opening<br />

their businesses to digital currencies.<br />

In a world where 1.9 billion adults remain<br />

unbanked, don’t underestimate the<br />

importance of financial innovation to help<br />

businesses and individuals realize their full<br />

economic potential. That underlying need is<br />

exactly why we think cryptocurrencies are<br />

no longer a fringe solution.<br />

The importance of education and advocacy<br />

While the case I’ve laid out for mass adoption<br />

of cryptocurrencies as a form of payment<br />

seems inevitable, it’s important to note that<br />

this is a movement that requires continuous<br />

support and education.<br />

In the coming years, we’ll see regulatory<br />

challenges and adoption hurdles, which<br />

is why we’ve made advocacy a priority<br />

at CoinPayments. That includes regular<br />

innovation with our own products and<br />

services as well as industry-focused<br />

initiatives like with <strong>NCFA</strong> in Canada, and<br />

our recent partnership with Celo Alliance<br />

which is focused on driving financial<br />

inclusion through cryptocurrencies. Through<br />

collaboration, we’ll work directly with leading<br />

charitable organizations to drive awareness<br />

and adoption in developing economies.<br />

About:<br />

Jason Butcher<br />

CEO<br />

CoinPayments<br />

CoinPayments is an integrated payment gateway for<br />

cryptocurrencies. It is the preferred cryptocurrency payment<br />

platform for merchants like Overstock and Quantfury, as<br />

well as eCommerce platform providers like Shopify and<br />

OpenCart.<br />

64


CATCHING<br />

THE WAVE:<br />

CAPITALIZE<br />

ON NEW<br />

OPPORTUNITIES<br />

IN PRIVATE<br />

PLACEMENTS<br />

TRENDING<br />

Private markets just<br />

completed a decade of<br />

explosive growth. According<br />

to McKinsey’s “A new<br />

decade for private markets”<br />

review, 2019 saw record<br />

numbers in terms of private<br />

placement volume, with<br />

global private deal annual<br />

volume reaching $919B.<br />

The opportunity is here, and<br />

it is enormous. This article<br />

covers select insights from<br />

industry thought leaders<br />

on the latest trends in<br />

technology-first private<br />

placement markets.<br />

5 Private Placement Insights<br />

Market Growth<br />

Currently, forecasts are putting global<br />

alternative AUM at over $20 trillion by 2025,<br />

which is twice the value they were at in 2018.<br />

The number of deals more than doubled from<br />

2009 to 2019. Behind these figures is strong<br />

investor demand, supercharged by recent<br />

regulatory changes.<br />

Regulatory Changes<br />

Recent SEC regulatory changes have served<br />

as a catalyst and provided more options for<br />

equity capital markets to source capital from<br />

individual investors, creating a necessity<br />

for organizations to prioritize building out<br />

compliance and syndication processes for<br />

retail participation. Due to the administration<br />

involved with the participation of larger<br />

numbers of investors, many firms have<br />

only made their private deals available to<br />

65


institutional investors, with retail participation<br />

hovering around 10%. Firms looking to<br />

capitalize on the new influx of retail investors<br />

are prioritizing efficiency improvements of<br />

internal processes.<br />

New Investor Class Emerging<br />

According to Blackstone, the percentage of<br />

its capital contribution by retail investors will<br />

shift dramatically in the first half of the next<br />

decade. By 2025 retail investors are projected<br />

to have a level of capital contribution equal<br />

to that of institutional investors. This means<br />

that organizations seeking sustainable growth<br />

in the space need to couple their private<br />

placement strategy with internal technology<br />

projects that prioritize building out compliance<br />

and syndication processes necessary for<br />

retail distribution. Although the demand for<br />

private deals is reaching record highs, there is<br />

not enough accessible supply of investment<br />

opportunities. As a result, competition<br />

amongst quality firms is accelerating to fulfil<br />

investor appetite.<br />

The Bottleneck: Manual Processes<br />

Firms relying on spreadsheets, email, and<br />

physical mail in <strong>2020</strong> will find it increasingly<br />

difficult to scale their business. The main<br />

factor behind the low rate of retail participation<br />

in deals is the inability of firms to increase<br />

the number of investors they are able to<br />

service without significantly expanding their<br />

workforce. The largest culprit is the legacy<br />

systems and processes that bring inefficiency<br />

to workflows such as investor onboarding,<br />

document execution, signature collection,<br />

and payment reconciliation.<br />

On top of not being scalable, these outdated<br />

processes often come with human error and<br />

correction efforts are tedious, expensive, and<br />

create opportunity cost. A situation such as<br />

COVID-19 only exacerbates these issues since<br />

the old processes are simply not equipped to<br />

handle the logistical challenges organizations<br />

are now faced with. Centralizing these<br />

workflows on an online platform is allowing<br />

firms to maintain business continuity while<br />

simultaneously removing old operational<br />

issues.<br />

Top Firms are Digitizing<br />

Even though there is now an industry consensus<br />

on the value added by digital solutions, many<br />

smaller firms have not yet committed to a<br />

necessary digital transformation strategy<br />

like the industry’s largest firms. There are<br />

various reasons keeping organizations from<br />

making technology a priority, however their<br />

competitiveness is declining as a result. While<br />

the goals of digitization projects may vary<br />

from firm to firm, some common business<br />

outcomes that need to be addressed include<br />

lowering operational costs, enhancing<br />

investor experiences, driving new revenue,<br />

and improving reporting and decision making.<br />

3 Must-Have Solutions When Digitizing<br />

Replacing labor-intensive, ad hoc tasks with<br />

standardized and automated workflows will<br />

deliver benefits across all business segments;<br />

accelerate growth through shortening the<br />

deal cycle, enhance investor relationships<br />

and drive cost reduction and back-office<br />

productivity.<br />

It should be noted that back office efficiency is<br />

not the only facet of digitization that delivers<br />

value to firms; the adverse impact that manual<br />

processes have on the quality of investor<br />

experience is also eliminated. Whether it is<br />

during the onboarding process or after the<br />

fact, users should be able to complete all<br />

interactions with a firm conveniently and<br />

access all necessary information in a way<br />

that is intuitive and seamless. Platforms that<br />

help organizations achieve this are going to<br />

be much more than a productivity tool by the<br />

people using them.<br />

1. Investor Onboarding<br />

This crucial part of the investor journey is<br />

perhaps most visibly impacted by solutions<br />

such as the one offered by Katipult. The<br />

onboarding process is currently plagued<br />

with inefficiencies that can be entirely<br />

removed by digitizing the entire workflow.<br />

This includes systems to manage digital<br />

form submissions, ensure compliance, and<br />

automate KYC.<br />

66


2. Subscription Document Generation<br />

(smart forms)<br />

Smart forms are a high impact feature<br />

of private placement software that allow<br />

firms to scale the volume of deals without<br />

expanding the workforce. Smart forms<br />

keep track of appropriate investment<br />

vehicles and investor exemptions, and<br />

merge all required information in a guided<br />

workflow to ensure accurate execution of<br />

signatures and initials.<br />

3. E-Signatures<br />

High on the list of priorities for leading<br />

firms has been replacing “wet” signatures<br />

with their electronic or digital counterparts.<br />

This allows firms to avoid playing tag<br />

with investors whose investments can’t<br />

move forward because of a missing<br />

signature. Collecting these electronically<br />

plays an important part in improving both<br />

the company’s back office efficiency<br />

as well as the investor experience.<br />

It is important to understand the business<br />

fit of an e-signature solution before you go<br />

ahead with the implementation. There are<br />

many off-the-shelf solutions available on the<br />

market and companies need to plan in order<br />

to avoid going through a huge digitization<br />

project that ends up with disjointed solutions<br />

that don’t work together. A fully integrated<br />

solution is key, so whether you decide to<br />

integrate separate solutions or find one<br />

purpose-built for your platform, just make<br />

sure you have a clear path to making the<br />

whole ecosystem work together.<br />

About:<br />

Brock Murray, Head of Global<br />

Development<br />

Katipult | TSXV: FUND<br />

Brock Murray is Head of Global Development & Director<br />

as well as co-founder and founding CEO of Katipult. Under<br />

his leadership the company entered 20 unique regulatory<br />

environments, successfully completed a public listing, and<br />

attracted enterprise customers such as ATB Financial.<br />

TRENDING<br />

67


68


<strong>2020</strong> FINTECH DRAFT: PITCHING & DEMO FINALS<br />

AUGUST 27 TH<br />

INAUGURAL <strong>2020</strong> FINTECH DRAFT<br />

Inspired by sports league drafts, the inaugural <strong>2020</strong> <strong>Fintech</strong> Draft Pitching & Demo<br />

competitions were held virtually on August 27, <strong>2020</strong> where 8 finalists competed for exposure,<br />

prizes, introductions to investors, media and prospective buyers and a complimentary one (1)<br />

year industry partnership with <strong>NCFA</strong>. The annual program is sponsored by <strong>NCFA</strong> and open<br />

to Canadian and international companies in the fintech sector and designed to identify and<br />

feature emerging and high growth fintech startups and scaleups. Finalists were evaluated<br />

on a variety of criteria such as strategy, traction, product/market fit and need, differentiation,<br />

innovation, x-factor and ability to answer judges’ questions.<br />

Pitching Judges:<br />

Demo Judges:<br />

Philippe Daoust<br />

Managing Director, NAventures<br />

National Bank of Canada<br />

Elisabeth O’Neill Laett<br />

Managing Partner<br />

Holt Accelerator<br />

Dave Unsworth<br />

Co-Founder and General Partner<br />

Information Venture Partners<br />

Christian Lassonde<br />

Founder and Managing Partner<br />

Impression Ventures<br />

Missed FFCON20 RISE? Checkout the Session Recordings -> here<br />

69


Target <strong>Issue</strong>:<br />

The real estate market has not experienced the advantages of liquidity like many other markets<br />

that were digitized and with such assets as gold and company stock tradable through modern<br />

technological platforms. It remained tedious, complex, slow-moving and costly. Real estate<br />

investors expect their funds to be locked up for several years; the minimum amounts to invest<br />

are high and there’s a lack of access to great global projects.<br />

Core Benefits:<br />

• Opening the real estate market to everyday investors.<br />

• Lowering investment thresholds – translation: you shouldn’t have to be mega-rich to start<br />

making money in real estate.<br />

• Clearing the way for local-stakeholder fundraising, revitalizing developing nations and<br />

depressed inner-city neighborhoods.<br />

• Removing regulatory hassles that bar all but the largest investors in the most lucrative real<br />

estate development projects.<br />

• Breaking down geographic barriers<br />

• SolidBlock is not conducting a Regulation Crowdfunding offering. Hosted by Wefunder Inc.<br />

Ideal Customers: Consumers (B2C)<br />

Milestones: In 5 years, we will open the real estate market to millions of people with over 1<br />

billion dollars of assets tokenized<br />

Yael Tamar<br />

CMO & Co-Founder, SolidBlock<br />

70


71


Q & A<br />

WITH<br />

YAEL TAMAR,<br />

SOLIDBLOCK<br />

What’s the vision behind SolidBlock?<br />

Very simple - make real estate accessible<br />

for everyone. Once we wrap real estate into<br />

a financial product, investors can buy and<br />

sell it at any time, digitally. It can be sold via<br />

crowdfunding or other digital platforms, as well<br />

as ATSs and exchanges, catering to a variety<br />

of investors, retail, high-networth individuals<br />

and institutions. There’s no reason only a<br />

select few can benefit from the stability and<br />

value growth of this asset class - SolidBlock<br />

has an ambitious goal to bring global assets<br />

to hundreds of millions of new investors.<br />

But aren’t people already using the internet<br />

for loans and investment?<br />

It’s cool that you can apply online for a loan<br />

– from a bank or another big, bureaucratic<br />

mainstream institution. But that’s nothing truly<br />

new. It’s just a digital version of the original –<br />

instead of paper you’re filling out a form on<br />

the website. Same thing with investing. You<br />

have an app that lets you buy, sell, and trade<br />

conventional securities. It’s great, but again, it’s<br />

just a digital version of what we’ve been doing<br />

all along. What SolidBlock is doing is truly<br />

original. We’re disrupting the gatekeeping<br />

function of the financial institutions. They<br />

no longer get to say which projects will get<br />

funded and which won’t. Because what the<br />

internet does best is bringing people together.<br />

Here’s what’s truly disruptive: once you have a<br />

solid business model for your project, SolidBlock<br />

will set it up legally and make it available to<br />

qualified investors from all over the world.<br />

That’s what we did in 2018 with the world’s<br />

first successful tokenization for a commercial<br />

real estate project, for the Aspen St. Regis<br />

hotel in Colorado, which raised $18 million on<br />

our platform. They were pioneers, in a way,<br />

because it was an untested funding method.<br />

But we proved how viable it could be, especially<br />

for projects that are too off the beaten path<br />

for mainstream financial institutions. And now<br />

Aspen Coin is trading on tZero at a, give or<br />

take, 30% premium from just about 18 months<br />

ago when the issuance was completed.<br />

The World Economic Forum predicts that 10%<br />

of the global GDP will be stored on blockchain<br />

by 2027, a total of $24 trillion. The power and<br />

potential of blockchain is already clear. What<br />

SolidBlock is doing is part of that massive<br />

global movement.<br />

What are some other “off-the-beaten-path”<br />

investments SolidBlock has created?<br />

We look for opportunities where mainstream<br />

financial institutions are less comfortable<br />

– but where the profit potential is clear and<br />

exciting. For example, logistics centers, for<br />

product fulfillment and shipping, are a huge<br />

growth area all over the world. But investing<br />

in smaller projects in Israel is risky and not<br />

cost-effective for a financial institution. So<br />

the asset owners approached SolidBlock<br />

to tokenize a logistic center in an industrial<br />

town in Israel boasting production facilities<br />

for Intel, IBM, etc. We know based on other<br />

regions that logistics centers are the future<br />

of the supply chain. And tokenization lets<br />

our investors get in on the ground floor,<br />

before mainstream institutions realize what a<br />

goldmine they’re passing up.<br />

Another industry with a question mark hanging<br />

over it is tourism. According to the UN, world<br />

tourism is down as much as 80%. We made our<br />

name tokenizing the Aspen St. Regis, so we’re<br />

72


very comfortable in the hospitality industry. And<br />

every single forecaster predicts that the industry<br />

will bounce back – cautiously, but soon.<br />

So we jumped into another area where<br />

traditional institutions were still hesitating,<br />

partnering with Best Western to tokenize<br />

a gorgeous beachfront hotel in Phuket,<br />

Thailand. It’s amazing. Thailand has been one<br />

of the safest places throughout COVID-19, and<br />

Phuket is one of its Top 3 tourist destinations.<br />

With the growing Chinese middle class<br />

spending billions there each year, investors<br />

know Phuket is a safe bet. There are lots more<br />

examples, but those two really speak to the idea<br />

that mainstream financial institutions are slow<br />

and bureaucratic. They don’t like to take risks,<br />

even “safe risks,” so to speak. It’s easier for them<br />

to say no, and that creates a huge opportunity<br />

for us – and for our investors.<br />

are potentially getting all this information for<br />

every single property in your portfolio. And<br />

this data is important because it gives you real<br />

insight into what’s going on. But as an investor<br />

you might not want to track all this data with<br />

so much granularity. That’s why we’re going<br />

to see the emergence of the same kinds<br />

of automation, harnessing AI and machine<br />

learning, that we’re seeing with other kinds of<br />

securities. Users will be able to set up alerts<br />

for certain conditions, create automation for<br />

other conditions, like buy or sell orders. So you<br />

don’t need to track it yourself on a day-to-day<br />

basis – though you’ll always have that option.<br />

The transparency of blockchain and the huge<br />

amounts of information available will make it<br />

easier to invest wisely. It will make it easier to<br />

set up funds of tokens with similar parameters,<br />

as well as customize your investment priorities<br />

and level of risk.<br />

FINTECH DRAFT<br />

What makes tokenized real estate different<br />

from other kinds of securities?<br />

The biggest difference is the amount of<br />

data that tokens offer us, in two key areas:<br />

transaction history data and reference data.<br />

Transaction history data means being able<br />

to see the provenance of an asset all the way<br />

back to the time of its creation. This is important<br />

for regulatory reasons, but it’s also extremely<br />

important in reducing the risks of fraud and<br />

operational errors.<br />

But reference data is even more exciting,<br />

because with IoT, the internet of things, this<br />

opens up a whole new world of information that<br />

we can literally attach to the token associated<br />

with a real estate asset. This could be things<br />

like vacancy rate, maintenance schedules,<br />

real estate prices and construction in the<br />

surrounding area, property taxes, and more.<br />

One reason people hesitate to invest<br />

internationally is the proverbial “swampland in<br />

Florida” – they’re afraid of a scam. But with all<br />

this data, it’s going to build confidence that the<br />

investment is legit.<br />

Can investors handle that much data?<br />

What a great question! You’re absolutely right,<br />

it’s a lot of data, especially because investors<br />

How is this different from a REIT?<br />

REITs are a good start, and that’s why they’re<br />

so popular. Everybody wants to invest in<br />

real estate! About 80 million Americans are<br />

already invested in REITs through retirement<br />

savings and mutual funds. But REITs don’t go<br />

far enough, because they’re still tied in with<br />

the big institutions. Public REITs give limited<br />

returns because they are so costly and private<br />

REITs don’t offer liquidity. From over $260<br />

trillion worth of real estate, only 1% is tradable,<br />

mainly through stock exchanges. SolidBlock<br />

is planning to double that number through<br />

tokenization in the next five years.<br />

How can we get more information?<br />

I’m happy to talk to anyone who wants to find<br />

out more – whether they’re a potential investor<br />

or an asset owner looking to raise equity for a<br />

great project. Reach me at yael@solidblock.co<br />

or +1 (347) 757-4638.<br />

Yael Tamar<br />

Co-founder and CMO<br />

SolidBlock<br />

73


Target <strong>Issue</strong>:<br />

Cheques remain the preferred payment option among an overwhelming number of small<br />

businesses in Canada and the U.S., due to the lack of simple, cost-efficient payment methods<br />

to process high-value transactions. Among these burdens are:<br />

• Interact e-Transfers have a transaction limit of CAD 10,000<br />

• Credit card payments result in high percentage fees (between 2.9% and 4.4% on average)<br />

• Wire Transfers are cumbersome and overly expensive ($14 to $80 and more per transfer)<br />

• ACH file upload to the banks are difficult to reconcile and time-consuming<br />

Core Benefits:<br />

MazumaGo is a payment platform that enables businesses to send and receive no-limit<br />

payments for a flat fee. With MazumaGo, businesses can pay their suppliers, collect payment<br />

from customers, setup recurring transactions and move money between internal accounts at<br />

different banks – all in a single dashboard. It is as simple to use as an eTransfer, but provides<br />

the security and robustness of the banking system.<br />

• Onboard suppliers via email, no collection of routing information required<br />

• Import invoices from your accounting software<br />

• Include direct payment links in invoices you send to your customers<br />

• Customers and suppliers authorize payments directly via online bank sign-in<br />

• Payments are deposited via direct bank-to-bank transfer within 48h or less<br />

• Customizable bank statements allow for easy reconciliation<br />

• Real-time tracking of payment status, like FedEx for payments<br />

Ideal Customers: Consumers (B2B)<br />

Milestones:<br />

• Sep, 2019: Launched DivDot<br />

• Dec, 2019: Closed initial pre-seed round at $146,000<br />

• Feb, <strong>2020</strong>: Launched sending money feature<br />

• March, <strong>2020</strong>: Douglas Magazine Award “Ten To Watch”<br />

• June, <strong>2020</strong>: Oversubscribed funding round to $500,000<br />

• August, <strong>2020</strong>: New Ventures BC top-10 finalist<br />

• October, <strong>2020</strong>: Processed $17 M with over 145 businesses<br />

• Next fundraising round (Seed round): Spring 2021<br />

Matthew Smith<br />

CEO and Co-Founder, MazumaGo<br />

74


75


MAKING<br />

BUSINESS<br />

PAYMENTS<br />

MOVE.<br />

Unleashing $1.5 trillion in productivity for<br />

small business<br />

It is hard to believe that, in 2018, over 15 billion<br />

cheques were processed in Canada and the<br />

United States alone. That equals to 41 million<br />

cheques every single day. How is that possible<br />

in our digital world, where the news is read on<br />

tablets, birthday wishes are made through<br />

Facebook, and groceries are ordered online?<br />

And why is the North American payments<br />

system so far behind when most European<br />

countries abandoned the paper cheque years<br />

ago?<br />

One of the main factors is the huge gap<br />

between consumer payments and commercial<br />

transactions. Over the past decade, consumers<br />

have consistently adopted digital payment<br />

methods, like Interac eTransfer or Venmo in<br />

the U.S.. The business payments environment<br />

however, is lagging behind drastically. Indeed,<br />

paper cheques remain still the most commonly<br />

used payment method for commercial<br />

transactions.<br />

It is no secret that manual processes and<br />

paperwork are causing supply chain friction,<br />

inefficiency, and revenue losses. What most<br />

people don’t know is that it’s small-to-medium<br />

sized businesses that carry the weight of this<br />

outdated payments system.<br />

Consider the number of cheques processed<br />

compared to the processing volume of cheque<br />

transactions. While the number of cheques<br />

has steadily declined over the past years,<br />

the average transaction size of a cheque has<br />

gone up—indicating that businesses still see<br />

value in these payment types for high-value<br />

transactions.<br />

It is fair to say the absence of a convenient<br />

electronic alternative to process large<br />

payments is the biggest obstacle to the total<br />

elimination of the cheque in North America.<br />

Transaction limits and percentage charges<br />

are barriers of current digital alternatives that<br />

hold back businesses from moving away from<br />

the cheques.<br />

TRUSTED AND REGULATED ACROSS CANADA<br />

Matthew Smith, CEO & Co-Founder of Victoriabased<br />

<strong>Fintech</strong> start-up MazumaGo discovered<br />

this gap in the market through the evolution<br />

of his previous business idea: a credit card<br />

processing software.<br />

When we launched the credit<br />

card tool, our customers kept<br />

saying that they didn’t want<br />

to pay a percentage of their<br />

transaction’s value in fees. Then<br />

we tried to think of a way to get<br />

around using credit cards.<br />

Businesses incur over $2.7 trillion in B2B<br />

administrative costs—80% of which is paid<br />

by small businesses. While it is particularly<br />

challenging for smaller companies to make<br />

the shift from paper to digital, this is the sector<br />

where it matters most. A recent Goldman<br />

Sachs study suggests the net result of B2B<br />

payments innovation will unleash $1.5 trillion<br />

in productivity for global small business.<br />

Smith and his two Co-Founders, Nick Addison<br />

(CTO) and James Davidson (COO), solved this<br />

problem by building a payments processing<br />

software that enables businesses to send and<br />

receive no-limit payments for a flat fee. With<br />

MazumaGo, they combined the simplicity of an<br />

eTransfer with the robustness of the banking<br />

rails.<br />

76


Payments are processed through secure ACH<br />

transactions, which can easily be initiated and<br />

tracked online through a simple dashboard.<br />

They started by solving payment pain points<br />

specifically for small construction businesses<br />

and then created solutions which would be<br />

accessible for businesses of every size and<br />

industry.<br />

The company launched in September 2019<br />

under the brand DivDot, and was recently<br />

rebranded as MazumaGo. The word Mazuma<br />

is Yiddish for money, also known as a slang<br />

word for Cash. Following the tagline, “Make<br />

business payments move”—the company’s<br />

vision is to eliminate any reasons why<br />

businesses would want to use cheques and to<br />

build a simple, secure network for businesses<br />

to exchange funds.<br />

– 5+ admin hours saved/month<br />

– 10 days faster receivables<br />

– Candace Hobin, Community Manager,<br />

Rhino Ventures:<br />

Rhino Ventures is a Venture Capital firm<br />

based out of Vancouver, B.C., that invests<br />

in early stage tech companies. As the<br />

Community Manager, Candace is in charge<br />

of fund operations behind the scenes of<br />

investments and capital calls.<br />

– “The fact that you can’t actually make a<br />

quick online transfer through the bank is<br />

really frustrating, so I definitely welcome<br />

MazumaGo with open arms. It’s great to<br />

use, super simple, and the way banking<br />

should be.”<br />

– 1 hour faster than a cheque<br />

– Up to $45 savings per transaction<br />

FINTECH DRAFT<br />

Over the first year, the company has seen<br />

significant growth, not least on account of the<br />

global pandemic. For many organizations and<br />

especially small businesses, office closures<br />

and remote working mandates created<br />

an uncomfortable wakeup call. Under the<br />

pressure of staying alive, businesses that still<br />

relied on manual, paper-based processes,<br />

needed to quickly adopt digital ways of<br />

processing funds. MazumaGo offers them<br />

an easy solution to digitize payments without<br />

expensive transformation costs. After all,<br />

the lack of a better solution for businesses<br />

to process payments has long existed, the<br />

changing business environment only brought<br />

it to light.<br />

Here are a few insights into customers’ stories<br />

of how MazumaGo helped them move away<br />

from archaic, inefficient payments processes:<br />

– Dave Philips, Business Operations<br />

Manager, NZ Builders:<br />

NZ Builder specializes in building high<br />

performance, energy efficient homes and<br />

Dave is the man in charge of sending and<br />

receiving high-value payments to keep<br />

everyone happy.<br />

– “If you boil it down, MazumaGo is the<br />

ability to do a massive eTransfer without<br />

the limits. And since it goes through the<br />

BMO security platform, that alone should<br />

make people feel comfortable. The option<br />

to send payment links through your own<br />

direct email adds a level of trust too.”<br />

– Dylan Touhey, Co-Founder, OneNet<br />

Marketing Inc.:<br />

OneNet Marketing Inc. is a digital marketing<br />

agency that helps technology companies<br />

acquire new customers. Co-Founder Dylan<br />

Touhey works with an internal team of<br />

marketing experts and uses MazumaGo to<br />

pay subcontractors.<br />

– “I used to waste hours standing in line at<br />

the bank, talking to tellers, painstakingly<br />

getting them to fill out wire transfer forms<br />

and making sure all the information is<br />

correct. It was a nightmare.”<br />

– 20 hours saved/month<br />

– 40% higher payment success rate<br />

About:<br />

Miriam Rader<br />

Marketing & Communications Manager<br />

MazumaGo<br />

MazumaGo is a Victoria-based <strong>Fintech</strong> company that enables<br />

businesses to securely send and receive no-limit payments<br />

for a flat fee. Founded by Matthew Smith (CEO), Nick Addison<br />

(CTO) and James Davidson (COO), the company launched<br />

in September 2019 and is now a registered money services<br />

business, processing millions of dollars in transactions for<br />

Canadian businesses every month. For more information, visit<br />

mazumago.com<br />

77


SENSO.AI<br />

LIVE PITCHING FINALIST<br />

Target <strong>Issue</strong>:<br />

Financial Institutions/Lenders are facing<br />

declining margins in loan portfolios from<br />

market factors including increased competition<br />

from non-traditional lenders and consumer<br />

preference for a “personalized” experience<br />

leading to higher customer churn. Additionally,<br />

lenders are in an unpredictable interest rate<br />

environment with limited access to real-time<br />

data due to legacy systems, which limit their<br />

ability to offer the best solution to customers.<br />

Core Benefits:<br />

Senso embeds predictive revenue intelligence<br />

into lender operations to optimize loan portfolio<br />

retention, acquisition, and product cross sell.<br />

Enable Lenders to:<br />

• Build enhanced communication strategies<br />

• Reprice and target portfolio clients<br />

proactively<br />

• Maximize profitability and client satisfaction<br />

• Protect and generate topline revenue<br />

• Develop personalized marketing<br />

campaigns<br />

Ideal Customers:<br />

Businesses (B2B)<br />

Milestones:<br />

• Technology proven with large Canadian<br />

bank<br />

• Technology in production across multiple<br />

Canadian clients<br />

• Access to historical, market-wide data for<br />

all consumers<br />

• Distribution channels provide access to<br />

100% of the market<br />

• Partnerships are being expanded globally<br />

Saroop Bharwani<br />

Founder and Chief Executive Officer<br />

Senso.ai<br />

78


FUNDMORE.AI<br />

LIVE PITCHING FINALIST<br />

FINTECH DRAFT<br />

Target <strong>Issue</strong>:<br />

Currently, it takes more than 40 days to<br />

fund a mortgage, costing more than $9000.<br />

Nearly 70% of all mortgage applications are at<br />

least in part fraudulent, according to a study<br />

completed by Home Capital and Equifax in<br />

2018.<br />

Core Benefits:<br />

The fundmore.ai platform allows lenders<br />

to assess many sources of data, helping<br />

them identify viable mortgages that carry<br />

less risk and have a greater opportunity for<br />

profit. This enhanced efficiency will improve<br />

lenders’ response times, decrease costs,<br />

increase their underwriting capacity, and<br />

reduce human error by automating a timeconsuming<br />

manual process. FundMore offers<br />

this as an underwriting service and through<br />

our FundMore platform.<br />

Ideal Customers:<br />

Businesses (B2B), Alternative Lenders, Private<br />

Lenders, Credit Union and Loan Origination<br />

Platforms.<br />

Milestones:<br />

1. Use of product by pilot customers<br />

2. Introduction of the FundMore Score<br />

3. Participation in CDL (Creative Destruction<br />

Labs) programs<br />

4. Finalization of Pre-Seed funding round<br />

5. Launch of product with channel partner<br />

About:<br />

Chris Grimes<br />

CEO & Co-Founder<br />

FundMore.ai<br />

Chris Grimes has over 15 years of experience in the mortgage<br />

and lending space. Seeing an opportunity to automate many<br />

of the tasks within his company LoanDesk.ca, he realized that<br />

he could build a great aggregation tool that leveraged artificial<br />

intelligence and provide a full end-to-end lending platform.<br />

79


WALO<br />

LIVE PITCHING FINALIST<br />

Target <strong>Issue</strong>:<br />

Canadians are struggling with their finances:<br />

– 1 in 2 are $200 away from insolvency<br />

– 1 in 3 don’t earn enough to cover their bills<br />

A young Canadian who enjoyed financial<br />

education is 3 times more likely to spend less<br />

than they earn, save more and borrow less.<br />

There’s an opportunity to better prepare kids<br />

for a healthier financial future by teaching<br />

them about money early on.<br />

Core Benefits:<br />

The WALO mobile app teaches teens how to<br />

manage money through a simple, convenient<br />

and fun financial education tool using real<br />

money. The app also sparks the money<br />

conversation and empowers parents to get<br />

their kids on the path to financial autonomy<br />

and raise them to become money-savvy<br />

young adults. Key features include spending<br />

analysis, goals-based savings, connected<br />

accounts, and coins & rewards.<br />

Ideal Customers:<br />

Consumers (B2B2C)<br />

Milestones:<br />

• Joined the Desjardins Startup-in-residence<br />

program<br />

• Finalist at the National Bank innovation<br />

competition<br />

• Raised $250k preseed<br />

• Released our BETA app<br />

• In discussion with several financial<br />

institutions<br />

Rim Charkani<br />

Co-Founder & CEO<br />

WALO<br />

80


TRUST ANCHOR<br />

GROUP<br />

LIVE PITCHING FINALIST<br />

FINTECH DRAFT<br />

Target <strong>Issue</strong>:<br />

Modern infrastructure, digitalization<br />

and fast connectivity has made cars,<br />

buildings, factories, and homes smarter<br />

and smarter. This has led to increased<br />

costs for protection against cyber-crime,<br />

city infrastructure being held hostage for<br />

ransom, identity theft, monetary fraud, and<br />

data breaches.<br />

Core Benefits:<br />

Trust Anchor Group helps smart cities, smart<br />

industries, smart mobility companies, eHealth<br />

providers and smart home companies to<br />

optimize their business by helping them to<br />

monetize their existing and new infrastructure<br />

and by providing a smart life operating system<br />

that includes cyber secure digital identity,<br />

interoperable real-time connectivity, secure<br />

data storage, edge AI and smart payments as<br />

a service.<br />

Ideal Customers:<br />

Customers (B2B)<br />

Milestones:<br />

• Enrolled in IBM Startup program and<br />

Microsoft for Startups program<br />

• Member of IBM Partner World and<br />

Microsoft Partner program<br />

• Selected into Elevate 2030, part of<br />

Urban ICT Arena and the EU Regional<br />

Development Fund<br />

• Delivering smart payment services and<br />

digital identity solutions in South America<br />

• Beta launch with customers in 7 countries<br />

• Selected Smart City Partner in Sweden<br />

and Brazil<br />

Tommy Andorff<br />

Co-founder and COO<br />

Trust Anchor Group<br />

81


CYCLEBIT<br />

LIVE DEMO FINALIST<br />

Target <strong>Issue</strong>:<br />

Cyclebit provides simple, affordable, and<br />

robust tools for retailers to accept digital<br />

currencies for in-store, online and on-thego<br />

purchases. A global company currently<br />

operating in Canada, the USA, Europe, and SE<br />

Asia.<br />

An all-in-one payment gateway for Fiat<br />

and Cryptocurrency transactions which<br />

supports over 20 of the most popular<br />

cryptocurrencies including BTC, ETH,<br />

LTC, BCH, and more. Additional products<br />

include a Merchant Dashboard and the<br />

My Cycle Card. https://www.cyclebit.io/<br />

Ideal Customers:<br />

Businesses (B2B)<br />

Milestones:<br />

• Launching products and services in<br />

Canada<br />

• Pilot program in USA<br />

• Launch products and services in<br />

Thailand<br />

Core Benefits:<br />

• Universal accessibility and borderless<br />

• No intermediation fees at the point of<br />

transaction<br />

• A high level of privacy, faster settlement<br />

period<br />

• 0% transaction fees for all cryptocurrency<br />

transaction<br />

• Video: https://youtu.be/aLNqNiO4_yA<br />

Sameer Pirani<br />

CEO<br />

Cyclebit<br />

82


CORL<br />

FINTECH DRAFT<br />

LIVE DEMO FINALIST<br />

Target <strong>Issue</strong>:<br />

There is an $850 billion funding deficit for startups<br />

and small businesses in North America that<br />

is currently not being met by angel investment,<br />

venture capital, alternative lending, or traditional<br />

banking. Corl has identified that this market can be<br />

served by a hybrid of debt and equity. Revenuesharing<br />

investments provide a mechanism<br />

for capital raising, without the burdensome<br />

contractual terms of traditional debt, or the high<br />

cost and controlling nature of equity.<br />

Core Benefits:<br />

Corl Financial Technologies Inc. provides<br />

Capital-as-as-Service (“CaaS”) to startups and<br />

small businesses. The Corl platform is datadriven,<br />

scalable, and uses machine learning to<br />

identify value across high-growth sectors. Core<br />

to our approach is leveraging financial, banking,<br />

social, and customer data to provide founderfriendly<br />

growth capital to help entrepreneurs<br />

and investors reach their strategic financial<br />

objectives. With Corl’s proprietary data,<br />

methods, and machine learning algorithms,<br />

the Company is able to identify asset-light and<br />

revenue-heavy businesses underserved by<br />

traditional investors.<br />

Ideal Customers:<br />

Businesses (B2B) looking for funding or<br />

businesses (B2B) looking to deploy capital.<br />

Milestones:<br />

• Raised $2 million seed round<br />

• Launched Railz.ai (Real-Time Accounting<br />

API), Corl Financial Investments Inc. (Corl’s<br />

royalty portfolio) and signed contract with<br />

the Government of Canada to deploy<br />

fintech-driven loans to Women-owned<br />

and Women-led businesses across<br />

Ontario and launched Corl Financial<br />

Investments Inc. (Corl’s royalty portfolio).<br />

• Launching DeFi royalty portfolio with<br />

Fortuna.ai<br />

Ben Ames<br />

Designation<br />

Corl<br />

83


84


<strong>2020</strong><br />

FINTECH<br />

DRAFT<br />

SHORTLISTED<br />

Migrations.ml<br />

Migrations.ml helps asset managers increase<br />

their returns and avoid losses in the bond<br />

market. Using machine learning, it enables<br />

researchers, traders and portfolio managers<br />

to analyze more bonds, make decisions faster<br />

and get more precise analytics.<br />

Location: Toronto<br />

Year Founded: 2019<br />

Vertical: Capital markets / Decentralized<br />

Finance / Crowdfinance<br />

Employees: 1 – 10<br />

Website: migrations.ml<br />

Engaiz<br />

ENGAIZ has developed an AI-Driven SaaS<br />

platform to help enterprises mitigate Third-<br />

Party Risks such as Cybersecurity, Data<br />

Privacy, Regulatory through an effective<br />

Governance and Engagement framework.<br />

Location: Toronto<br />

Year Founded: 2019<br />

Vertical: Third-Party Governance & Risk<br />

Management<br />

Employees: 1 – 10<br />

Website: engaiz.com<br />

FINTECH DRAFT<br />

Finally<br />

Finally is a DIY Financial Planning Simulator<br />

that allows users to create a free financial<br />

plan in less than 20 minutes, and understand<br />

the products and providers that can help you<br />

reach your goals faster.<br />

Location: Toronto<br />

Year Founded: 2019<br />

Vertical: Personal Finance<br />

Employees: 1 – 10<br />

Website: myfinally.com<br />

RAILZ<br />

Railz provides a single API that integrates<br />

with the majority of accounting software<br />

service providers used by small businesses.<br />

They provide quick, low cost and direct<br />

access to both existing and new customers’<br />

accounting software systems and are solving<br />

the traditional challenges the Small Business<br />

lending market has seen for years with<br />

respect to time, cost and risk.<br />

Location: Toronto<br />

Year Founded: <strong>2020</strong><br />

Vertical: Lending / Borrowing<br />

Employees: 11 – 50<br />

Website: Railz.ai<br />

85


Knnct<br />

knnct’s robust P2P platform for brokers &<br />

lenders lets them get mortgage deals done<br />

quicker and easier. Brokers create a digital<br />

mortgage application, post their deal and then<br />

knnct filters & matches the deal with lenders<br />

whose lending criteria matches the deal &<br />

have access to all compliance docs.<br />

Location: Toronto<br />

Year Founded: 2018<br />

Vertical: Lending / Borrowing<br />

Employees: 1 – 10<br />

Website: knnct.com<br />

Sentro<br />

The challenge for group insurers is<br />

administrative complexity. Sentro tailor<br />

plans for every customer. But they try do<br />

it with legacy technology that holds them<br />

back. Sentro lets group insurers offer their<br />

customers and partners choice and flexibility,<br />

in a highly efficient way.<br />

Location: Auckland, NZ<br />

Year Founded: 2019<br />

Vertical: Insurtech<br />

Employees: 1 – 10<br />

Website: Sentro.co<br />

Lagoon<br />

Lagoon empowers investment professionals<br />

in capital markets with data science tools,<br />

without the need to write a single line of code.<br />

The platform places the human at the center<br />

(HITL), allowing the user to customize and<br />

control metrics to generate explainable, datadriven<br />

insights.<br />

Location: Tel Aviv<br />

Year Founded: <strong>2020</strong><br />

Vertical: Digital Banking / Analytics /<br />

Infrastructure<br />

Employees: 1 – 10<br />

Website: www.data-lagoon.com/<br />

Bitvo<br />

Established in 2018, Bitvo is a cryptocurrency<br />

exchange that facilitates buying, selling and<br />

trading cryptocurrencies through its best-inclass<br />

website and mobile applications. Bitvo<br />

offers seven different cryptocurrencies, including<br />

Bitcoin, Ether, XRP, Bitcoin Cash, Litecoin, Dash,<br />

Ethereum Classic and QCAD, Canada’s first<br />

stable coin designed for the mass market.<br />

Location: Toronto, Calgary<br />

Year Founded: 2017<br />

Vertical: Blockchain / Digital Assets /<br />

Cryptocurrency<br />

Employees: 1 – 10<br />

Website: bitvo.com<br />

Kaira Technologies<br />

Their mission is to help people take charge<br />

of managing their personal finances to help<br />

them achieve financial well-being. Kaira’s<br />

Financial Wellness Coach comes in the<br />

form of a mobile, it gives personalized and<br />

proactive advice to relevant events with the<br />

aim of achieving Financial Wellness.<br />

Location: Boucherville, QC<br />

Year Founded: 2018<br />

Vertical: Personal Finance<br />

Employees: 1 – 10<br />

Website: Kaira.ai<br />

Moves<br />

Moves is a financial services platform for<br />

independent “gig” workers. Overlooked or<br />

ineligible for products offered by traditional<br />

financial institutions, this rapidly expanding<br />

demographic needs modern financial<br />

products designed to support them on their<br />

paths to career fulfillment.<br />

Location: Toronto<br />

Year Founded: <strong>2020</strong><br />

Vertical: Personal Finance<br />

Employees: 1 – 10<br />

Website: Movesfinancial.com<br />

86


Finnovate.io<br />

Finnovate.io has established itself as a<br />

trusted software development partner in the<br />

Canadian <strong>Fintech</strong> ecosystem through a wide<br />

variety of leading edge projects. Working<br />

with companies of all sizes, from start-ups<br />

to Canada’s largest banks, Finnovate.io has<br />

repeatedly demonstrated an ability to provide<br />

technical support and expertise in all stages<br />

of product development.<br />

Location: Toronto<br />

Year Founded: 2017<br />

Vertical: Software Development for <strong>Fintech</strong><br />

Employees: 11 – 50<br />

Website: finnovate.io<br />

Numoola<br />

NuMoola is the industry’s first family-focused<br />

consumer banking app that uses real money,<br />

gamified education, and the family network<br />

to teach kids (and parents!) about managing<br />

money, missions, and budgets. The NuMoola<br />

App focuses on family togetherness by<br />

encouraging family goal setting and initiating<br />

conversations about money management.<br />

Location: Pittsburgh, PA<br />

Year Founded: 2017<br />

Vertical: EdTech<br />

Employees: 1 – 10<br />

Website: numoola.com<br />

FINTECH DRAFT<br />

Fidectus<br />

Fidectus automates post-deal processing<br />

in energy trading. They connect market<br />

participants and optimize their working capital.<br />

Their clients optimize their working capital<br />

while benefiting of highest resilience and ROI.<br />

Location: Zürich<br />

Year Founded: <strong>2020</strong><br />

Vertical: Finance / Accounting<br />

Employees: 1 – 10<br />

Website: Fidectus.com<br />

Balance<br />

Balance offers an insured institutional grade<br />

digital asset custody and wallet management<br />

solution to crypto exchanges, OTC desks, and<br />

funds. Assets are kept secure in geographically<br />

distributed offline vaults on dedicated, military<br />

grade hardware.<br />

Location: Toronto<br />

Year Founded: 2017<br />

Vertical: Blockchain / Digital Assets /<br />

Cryptocurrency<br />

Employees: 1- 10<br />

Website: balance.ca<br />

Arbor<br />

Powered by unbiased AI data aggregation,<br />

Arbor is a social spending platform that<br />

educates consumers on the impact of<br />

their spending. Arbor empowers everyday<br />

consumers like you, to make informed<br />

decisions about where and how you spend<br />

your hard-earned dollars.<br />

Location: Calgary<br />

Year Founded: 2019<br />

Vertical: Digital Banking / Analytics /<br />

Infrastructure<br />

Employees: 1 – 10<br />

Website: yourarbor.com<br />

VIEW PROFILES<br />

87


Thanks to our valued industry partners, innovators and leaders<br />

<strong>NCFA</strong> is grateful to and recognizes the following industry partners/sponsors for their<br />

support and commitment to <strong>NCFA</strong> Canada’s mandate to develop Canada into a world<br />

class fintech, blockchain, P2P, crowdfunding, alternative finance and innovation finance<br />

centre by providing education and research, advocacy and networking opportunities in<br />

the rapidly evolving <strong>Fintech</strong> & Funding industry.<br />

88


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PARTICIPATION<br />

COLLABORATION & IMPACT<br />

CONFERENCE THEMES<br />

o<br />

o<br />

o<br />

o<br />

o<br />

o<br />

8 Week Virtual Conference<br />

500+ Attendees<br />

100+ Speakers<br />

60+ Sessions<br />

8 Pitching & Demo Finalists<br />

2 Challenges<br />

o 17 Event sponsors + 7 Industry collaborators +<br />

50 Community partners<br />

o COVID Updates & Resilience<br />

o Launches, Demos & Announcements<br />

o Partnerships + Investment<br />

o Diversity + Inclusiveness<br />

o<br />

o<br />

o<br />

o<br />

o<br />

o<br />

o<br />

Scaling <strong>Fintech</strong> Funding, Innovation and Competition<br />

Open Finance and Future of Paytech<br />

Sustainable Finance<br />

Leadership, Adaptability & Culture<br />

Digital Identity and Blockchain<br />

Currency Wars, Digital Assets & Rise of DeFi<br />

Artificial Intelligence in <strong>Fintech</strong><br />

“You cannot discover new oceans unless you have the courage<br />

to lose sight of the shore.” – Andre Gide

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