NCFA Fintech Confidential December 2020 (Issue 3)

ncfaglobal

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.

INSIDER VIEWS, INNOVATION AND BEST PRACTICES

VOL. 1, ISSUE 3 | DECEMBER 2020

FEATURED

The Good, the Bad and

the Ugly of Central Bank

Digital Coins (CBDCs)

CREATING

SUSTAINABLE WEALTH

Through Digital Finance

LEADERSHIP AND CULTURE

Tale of Two Doors

SEC VOTES TO APPROVE

Changes to Regulation

Crowdfunding: Increasing

Max Raise to $5 million

IS CANADA ON

THE VERGE OF

OPEN BANKING?

PLUS: 2020 FINTECH DRAFT

FFCON20 PITCHING &

DEMO WINNERS

FINALIST PROFILES

CANADIAN FINTECH

DIRECTORY

FINALIST PROFILES: SolidBlock, MazumaGo,

Senso.AI, FundMore.AI, Walo, Trust Anchor

Group, Cyclebit, Corl

Cover: Paul Schulte, Schulte Research

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

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


Dear Global Fintech & Funding Communities,

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.

Despite a challenging year for many, the fintech industry continues to demonstrate its resilience,

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

benefit millions of consumers, small businesses, and the economy. As covid accelerates the

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

to work on supportive solutions from mobilizing low-cost capital campaigns to personal finance

apps that help users better manage their finances, spending, savings, and investment habits.

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

governments and industry work to collaborate on overhauling Canada’s digital infrastructure,

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

round of open banking consultations that were delayed due to the pandemic were suddenly

announced in November with many organizations, fintechs and incumbent banks coming

together to discuss the scope, governance, implementation, and accreditation of a made

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

interests while looking globally for insights to implement a principles-based, inclusive, broadscoped

and competitive framework as swiftly as possible.

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.

All the best

Craig Asano

Founder and CEO

NCFA


TABLE OF CONTENTS

FEATURED

01 05 08 12 16

THE GOOD,

THE BAD AND THE

UGLY OF CENTRAL

BANK DIGITAL

COINS (CBDCS)

IS CANADA ON

THE VERGE OF

OPEN BANKING?

SEC VOTES TO

APPROVE CHANGES

TO REGULATION

CROWDFUNDING

INCREASING THE

MAXIMUM RAISE TO

$5 MILLION

FUTURE OF

CRYPTO MARKET

INFRASTRUCTURE:

THE ROLE OF

CUSTODIANS AND

EXCHANGES

CREATING

SUSTAINABLE

WEALTH

THROUGH

DIGITAL

FINANCE

INSIDER VIEWS

19

FROM GLOBAL LEADER

TO FOLLOWER, IS CANADA

LOSING ITS FINTECH EDGE?

24

HERE IS WHY INSURTECH IS

HEATING UP AS AN

INVESTMENT CATEGORY

22

HAS FINTECH

MADE BANKING

BETTER?

28

THE OSC’S NEW INNOVATION

CHARTER: IS THIS REALLY A

‘NEW MODEL’?

30

AS FINANCIAL INSTITUTIONS

BUY INTO AI, THESE FACTORS

WILL BE KEY TO SUCCESSFUL

TRANSFORMATIONS

CULTURE

32

34

36

38

BUSINESSES COMPETING ON SOCIAL

VALUES USE FINTECH TO GAIN AN EDGE

TALE OF TWO

DOORS

3 HUMAN- CENTRIC PRACTICES TO BECOME

A BETTER AI FINTECH LEADER

GEN Z: THE END OF STATUS

QUO BANKING?

IN FOCUS

40

42

44

46

48

HOW BANKS, FINTECHS, AND CUSTOMERS

WIN TOGETHER

PRICE DISCOVERY IN DIGITAL CURRENCIES

IS MATURING

WHY IS AI REQUIRED FOR THE

FUTURE OF MORTGAGE LENDING?

CASE STUDY: TRANSFORMING A GLOBAL

SAAS BUSINESS WITH DATA & AUTOMATION

WHAT THE HECK IS SSI?

(SELF- SOVEREIGN IDENTITY)

TRENDING

50

56

58

65

QR CODES THE TECH THAT CHANGED CHINA

IS COMING CLOSER TO HOME

FINTECH IN

ATLANTIC CANADA

THE RISE IN BIG TECH AND FINTECH

CREDIT

CATCHING THE WAVE: CAPITALIZE ON NEW

OPPORTUNITIES IN PRIVATE PLACEMENTS

2020 FINTECH DRAFT

70

74

78

88

89

PITCHING WINNER:

SOLIDBLOCK

DEMO WINNER:

MAZUMAGO

FINALIST AND SHORTLISTED

PROFILES

FFCON20

PARTNERS & IMPACT

FINTECHCANADA.IO

FREE LISTING & SOCIAL NETWORK


iv


THE GOOD,

THE BAD AND

THE UGLY

OF CENTRAL

BANK DIGITAL

COINS (CBDCS)

FEATURED

The good: inclusion, provenance and bank

cleanup

It is becoming clear to anyone with a window

in their office that blockchain is now (finally!)

emerging as a viable and pivotal technology.

It was a long time coming and, as with all

new technologies, the actual use case is far

different from anything envisaged during its

inception. The main drivers in the development

of distributed ledger technology are central

banks. And they do, in fact, see great benefits

to Blockchain technology. These benefits

include...

• Independent identification and verification.

The establishment of an identity confers

ownership. Shockingly still, more than 1

billion people in the world do not have a

conferred legal identity and about 2 billion

have no financial history.

• This creates provenance for everything:

ideas, people’s bodies, property, data,

relationships, and so much more we

cannot conceptualize now.

• The provenance constructs a whole new

understanding of collateral and establishes

the capacity to borrow against assets

which, heretofore, were an uncounted

part of human experience. This includes

millions of hectares of agricultural land,

millions of homes, and 2 billion people

who are not in the banking system.

• Blockchain, thus, guarantees mass

inclusion — once provenance is

established, everyone’s land, ideas, and

homes become protected assets that can

be borrowed against.

• Finally, once newly empowered and

financially integrated people start

businesses, blockchain technology

offers them smart and cheap contracts;

expensive and business-killing middlemen

are eliminated.

• Whole new types of financial opportunities

emerge and a new class of entrepreneurs

is born, creating prosperity for millions of

families and their communities.

There is another more subtle and complex

— yet utterly simple — dynamic at play here.

I have heard it from too many separate and

independent corners of the investment

community for it to be hearsay. The banks in

the US, Europe, Middle East, and China are a

mess. They need to be cleaned up after a 20-

1


year Supercycle of mad lending. What if there

is a plan afoot to roll out a new form of M1 in

the form of digital coins from The Central Bank

directly to the e-wallets of accredited entities

or directly to people’s accounts so as to

bypass banks altogether? What purpose does

this serve? It redirects the deposit liabilities of

banks directly into people’s accounts in order

to give those same banks time to deal with

their bad debt. In effect, digital coins will act as

a “ring-fence,” turning banks into a large scale

“asset management company” to clean up

balance sheets. Incidentally, don’t expect the

banks to sit by idly as they will want a piece of

the “central bank crypto action.”

In the meantime, the economy can function

with digital money distributed directly to

citizens. Digital coins, in effect, become a

substitute bank credit. Easing the pressure

on bad debt and ensuring that bad banks

can’t paralyze national economies. Ideally,

it is done slow enough so as not to put too

much pressure on asset prices. We need to

pay attention to how central bank coins (let’s

call it M1-b money) replace paper money and

what financial applications (the new rails) are

used to distribute M1-b directly to consumers.

I contend that the chatter distinguishing

wholesale and retail distribution will become

irrelevant as the global banking system

morphs from a fractional reserve system run

by banks to a full reserve system run by a

group of tech companies who manage the

‘electronic rails’ and ‘train stations’ by which

the money flows from the government to the

citizen.

The Bad: conflicts of interest and political

blocs

Now we get to the bad stuff. What I see

playing out before my eyes is a general

rebellion against the dollar. There is a growing

global perception that the US hegemony has

morphed from an enlightened Pax Americana

to a hypocritical bully-ana; DC has been

weaponizing sanctions (or outright invasion)

“willy nilly” to punish countries who dare to

question the dollar’s supremacy. I attended a

European Central Bank Zoom conference last

week and was alarmed to hear that CBDC now

carries intellectual baggage of regionalism

and “currency bloc” thinking. There is certainly

a sense of FOMO (fear of missing out) as the

Eurozone confronts its lack of an alternative

to Libra and BSN. That’s fair. But the optimistic

tenor of the discussion belies a confused

attempt to create a CDBC Frankenstein’s

monster to satisfy 18-19 countries (is it “Eurofirst”

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

we’ll call you” attitude when it comes to the

creation.

At the same time, I was alarmed to hear

about BUNA, the newest FOMO iteration of

a CBDC in the Gulf States. When pressed

by interlocutors about why the Gulf States

needed their own CBDC, the argument boiled

down to sanctions. I am getting the sense

that the CBDC’s elephant in the room is that

each national bloc wants to be able to impose

its OWN sanctions on its OWN perceived

adversaries. They do not want someone

else to impose sanctions on them, ie Uncle

Sam. So, we have a world which is morphing

into four blocks: Libra in the US; a manyheaded-hydra

in Euroland; BUNA in the Gulf

countries; and BSN in Asia. Incidentally, there

was a massive pushback to Libra among the

European central bank folks. A representative

from the Deutsche Bundesbank was

especially unflattering about Libra: “We might

give it a look sometime in 2025.” OUCH!

Second, the “bad” part of CBDC is the practical

realization that central banks are, by nature,

very conservative organizations. The joke

goes that if you need a heart transplant, get

one from a central banker because it has never

been used. The slowness and institutional

absence of imagination, technological or

otherwise, means that a private sector partner

is vital. Public-private partnerships are crucial

to kickstart the process. Someone has to build

the new digital rails! In the US, it seems that

Libra has been tapped on the shoulder. In

China, it is Red Date.

The Eurozone has the European Payments

Initiative which will use the existing technology

of 14 banks in 5 countries to build a private

rail system (what could possibly go wrong?).

For better or worse, the private sector is vital

to work alongside central banks in order to

create a speedy, flexible, and interoperable

system of payments. So far, Red Date is

further ahead than anyone. While Libra can

2


apidly create a system, there is still massive

resistance to Facebook operating inside other

countries as an “honest broker.” A company

like Master Card might be a better candidate,

but it seems that the political Rubicon has

been crossed and Libra has been tapped.

Lastly, there was a terrific presentation by a

very senior member of the Banque de France

on the politics of a digital coin. There is now

yet another elephant in the living room (it

seems that a herd of elephants is squeezing

CBDC from all sides). He was very clear about

the priorities of central banks when it comes

to new initiatives of any kind. ‘What is the

order of priorities?”, he asked? “First is politics.

Second is policy. Third is regulation. And

fourth is the functional solution.” I think this

explains why the evolution of agreed-upon

terminology is so problematic. It explains why

the functionality of the CBDC’s “rails and train

stations” is too elusive.

The reality is that politics and national policy

are far more important than the creation of

clever solutions to glaring problems. I have

learned that money and power are always at

the heart of fixing national problems. Find out

whose money and whose power is working

the levers behind the scenes and you will find

the solution. The regulators will also slavishly

follow this trend. For instance, all of Libra’s

senior leadership will be in Washington DC.

It will likely be located in Lafayette Square

across from the White House. The new

spokesperson has been hired from the

FDIC. The new CEO came from HSBC and

has a history as an undersecretary in the US

Government.

Follow these breadcrumbs. It’s a matter of

form over function. Investing with an eye

toward finding companies with the best

solutions rather than companies with the best

political instincts or connections might lead

one to pick the wrong horse. This is why

people may be grossly underestimating Libra.

The Ugly: Each CBDC bloc wants to

decide who is a terrorist & who is a money

launderer.

Now we get back to the point I made earlier

about The Euro Central bank conference

last week (Incidentally, not a single Asian

central banker was invited, even though it

had delegates from Canada, Mexico, Libra,

Bahamas, Sweden, Finland, and Middle

East. I have to add that the smartest guy

in the room was, I thought, Tim Lane from

the Bank of Canada). There was frequent

discussion of the need to regain control

over a sovereign state’s ability to impose

sanctions. Countries no longer want to play

the game of guessing who will be the new

best friend or enemy of the United States.

And they certainly do not want to find

themselves on the sanctions list.

If a country does land in the sanctions

swamp, it is essentially barred from SWIFT

and cannot transact in dollars. SWIFT is

NOT a ‘society’ in Belgium. It is controlled

by Politicians in DC and is executed through

5 banks in New York. The world has become

increasingly wary of this arrangement and

is seeking an alternative. Representatives

from BUNA, ECB, and BSN have all made

this same point loud and clear.

Second, countries also want to decide who

is a terrorist and who is a patriot. It is easy

to forget that the 56 “terrorists” who signed

the Declaration of Independence in 1776

were ordered to be hanged by Great Britain.

By 1781, they were hailed as patriots who

created a new country. (The US was not a

country until 1789 — it took 13 years to get

from rebellion to nationhood!). They say

that the difference between a patriot and a

traitor is a matter of timing.

Here we see the problem with dollar

sanctions. At any time given time, the US

gets to decide who is a terrorist and who is

a patriot. Many countries are still very young

and are in the painful and tawdry process of

nation-building and establishing a national

consensus. There is growing resentment

about the US’ ability to take a snapshot of

history and decide when nation-building

must cease and restart again. The US’ gross

history of international abuse ought not to

be forgotten either. The 20th century is filled

with the US overthrowing rightfully elected

Democrats and replacing them with tyrants:

Pinochet in Chile, the Shah in Iran, Arbenz in

Guatemala, and so many more.

FEATURED

3


Third, countries want to have the freedom to

decide who is a money launderer and who

is a tax evader. This sounds absurd. Hear

me out. Much of the clandestine activity

of intel agencies are very often carried out

with laundered money. Countries deem the

activities of their intel agencies as essential

to survival. If these activities are caught in a

trap of “laundering,” the funds can be frozen

by the US. Furthermore, some countries

reserve the right for political or national

security reasons to let some elites off the

hook when it comes to tax evasion, money

laundering, or hidden financial identities.

Why should politicians in DC get to decide

matters of sensitive national security of

other nations in a simplistic “good versus

evil” view of the world, especially when

recent history has shown these judgment

calls to be smeared with hypocrisy?

So, the CBDC debate rages on. Let’s not

think that it is solely about functionality or

the issues being addressed. Power, money,

and nation-building are first and foremost.

Regulation comes a distant second. And

problems being solved are, unfortunately,

last. The reason why the debate over

CBDC has the hallmarks of the fog-of-war

is because, as always, we’re having the

discussion upside down: the solutions come

last, politics come first. Welcome to the

world of financial realpolitik. It’s form over

function — political form trumps practical

function as these new digital rails are being

built.

About:

Paul Schulte

Founder and Managing Editor

Schulte Research

Paul Schulte is the Founder and Managing Editor of Shulte

Research based in Singapore. Paul’s roles in banking &

financial services in the past 30 years include equity & fixed

income research (buy & sell sides) in emerging markets.

4


IS

CANADA

ON THE

VERGE

OF OPEN

BANKING?

FEATURED

Open Banking is a global movement that

aims to return the ownership of financial data

to the consumer. In doing so, consumers

will have greater choice and access to

personalized products and services that will

enable them to achieve their financial goals.

Overall, Open Banking will be a catalyst for

innovation, transparency and competition

within financial services. Canada has now

entered phase two of its Open Banking

consultations with new Finance Minister

Chrystia Freeland in place. They will be

looking at ways to implement and adopt

measures in order to stay competitive in

the global financial sector. The industry

is starting to come together to help drive

Open Banking in many ways including a new

organization called the OBIC “Open Banking

Initiative Canada” a not for profit which exists

to lead the way in the development of a

market-driven framework for Canadian Open

Banking. OBIC will soon release their Open

Banking Manifesto as well as a 7-part FinTech

podcast series highlighting advantages

of open banking in the UK and challenges

currently faced by Canadian FinTech’s due to

lack of a clear road map.

Open Banking Will Be Important For Every

Player

Now, more than ever before, the need for

an Open Banking structure within Canada

has become even stronger. As Canadians

increasingly switch over to cashless payments,

the Canadian payment system will experience

mounting pressure. With Open Banking,

players such as the consumer, Banks and

FinTechs will be set up for success.

5


Consumers

Open Banking will provide Canadian

consumers with greater access to products

and services that will help to increase

productivity, education, and choice regarding

their financial options. This framework will

involve lower fees, tracking of consumer

habits, creating the ability to move funds

between banks, as well as introducing

greater variety in products and services.

Most importantly, Open Banking will allow

customers to take back their autonomy when

it comes to their data. Consumers can choose

what information is shared, when their data is

shared and for how long, as well as the power

to revoke access whenever they like.

Banks

This framework will allow banks to develop

partnerships with FinTechs, acquire new

customers, become more effective at cross

selling their products, and gain a deeper

understanding of their existing customer

base. Open Banking will also enable banks

to become more connected with consumers

and reduce fraud by obtaining enriched

data through APIs (Application Programming

Interface).

Fintech Companies

For FinTech companies, Open Banking will

play a key role in levelling the playing field

when it comes to getting secure access to

client data. Across the ecosystem, FinTechs

will be able to create innovative products

and services to meet the needs of Canadian

consumers. An Open Banking framework will

also allow FinTechs to gain access to real time

consented client data verses current screen

scraping techniques which are unregulated.

UK as a Global Leader

Through a combination of both market

actions and government legislation, the UK

has become a leading global power in Open

Banking as they launched in January 2018. By

providing both Data Sharing and Payments

Initiation to consumers, FinTechs and

other banks are able to provide enhanced

and personalized financial services. As an

example, using Payment Initiation Service

Providers (PISPs) has allowed UK consumers

to automate many recurring transactions in

their daily life while gaining (and maintaining)

higher security and privacy over their personal

information.

In terms of adoption, there are now 2 million

UK consumers using Open Banking. As of

October 2020, there were 200 third party

service providers and 76 account providers

with Open Banking regulations which

allows consumers additional choice and

drives competition. Along with its success

with consumers and industry stakeholders,

Open Banking will also make a significant

contribution to the UK’s economy. According

to an analysis from the Centre for Economics

& Business Research, Open Banking will

contribute an estimated $1.4 billion to the

UK’s GDP on an annual basis.

Other Global Leaders in Open

Banking

Australia

Australia has over 800 FinTechs and is set to

grow from $250M in 2015 to over $4B by the

end of 2020. Open Banking was introduced

nationwide in July 2020, enhancing

collaboration between FinTechs and banks,

and helping to accelerate growth. Traditional

institutions and FinTechs alike have seized on

the opportunity to build and offer innovative

products and services that develop new ways

to meet consumers need for more control,

flexibility and transparency. Although only in

its first phase, an Open Banking. Open Banking

framework has been attributed to the early

success of innovative business models and

stakeholder’s growth across Australia.

Singapore

As one of the global leaders in Open Banking,

Singapore’s success is based on its ideal

digital ecosystem for FinTech’s as well as

the adoption of APIs. Today, at least 50

financial institutions and 140 FinTech’s rely

on Singapore’s Open Banking framework. In

2020, 89% of Singaporean banks reported

that increased collaboration with FinTechs

has increased growth and efficiency. Today,

6


oth traditional players and market disrupters

are leveraging Open Banking to deliver

innovative products for consumers in spaces

such as mobile banking and AI.

Where Canada Stands On The Global

Stage

Canada has fallen far behind the global

adoption of Open Banking which is hindering

our FinTech investments as well as our longterm

growth. Although the use of FinTechs has

grown from 18% to 50% since 2017, Canada has

not decided when or if Open Banking will come

to Canada. We are hopeful for progress in

Canada as the Federal Government is holding

its second phase of consultations in December

2020 on the merits of Open Banking.

This phase will determine how regulators and

the financial players can assess and mitigate

data security and privacy risks associated

with open banking. Another great sign is the

Digital Charter Implementation Act, 2020

was announced by the honourable Navdeep

Bains, Minister of innovation, science and

economic development Nov 19th that will

advances the Digital Charter and its 10

principles. Canada has the opportunity to learn

from other countries mistake and challenges

as we build our framework for the future of

finance in Canada, which can drive additional

investments from VC’s and stronger GDP.

This technology, and other solutions that

leverage an Open Banking framework, would

have been invaluable to Canadian consumers

when accessing CERB and CEWS funds

from the Federal Government. Further, the

Canadian launch plan for a Real-Time Rail

(RTR) payments system will create additional

benefits and synergies with Open Banking

as Canadian consumers and FinTechs will

be able to access faster and more efficient

transactions.

Moving Forward

As Canada moves forward, an Open Banking

structure will play an important role in

encouraging innovation, transparency, as well

as increasing our competitiveness on the

global stage. To learn more about Canada’s

Open Banking initiative, check out OBIC’s

Web Series on Open Banking.

FEATURED

The Importance of Open Banking During A

Pandemic

The global pandemic has not only accelerated

the shift to virtual delivery for many services

across industries and sectors, but it has

also forced business closures and multiple

lockdowns on everyday life. In the midst of a

turbulent economy, the benefits of adopting

Open Banking are ever-so important. Open

banking can benefit small and medium-sized

businesses, as well as individuals, by allowing

them to access more useful and informative

financial products and services related to

bookkeeping, budgeting, investing, and

lending. Proving this, within 48 hours, a team

of UK’s Fintech community built a working

proof of concept that allows self-employed

workers to self-certify their loss of income by

connecting their bank statements.

About:

Michelle Beyo

Founder & CEO

Finavator

Michelle is the founder of Finavator and a strategic advisor

for multiple FinTech’s. Finavator is an award-winning

strategy consultancy focused on bridging the gap between

FinTech’s and Traditional banks. We work with Startup’s

to drive growth through strategic partnerships, enterprise

relationships, and new clients. When working with traditional

banks, we help evaluate FinTech’s to find the best partners in

order to expand their service offering to their clients. Michelle

started Finavator as she is passionate about payments &

financial inclusion. Her background in Telecoms, E-commerce,

Payments Prepaid and Loyalty programs nurtures her passion

for the world of tech. She has 20 years of extensive industry

experience driving innovation across the retail and payments

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

Women in Payments Global Council Committee Member,

Canadian Prepaid Providers Organization Membership Chair,

NFCA Payment Advisor and Board Member at Open Banking

Initiative of Canada.

7


SEC VOTES

TO APPROVE

CHANGES TO

REGULATION

CROWDFUNDING

INCREASING

MAX RAISE TO

$5 MILLION

On November 2, 2020, the Securities and Exchange Commission

approved amendments to facilitate capital formation and

increase opportunities for investors by expanding access

to capital for small and medium-sized businesses and

entrepreneurs across the United States. The vote was 3 to 2.

SEC Chair Clayton said, “He’s extremely pleased with the work

done by the Commission.” He believes, “that the changes will

modernize the exempt offering framework and have a lasting

impact on our capital markets without detriment to investor

protection.”

“A $5 million limit and other substantial regulatory changes

will expand crowdfunding’s use rapidly. At $5 million, a tech

startup can raise a seed round or a traditional small or mid-sized

company can raise expansion capital. This will open significant

new opportunities for businesses to use this capital to recover

from the current economic crisis or launch innovative new

products and services.” says Jason Best, Principal at Crowdfund

Capital Advisors.

We are

thrilled that the

Commission has

finally increased

the maximum

issuers can raise

under Regulation

Crowdfunding from

$1.07 million to

$5 million

– says Sherwood Neiss,

principal at Crowdfund

Capital Advisors.

8


“For the first, time we have easily accessible,

real time data on the economic health and

sentiment of startups and small and medium

enterprises (SMEs) and of the communities

where they are based. This enables

policymakers to understand immediately, how

the SEC’s action today is positively impacting

American lives. We are grateful to the Small

Business and Entrepreneurship Council for its

tireless efforts on behalf of these changes and

for their ongoing education of their members

about how to use crowdfunding to enhance

their businesses. Every community across

the country should immediately educate

themselves about this new opportunity to

support their local businesses.”

The vote comes at a time when local

businesses and local economies across

the USA are facing the most challenging

economic crisis since the Great Recession.

The third wave appears to be worse than

the first two with many Americans bracing

for another shut down like in other parts of

the world. If this happens, millions of small

businesses that were just scrapping by might

permanently shut their doors leading to a

housing crisis as unemployed people cannot

pay their rent or mortgages.

There is a way to supercharge Regulation

Crowdfunding and provide immediate,

impactful stimulus to Main Street businesses

that may not survive the pandemic. That is

for the Federal Reserve to take $20 billion

of the $596.3 billion they have remaining

from the Main Street lending, PPP and

EIDL programs and put it into the Main

Street Recovery Co-Investment Fund. This

fund would match dollar for dollar, up to

$250,000, into businesses that are struggling

to survive the pandemic but have customers

that wish to see these businesses survive. By

turning these customers into investors (what

we are calling investomers), the businesses

access capital from customers who are

now stakeholders in the business and the

government can successfully deploy capital

at the most micro level into communities all

across the USA.

FEATURED

Broad Appeal Among Industries Across the

USA

To date, Regulation Crowdfunding has

raised capital for over 430 industries.

The chart to the right looks at the top 15.

It shows is that there is broad appeal by

both issuers in a variety of industries and

investors interested in backing these

enterprises. The two things we

expect to change over the next

year, given the SEC changes,

is more real estate offerings

and more medium sized

issuers entering the market.

The $1 million cap limited

many developers/issuers from

leveraging money from Reg CF

investors, increasing the cap to

$5 million means more small/

medium sized developers/

issuers and more investors will

be leveraging Reg CF for funds

and diversified investment

opportunities. It also means

that firms with Revenues

between $10M and $50M will find Reg CF

more appealing as a mechanism for raising

funds. It will be a cheaper alternative than

hiring an investment bank and a faster

method as the time to raise funds averages

around 90 days.

Source: Crowdfund Capital Advisors

9


Steady Growth in Offerings Over Time

This next chart shows consistent and steady

growth in monthly offerings over time. July

2020 saw the highest number of offerings

at 128 since Regulation Crowdfunding

began and October saw the second highest

number of offerings at 115. With the changes

made by the SEC, this means that issuers

that need to raise in excess of $1 million but

less than $5 million will be turning online for

funding.

Source: Crowdfund Capital Advisors

Average Number of Investors and Commitment Size is Increasing with Covid Tail-winds

The next chart demonstrates how investments and investors have been increasing since the

launch of Regulation Crowdfunding began in May 2016.

Source: Crowdfund Capital Advisors

10


As one can see, the industry began to see

record numbers starting in July 2020 (Note

Since Regulation Crowdfunding began in

May 2016 we use May as the beginning of the

fiscal year and hence Q1 begins in May each

year). The average check size investors are

writing is increasing. In February, when the

markets shut down, the average check size

was $436. In October that amount doubled to

$879. Because they are writing larger checks,

this bodes well for Main Street businesses

that will need to turn to their customers for

capital over the next year.

“The data has been positive for Regulation

Crowdfunding. The industry has proved the

naysayers wrong and the opportunity for

issuers and investors affirming,” says Neiss.

“This truly represents the democratization of

access to capital we promised and a way to

engage investors at the most local level. If

we can just get the government to focusing

on investing alongside community investors,

I believe we can get through this pandemic

with minimal scars.”

About:

Sherwood Neiss

Principal

Crowdfund Capital Advisors

Sherwood Neiss is a principal at Crowdfund Capital Advisor. He

is at the forefront of the US Crowdfunding industry as one of

the authors of the securities-based crowdfunding provision of

the 2012 JOBS Act. He is the creator of the CCLEAR Database

that aggregates US online investment platform data and

transmits it to Bloomberg on a daily basis.

FEATURED

STRATEGIC PR & MARKETING

For the Fintech and

Blockchain Industries

We craft compelling, individualized PR

campaigns to help you stand out in an

increasingly competitive technology landscape

Find out what we can do for you

PR Strategy | Media Relations

Content Creation | Analyst Relations

Thetopflooragency.com

Email: pr@thetopflooragency.com

Phone: +1 (905) 379 1893

11


FUTURE OF

CRYPTO MARKET

INFRASTRUCTURE:

THE ROLE OF

CUSTODIANS AND

EXCHANGES

While bitcoin offers the possibility of removing

third parties and making transactions peer-topeer,

the reality is that most cryptocurrency today

is bought and stored using third party exchanges.

These platforms typically act as combined brokers

and custodians—executing orders on behalf of

customers, and storing their funds in commingled

omnibus custodial accounts.

Over the last decade, the liquidity flowing into

cryptocurrency has been captured by various

different exchange-custodians, creating a

landscape of fragmented liquidity that is difficult for

traders to navigate. At the same time, the growthfocused

mindset of early exchanges has led to poor

standards of security and regulatory compliance,

creating billions of dollars worth of losses from

hacks and security breaches. This insecurity has

deterred large investors and institutional players

from entering the market, further exacerbating the

liquidity problem. Even cautious smaller investors

are often unwilling to be exposed to such high

levels of counterparty risk, especially with an asset

class that has irreversible transactions, where theft

of private keys leads to permanent loss.

To improve this insecure and illiquid trading

environment, the cryptocurrency ecosystem is

beginning to mirror the institutions of traditional

finance, with independent brokers, exchanges, and

qualified custodians working together to provide

secure custody and trading.

12


Under the Investment Advisers Act of 1940, this

custodial setup is a legal necessity for institutions

with $150 million or more in assets. But it can

also be beneficial to individual investors that

want to mitigate counterparty risk. And in the

bigger picture, this traditional division between

custodians and brokers can help solve the

broader liquidity, security, and user-experience

issues that are preventing the market from

scaling.

Protection of customer funds

is paramount. Without trust,

high quality service and realtime

access to funds the crypto

sector will fail to expand past

the current market cap and

attract further adoption. —

coinpass

By focusing solely on safeguarding

private keys, specialised custodians

can offer all the same assurances as

traditional finance. Investors can avoid the

complexity of setting up their own crypto

wallets, and renegotiate the tradeoff

between security and accessibility that

typically accompanies the decision

between storing crypto assets in hot or

cold wallets, or on an exchange.

Crypto assets held with a trusted custodian

can be both secure and accessible, with

private keys stored in segregated accounts

that are backed by insurance coverage,

bank-grade security, full regulatory

compliance, and governance controls over

managed assets. These protections shield

investors from the risks and complexity

of the crypto market, creating the ideal

starting point to make the most of the

latest crypto asset innovations.

Safeguarding cryptoassets - the evolving

ecosystem

Instead of needing to visit different venues

to access the financial services of trading,

investment, and lending, each with their own

specific onboarding requirements, investors

using the services of a cryptocurrency

custodian can easily access these different

services from a single secure wallet.

Through decentralised finance (DeFi), brokers

and exchanges can now access liquidity on

decentralised platforms to better service their

clients offering them more opportunities than

ever to participate in the ecosystem and ‘sweat

assets’ to maximise returns. This might be

through lending, staking, borrowing, securing

the network, or conducting complex trades

with new financial instruments. Equally, brokers

become best placed to introduce their clients

to custodians featured in their network as part

of their risk management strategy.

By offering investors the opportunity to tap

into this ecosystem and generate an income

without increasing security risks, crypto

custodians move beyond basic safekeeping to

become a one-stop shop for cryptocurrency

services—a financial browser so to speak that

partners with defi protocols and exchanges

to offer secure, direct access to the same

diverse range of liquidity, lending and leverage

services as prime brokers offer hedge funds in

the world of traditional finance.

Diversification with DeFi and staking

The rapid evolution of the cryptocurrency market

has created more opportunities than ever for

portfolio diversification, with smart contracts

not just replicating the functions of traditional

finance on the blockchain, but supercharging

them—giving investors unique opportunities to

take advantage of crypto assets.

The rise of Proof-of-Stake, which is expected

to come to Ethereum later this year, is

now giving investors the opportunity to be

rewarded by setting aside assets to be “staked”

or “delegated” in order to help secure the

network.

From an investment perspective, income

generated from staking is akin to earning

interest on fiat in a bank account. But with

staking, returns are typically far more

lucrative. Ethereum 2.0 is expected to offer

staking rewards up to 15%, and smaller chains

like Cosmos are already offering 8%. This

opportunity to earn a yield by staking has

led to comparisons between Proof-of-Stake

FEATURED

13


cryptocurrencies, and traditional assets like

treasury bonds, which typically occupy a

valuable position in an investment portfolio by

offsetting risk.

Individuals choosing to stake independently,

however, take on the risk of incurring network

penalties known as slashing. The economic

model of Proof-of-Stake relies on a carrot and

stick system, where honest validators that follow

the rules of the network are rewarded, and

misbehaving or lazy validators are penalised

with a loss of tokens. While some bad actors

might break the rules deliberately, slashing

penalties are equally likely to be incurred due

to technical errors stemming from a nonprofessional

supported staking set up.

With an independent custodian and exchange

partnering to offer dedicated staking services

and custody, investors can remove the risk

of slashing by outsourcing the responsibility

for following the staking procedure correctly.

Instead, stakers can focus on getting the

best rates by choosing between different

staking service providers offered through the

exchange-custodian partnership.

Aside from staking, custodians can also offer

crypto investors secure access to the opensource

system of smart contracts known as

DeFi. This new form of financial plumbing

gives traders access to shared liquidity pools,

borrowing and lending protocols, innovative

derivatives, and decentralised peer-to-peer

token exchanges—providing more potential

than ever to maximise returns, minimise risk,

and implement sophisticated trading and

investment strategies.

Regulated exchange + Insured crypto

custodian

As visionaries like Ethereum founder Vitalik

Buterin have suggested, the ideal form of

crypto custody infrastructure would let users

securely tap into decentralised protocols and

exchanges from a centralised fiat gateway.

Hence, what the browser is to the Internet

and what the bank is to traditional finance is

what the custodial wallet then becomes to the

blockchain, and to the future of finance - an

unbundled set of services accessed via an

aggregator platform such as a wallet where

users secure their keys in their wallets, and

then use them to manage their assets.

With such a setup, an investor might sign

into their custodial wallet to get full access to

centralised or decentralised exchanges and

protocols providing services spanning trading,

lending, borrowing, staking, and liquidity—just

like a prime broker might offer hedge funds

bundled services in the world of traditional

finance.

This secure access to financial innovation can

be made possible through partnerships.

Independent custodians would remain

responsible for safeguarding crypto

assets with the same institutional-grade

security mechanisms as traditional financial

institutions, including segregated accounts

and insurance coverage. These custodians

could evolve to become ‘smart custody

platforms’ or programmable custodians

where endorsement APIs could effectively

let end users move faster on opportunities in

the market by enabling them to self-create

controls or rules without needing to wait on the

custodian to approve their business logic. They

would also provide the technical infrastructure

and support needed to integrate with staking

services, DeFi protocols, and regulated fiat-tocrypto

trading, through open APIs.

Exchanges meanwhile, can forge their own

relationships with regulated banking partners

to offer the seamless transfer of fiat into the

system, and move beyond simple trading

services by offering direct access to DeFi and

staking—underpinned by the infrastructure of

the custodian.

In light of these potential benefits, crypto

custodian Trustology is exploring a partnership

with soon-to-be regulated cryptocurrency

exchange and client, coinpass.com.

Trustology’s custodial infrastructure secures

crypto assets with biometrics, multi-sig, toptier

encryption, walled gardens, and allow or

whitelists as commonly referred to. Funds

are covered by a range of insurance plans,

and customer support is available around the

clock. With advanced integrations, crypto asset

holders are able to directly tap into the latest

14


income opportunities—including staking on

Ethereum 2.0—in a safe, secure, and regulatory

compliant manner, and securely access the

DeFi economy from a web browser or mobile

app via MetaMask integration or API integration.

Trustology continues to focus on building out

solutions within its infrastructure that best deliver

on best execution for clients and meet with

institutional regulatory requirements around

segregation of duties. Their goal is to lead with

a flexible custodial platform that can easily

integrate with the right services, protocols and

partners to deliver on what’s best and needed

for its clients to reduce custody risk and overall

transaction costs. They are currently exploring

best practice in facilitating settlement and

clearing, enhancing the treasury management

workflow and incorporating more payment on

ramp platforms such as coinpass.

for retail and institutional clients across multiple

user interfaces. Having recently launched their

mobile app trading platform, they are now

turning their focus on banking DeFi services.

Together, this combined exchange-custodian

partnership could bridge the gap between

the institutions of traditional finance, and the

burgeoning cryptocurrency ecosystem—

preserving the security and compliance

benefits of the traditional broker and exchange

duo, while also delivering access to the new

opportunities provided by digital assets.

Co-Authors

Alex Batlin

Founder and CEO

Trustology

FEATURED

Meanwhile, coinpass is forming the ideal

entrance point into the world of DeFi—letting

users swap pounds or euros for crypto with

regulated banking partners, and then dive

straight into the innovation of decentralised

protocols. Their vision - a digital finance platform

integrating banking, crypto and defi services

Jeff Hancock

Founder and CEO

coinpass

15


CREATING

SUSTAINABLE

WEALTH

THROUGH

DIGITAL

FINANCE

We live in interesting times. We have extreme

weather events, social disruption in part driven

by a global pandemic and by the dissolution

of trust in institutions, and financial disruption.

‘Perfect storm’ may be an overused term, but

combining ecological, social, and financial

stress does provide the makings of a perfect

storm.

While all three need to be addressed with

better performance, patience and prudence,

there are some critical differences. For example,

while you may have the potential to refinance

a loan or a mortgage, there is no option to

refinance ecological debt, nor social debt.

However, there is also an incredible opportunity

that may be likened to a Phoenix rising. It is

the convergence of sustainable finance, the

democratization and naturalization of capital

markets enabled by digital finance, and your

opportunity to apply your wealth to a better,

greener economy.

and governance (ESG) considerations into

account when making investment decisions

in the financial sector. This is leading to

increased longer-term investments into what

is supposed to be sustainable economic

activities and projects. Some refer to this

opportunity as green finance, which I will

address below.

There are three layers of wealth. Think

of a pyramid shape. (Insert Figure 1.) The

foundation of all wealth, without exception,

comes from the planet. Everything we use,

grow, build, or buy - energy, food, homes or

cars - comes from the planet as provided by

Mother Nature. Think of her as the president

Sustainable finance generally refers to the

process of taking environmental, social

16


of the planet. Her terms and conditions, her

rules, override all regulations.

Secondary wealth is derived from the things

we make from primary wealth. Ore becomes

steel, plants become your dinner, trees are

used to make lumber, paper, etc. Because

we do not follow the rules set by Mother

Nature, the conversion is 96% inefficient.

Some experts say that is low, and it’s really

98%. Simply stated, that means for every

$100, you are getting $4 or $2 of value.

The final layer, tertiary wealth are all the paper

abstractions that we layer on top. Tertiary

wealth is entirely dependent on the primary

level being healthy, and rests precariously

on top of the pyramid, only kept in place

by trust. When we put the primary layer of

wealth at risk by our decisions or actions, you

can see where this is going.

The Stockholm Resilience Centre has

estimated how the different control variables

for seven planetary boundaries have changed

from 1950 to present. (Insert Figure 2) We are

in the red on three critical variables, and this

is causing instability in ecosystems, social

systems and risk, including stranded assets.

What may be surprising to many is that

with all the concerns posted in the media,

the push for disclosure on climate-related

financial risk, climate change is still not the

biggest crisis according to experts. It’s the

loss of biodiversity. It’s the impact our way of

doing things had burdened our ecosystems

with nitrogen and phosphorus. So not as

much a tragedy of the horizons as stated

by the former Chair of the Financial Stability

Board, Mark Carney, but a tragedy that’s in

our face, but that we are not managing.

I find it extraordinarily perverse that the

decisions and actions we continue to make,

which diminish the quality of our lives today,

and certainly undermines the quality of life

for our children and our children’s children,

we seem to be okay with. Perverse, yes, but

predictable. As early as 1738, Dutch polymath

Daniel Bernoulli figured it out, and this was

echoed in a Ted Talk by behavioural expert

Dan Gilbert who said “the expected value of

any of our actions -- that is, the goodness that

we can count on getting -- is the product of

two simple things: the odds that this action

will allow us to gain something, and the value

of that gain to us.” So, basically we overvalue

what we have in our hands today, and

undervalue what the future holds. Part of this

challenge may be that we mistakenly trust

other people to manage our money, and at a

cost to us that is no longer necessary.

Digital finance offers a range of values that is

only starting to be understood by the market.

And in the time and space remaining I can

only hint at some of the opportunity. Digital

finance and the value it offers to greening

finance deserves a much, much deeper

discussion (and one that I hope NCFA will

enable). The democratization of capital

markets offers individuals the opportunity to

direct their tertiary wealth to the things that

matter to them. It means that every dollar,

peso, euro, can be a vote and support an

action to bring human endeavours back

within the boundary conditions necessary for

a quality of life that is sustainable.

FEATURED

A group of entities, including the World Gold

Council, The Silver Institute, the European

Central Bank and others, stated that the

value of the global money supply was 600

hundred times higher than the value of new

gold coins minted in 2019. In the first six

months of 2020, digital currencies increased

1,600 times over minted coins. While any

currency carries a carbon and a broader

environmental footprint, digital currencies,

17


assets and the communities that power them

offer access to new pools of capital at a lower

costs while reducing intermediaries and

excessive fees found in traditional banking.

New consumer-centric financing models

offer consumers choice and enable them to

vote directly with their dollars that can lead to

lower environmental impacts. It is important

to note that digital currencies are not riskfree;

a power failure, cell tower outages,

bad reception in rural areas not well served

by the internet, extreme weather; these are

some of the unintended consequences that

come with a transition to digital.

But if money talks, with digital finance you

could make it walk in the direction you want

it to go to match your values aligned with a

better, greener economy. If money makes

the world go round, digital currency could

enable you to drive initiatives that are part of

a circular economy, or products and services

that fit into the ecosystem where you live

and work.

So, whether you are buying a product,

engaging services, investing in a project,

asset or an activity, look at the investor or

purchaser in the mirror. The first question that

you should ask is “have I taken into account

the environmental impact or environmental

performance of the product, the asset or

activity?”

If not, think again? The choice is yours and

the power of change is within.

About:

Lynn Johannson

Owner

E2 Management Corporation

Lynn Johannson is a 27-year veteran in the business of

environmental management. She is recognized as an

expert in sustainability, with experience in over 50 countries,

developing strategy, and applying innovative system solutions

for organizations of all kinds. She is the Catalyst for “Are You

Climate Ready?”, an international initiative to help organizations

accelerate better management and reporting on climaterelated

financial disclosures (TCFD).

18


FROM

GLOBAL

LEADER TO

FOLLOWER,

IS CANADA

LOSING ITS

FINTECH

EDGE?

INSIDER VIEW

Holt’s mission is to develop

a more competitive fintech

ecosystem in Canada to

foster financial innovation.

An overlooked focused

area. Our research from

hundreds of Holt Advisors,

our digital events, and precovid

travels across the

globe discovered three key

pillars are affected, resulting

in Canada’s positioning

trending from global leader

to follower.

Regulatory frameworks: A crucial hurdle on

the path of Innovation?

In an industry that moves exponentially fast,

regulation can cause friction. It creates barriers

through uncertainty in the development process,

unclear regime, and setting primary conditions

that become obsolete quickly.

Take the drawn-out and delayed Open Banking

process. As a result, our market isn’t benefiting

from fintechs already serving this infrastructure.

Why didn’t we continue to drive forward ten

years’ worth of research on CBDC instead of

waiting for other nations to catch up and pass us?

While Open Banking gets most of the attention,

other fronts would benefit from improvement.

Streamlining inter-provincial regulations,

improving market access for innovators, and

loosening restrictions on banking/payment

licenses (similar to Europe) would also help build

a more competitive fintech ecosystem.

19


How can we create the support systems for

growth stage fintechs, who are often left out

of the current ecosystem?

The government must lead by example

and act as the first customer to particular

homegrown fintechs (e.g., PPP program in

the US). They must also develop a system

of incentives for these incumbents to work

with fintechs and modernize themselves,

improving venture investing liquidity ratios.

Furthermore, stakeholders within Canadian

fintech need to be included at the table when

these new rules are being drawn up. These

discussions need to be transparent and have

to result in tangible action items with a set

timeline.

Corporate incentives and security are not

mutually exclusive.

Stifling innovation means it will eventually die

off. Consequently, our financial institutions will

be reliant on financial technologies from the

US, Europe, or elsewhere as they struggle to

catch up with the rest of the world.

Financial institutions play a huge role here.

They must look into improving outcomes

of innovation objectives, with data-driven

marketing being an activity of said objectives

but not the primary aim. For instance, setting

goals and then optimizing processes to

achieve these results and leverage. From

here, diversifying your tactics to achieve

these results (i.e., CVC, hackathons) are all

welcomed as long as there’s alignment to

the ultimate objective.

Security is and should always remain a

top priority. While it’s fair game to make

sure system vendors (i.e., fintechs) are well

compliant here, there should be budgets for

fintechs to help them deliver their solution

securely to the banks’ standards. Additionally,

there are many opportunities around data

processing and several secure methods to

analyze a Financial Institution’s data without

jeopardizing its customers’ privacy and

security.

20


Inefficient Distribution of Financial

Allocation

the abundance of government investment

programs.

There are too few options for startups in

need of venture capital when considering

stage and industry. Over the short-term,

there is a reluctance to invest, even

with a decrease in valuation. You notice

this behavior in early-stage financing

(especially seed), which ultimately defeats

the purpose as it takes capital to build

startups.

The government must continue to support

R&D programs to help our startups, a

significant funding source for early-stage

companies, while also supporting the woes

in commercializing R&D properly in Canada.

Rubber stamping of IRAP has been very

helpful, but we need greater transparency

around who is taking advantage of it,

and who has been hindered. Improved

targeting programs for early-stage startups

is required, as France did with a €4B plan

to support startups, or better streamlining

The Canadian people have shown great

tenacity and teamsmanship throughout the

pandemic and in combination with directed

efforts and precise planning Canada has an

amazing pool of talent that can continue to

help build a robust ecosystem and become

a global contributor in financial innovation.

About:

Jan Arp

Founding Managing-Director

Holt Accelerator

Jan Arp, Founding Managing-Director at Holt, is a global expert

in this space and works towards helping Canadian Financial

Institutions & Services embrace financial innovation in a

meaningful way. One that pays off for both their customers and

bottom line.

INSIDER VIEW

21


HAS

FINTECH

MADE

BANKING

BETTER?

Fintech is responsible for a long list of

innovations. Helping people make better

financial decisions could be next.

Building banking that is not just different, but

better, is a common refrain when speaking

with fintech entrepreneurs. It is natural to

wonder then, what roles are fintech companies

playing now in building ‘better banking’, and

more importantly, what opportunities are

there to better deliver on this promise?

The DUCA Impact Lab was established by

DUCA Financial Services Credit Union to

explore these types of questions, and to

ultimately work with its partners to build and

test models of banking that benefit all. Each

year, the DUCA Impact Lab, in partnership

with Angus Reid Group, examines national

perspectives on fair banking in Canada. The

study surveys a national pool of banking

consumers on their perceptions of fairness

in their banking experiences. It evaluates

a number of fair banking factors such as

transparency, credibility, pricing, as well

as access to products and services. It then

compares these consumer perspectives with

responses from bank employees working in a

sales or lending capacity at different types of

lending institutions, including fintech’s.

Reflecting on the study results for 2020

reveals some key considerations for fintech

companies as they continue to innovate

and build on their presence in the financial

services marketplace. For example:

More people need access to quality advice.

The majority of consumers interact with a

financial advisor once per year, or less. In

fact, 29% say they have never met with one.

Even for those that do meet with an advisor,

chances are they either don’t trust, or are

indifferent to the advice they get (75% of

consumers combined). This is particularly

troublesome, given that the right advice is

desperately needed - nearly 45% of people

22


with debt say they have neither a budget, nor

specific financial goals. Lenders surveyed

who work in fintech take an overly ‘sales

first’ view of their companies compared with

peers, and are significantly less likely to view

the primary focus of their company as helping

people (21%), when compared to 35% at banks,

and 48% at credit unions. Perhaps there’s an

opportunity to do both.

Trust is a short-term opportunity, but longterm

potential risk for fintech’s.

Nearly as many Canadians distrust financial

institutions as trust them, with a winnable 46%

of consumers who are somewhere in the

middle. Also consider that only 22% of big bank

customers think they are getting a good deal

on their financial service products; this should

translate into opportunities for new entrants

and alternatives to the big banks. The level of

trust consumers have in fintech companies

is generally similar to other lending options

to start, but borrower experience becomes

more negative post fulfillment. For example,

fintech customers are more than twice as

likely to respond that their debt has impacted

their ability to afford basic health care services

such as prescription drugs. Mitigating these

risks has benefits for everyone.

The Fintech sector has produced some

amazing innovations, improving the way

financial institutions are able to offer a

range of services, facilitate transactions and

understand customer needs. Extending this

innovative thinking to focus on consumer

experiences and well being is a natural fit.

About:

Keith Taylor

Executive Director

DUCA Financial Services Credit Union

Keith Taylor is the Executive Director of the DUCA Impact

Lab at DUCA Financial Services Credit Union, an innovation

hub focused on building banking that benefits all. He works

with a range of collaborators such as fintech’s, community

organizations, academics and others to build and test solutions

to inequity in the banking system.

INSIDER VIEW

Unlocking the potential

of banking.

DUCA believes that banking has the potential to

solve a wide range of difficult problems. In order for

this potential to be realized, financial institutions

need a broader sense of social responsibility.

That’s why we created the DUCA Impact Lab.

23


HERE

IS WHY

INSURTECH

IS HEATING

UP AS AN

INVESTMENT

CATEGORY

The global InsurTech startup ecosystem

saw record-breaking level of investments

of US$2.5 billion in Q3 2020 1 . Despite a slow

start in the first quarter of the year, due to

the impacts of COVID-19, global InsurTech

funding for 2020 has already surpassed $5

billion and is likely on track to match the 2019

figure of $6.3 billion.

Annual InsurTech funding trends: Deal and funding volume (US$ million), 2012 – Q3 2020

Dollars

Deals

Funding (US$million)

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

46

66

348 276

94

868

132

2,721

176

1,742

2012 2013 2014 2015 2016 2017 2018 2019 2020

218

2,274

262

Figure: Global InsurTech funding volume and deals as of Q3 2020

Source: Quarterly InsurTech Briefing Q3 2020 by Willis Re

4,167

314

6,348

275

5,028

350

300

250

200

150

100

0

Deals

1

Quarterly InsurTech Briefing Q3 2020 by Willis Tower Watson.

24


Our Luge Capital data for Canada, presented

in our Status of the Canadian InsurTech

Landscape report, shows that $1.2 billion of

venture capital has been invested in InsurTech

startups headquartered or operating in

Canada between 2011 and H12020. The

number of InsurTech startups founded in the

last few years has also picked up significantly.

INSIDER VIEW

Figure: InsurTech Startups Headquartered or Operational in Canada by Year Founded

Source: Status of the Canadian InsurTech Landscape by Luge Capital

So why is there so much buzz about InsurTech?

Why are entrepreneurs choosing to dedicate

their resources to build solutions for this industry?

Why are investors bullish on this category?

Some of the key drivers of heightened activity

in this sector are discussed below.

Massive industry

The Canadian insurance industry wrote in

excess of $187 billion in premiums through

Property & Casualty (P&C) 2 and Life & Health

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

insurance sectors paid out $144.5 billion in

claims or benefits to Canadians in the same

year. Globally, the industry placed more than

US$6 trillion in premium in 2019 5 . The sheer

size of the industry in itself attracts both

entrepreneurs and investors aspiring to build

massive businesses.

Legacy technology and cost-centre

mindset Many insurers still have legacy core

systems built on monolithic, on-premise

applications. This poses several challenges

including time-consuming maintenance,

lack of scalability and an inability to be fast

and nimble. Today’s customer expectations

demand rapid innovation, and this is

difficult to achieve with siloed databases

and inflexible core systems. In addition,

historically, IT spend has been viewed by

many insurance leaders as a cost-centre 6 .

The industry is being forced to completely

shift its mindset to view technology as

an avenue for faster time to market and

superior customer experience. But this is

not going to happen overnight.

Enter InsurTech startups, who take a

technology-first approach to insurance

and build their software on cloud-based

architectures, allowing them to go to market

fast and innovate quickly.

Expectations of Amazon-like experience

Entrepreneurs have identified an opportunity

to make the process of buying and keeping

insurance suitable for today’s consumers,

who now expect Google, Amazon and

Uber-like experiences. Other entrepreneurs

and investors see the opportunity to help

incumbent players such as insurers and

brokers bring their customer experiences up

to par.

2

2020 Facts of the Property and Casualty Insurance Industry in Canada .

3

Canadian Life & Health Insurance Facts 2020 Edition .

4

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

5

World Insurance Marketplace by Insurance Information Institute.

6

Insurers Face A Crisis. Now, Innovation Is No Longer Optional.

25


Yet other startups are helping insurers with

automating their internal processes, and

improving their underwriting and claims

functions. Gartner expects the global IT

spending of insurance companies to be

US$222 billion in 2020 and forecasts the IT

software sub-segment to grow at 8.4% CAGR

between 2019-2024 7 . This demonstrates the

growing demand for software from insurers.

Whether it’s in distribution, process

automation, underwriting or claims, there is

an opportunity for technology startups to

drive innovation in the industry.

Data = oxygen

Data and underwriting are the lifeblood of

insurance. Yet, historically, insurers have

used a pre-defined and limited set of data to

underwrite policies. This worked fine for the

last 100 years. However, today’s consumers

want significant personalization, which can

only be provided with the use of contextual

data. Increased access to alternative data as

well as structured data have opened up a

whole world of possibilities when it comes to

better personalization of insurance products

and experiences. To that end, InsurTech

startups have identified an opportunity

to either become the provider of such

alternative data to incumbent insurers, or

compete head-on against such incumbents

to use contextualized data and provide a

better experience themselves.

Shift in talent demographics

The average age of a life insurance agent

in the U.S. is 59 8 and this is comparable to

the talent demographic in the Canadian

insurance industry. As a large part of

the insurance workforce starts to enter

retirement, the industry is facing growing

challenges with replacing that talent. There

is an opportunity for technology companies

to help insurers and brokers continue to

deliver their topline numbers in a scalable

way with a smaller workforce. In fact, the use

of modern technologies may even work to

attract a younger talent demographic to this

industry.

Commoditization of core product and need

for standout brand

As the ease of insurance product distribution

accelerates with the help of technology, we

may eventually reach a point where insurance

products themselves become commoditized

due to competitive pressures. Insurers will

need to find other ways to differentiate from

competitors by offering superior customer

service, smooth claims experience and addon

services. Many InsurTech startups are

building technology solutions to help insurers

differentiate in those respects and build brand

loyalty.

Exits

The InsurTech space is beginning to see

some mid-to-large startup exits. To make

matters even more interesting, some of these

startup exits have happened within just a few

years of operations. For example, earlier this

year, Lemonade went public with a valuation

of US$1.6 billion and the shares soared 139%

on the first day of trading 9 . Prudential acquired

Assurance IQ for US$2.35 billion last year 10 .

As investors, we believe that the industry

will continue to see more acquisitions as

incumbent players use M&A as a strategy to

add new technologies and revenue.

These are some of the key factors driving

innovation and venture funding in InsurTech.

We expect this category to continue to grow

from a funding and M&A perspective for the

next few years.

Co-Authors

Karim Gillani

General Partner

Luge Capital

Laviva Mazhar

Investment Associate

Luge Capital

26

7

Forecast: Enterprise IT Spending for the Insurance Market, Worldwide, 2018-2024, 3Q20 Update .

8

The insurance sales gap is widening. This is how we can close it.

9

Understanding Hippo’s valuation in a post-Lemonade IPO world .

10

Prudential buys Assurance IQ for $2.35 billion in new tech bet .


27

INSIDER VIEW


THE

OSC’S NEW

INNOVATION

CHARTER:

IS THIS

REALLY A

‘NEW MODEL’?

The OSC has recently announced a Charter

for a new Office of Economic Growth &

Innovation (Innovation Office): release and

innovation office charter.

The NCFA welcomes the announcement but

remains skeptical. Is this really a “new model”

or merely window dressing?

1. An Innovation Office alone will not make

the OSC more “innovative”. Innovation

requires a lot more than a mere reference

to these words. The Charter points towards

“fostering a culture that encourages

experimentation, embraces failures as

necessary learning steps and allows for a

quick pivot to the next idea” and playing a

role in the “OSC’s ongoing modernization,

which includes adopting a more flexible

regulatory approach, making investments

in technology and simplifying our rules

and processes”. Do the OSC leaders (and

the Ontario Government) understand how

difficult this essential culture change will

be?

What does “modernize how we formulate

policy and new regulations” mean? Does it

involve, for example, more disciplined decision

making, better analysis and use of data

(including collecting or enabling much better

capital markets data generally in Canada),

extensive staff training, learning to better

manage risk? We need more information

so that industry participants can have greater

comfort about what the OSC proposes and

what is likely actually to be achieved.

Related to this, the vision for the Innovation

Office seems odd. “To be recognized as

a catalyst in innovative regulation that

promotes confidence and economic growth.”

Why would the OSC want the Office only to

be “recognized”? Normally one would expect

to see a vision for a more cost-effective

regulator in a dynamic regulatory ecosystem

supporting a healthy economy, eg, ‘OSC is a

world class regulator in a dynamic, innovative

economic environment’, or ‘OSC is a key

partner in building a healthy Ontario economy

that enables innovation and provides jobs’.

28


The vision would be followed by a mission

statement that sets out how the Office/

OSC itself would work towards the vision

(perhaps by “accelerating innovation,

bolstering capital formation and reducing

regulatory burden”?), followed by the

strategic priorities to achieve the mission

as set out in the Charter.

Links to recent NCFA advocacy on behalf of

the Fintech & Funding industry

NCFA Response to Ontario’s Capital Markets

Modernization Taskforce Consultation (Sep 7, 2020)

NCFA Response to CSA on NI 45-110 Harmonized

Securities Crowdfunding Rules (May 27, 2020)

2. There appears to be a willingness

to “deepen engagement” with

stakeholders, which may not have

existed in the past. This is always

positive, but will the OSC really listen?

The NCFA has been very clear for years

about what is needed. See https://

ncfacanada.org/advocacy/. Our views

are well supported by the fintech

sector, academia, investors, and others.

Little has changed. What does the OSC

want from stakeholders?

NCFA Open Letter: Government should collaborate with

Fintechs during the COVID-19 pandemic to give Startups

and SMEs a Fighting Chance on April 15, 2020

NCFA Response to ASC Consultation Paper 11-701:

Energizing Alberta’s Capital Market on Sep 22, 2019

NCFA Comments: CSA/IIROC Joint Consultation Paper

21-402: Proposed Framework for Crypto-Asset Trading

Platforms on May 2019

NCFA Submission to the Ontario Securities Commission

on Regulatory Burden on Mar 1, 2019

INSIDER VIEW

3. Overlapping issues like data and privacy

protection, competition, and IP, while

perhaps not directly within the OSC’s

jurisdiction, are becoming increasingly

urgent,. And yet there is nothing in the

announcement about collaboration

with other regulators and entities like

the Standards Council. There is no

mention of the Canadian Securities

Administrators (CSA) who must be

involved if the OSC is to become a

cost-effective, world class regulator

and a key partner in building a healthy

Ontario economy. Does the OSC

view the CSA as a mere “stakeholder”

to which the OSC may listen, or as a

partner?

Conclusion

The NCFA looks forward to further

details on this project which we hope

will address some of our concerns.

There are many barriers to innovation in

Ontario, and elsewhere in Canada. Many

stakeholders think that the main barrier

is the regulatory culture of the OSC

itself. To the extent that this is so, the

OSC faces a big challenge - one that the

incoming OSC Chair must tackle full on

for impactful regulatory change .

NCFA submission to Ontario Minister of Finance: Urgent

Need for Regulatory Change (report | summary) on Oct

18 2017

By NCFA Community

29


AS FINANCIAL

INSTITUTIONS

BUY INTO AI, THESE

FACTORS WILL BE

KEY TO SUCCESSFUL

TRANSFORMATIONS

When the Canadian government unveiled

a world-first national artificial intelligence

strategy, it was a signal for homegrown

companies to start paying to this emerging

technology, no matter the industry — and

financial institutions heard the call.

Financial institutions are particularly suited to

benefit from AI, with massive amounts of data

that can be used to automate processes and

the resources to make solutions more secure.

But what does success look like? That’s the

question MNP thought leaders and other

panelists explored during a session on how

AI is transforming interactions with financial

institutions at FFCON’s digital summit.

The scope of AI transformations is enormous

“Financial services providers are adopting AI

for everything from mundane task automation,

to creating consistent customer services

and experiences, diving deep into behavior

analysis, as well as delivering efficient fraud

prevention and detection,” says Massimo

Iamello, an assurance and accounting partner

at MNP. “They also need to manage the risks

and concerns that arise along the journey of

transformation.”

The rise in cloud technology has allowed AI

applications to flourish, and financial institutions

are taking advantage as they slowly migrate

from on-premise legacy systems. Dev Mishra,

MNP’s solution lead for data engineering, AI

and machine learning, says the cloud has

enabled businesses to start up AI initiatives

more quickly — meaning more customer data

can inform AI applications as it’s generated. In

the past, businesses had to rely on manual

surveys, which aren’t always accurate.

Financial institutions are also making

acquisitions for tech talent who can

immediately put valuable customer data to

use. MNP recently acquired T4G, a 25-yearold

Canadian company that helps businesses

collect, organize, and use their data for

business insights and applications.

MNP has the base, the

experience and employees

with potential backing, while

T4G is on the cutting edge with

very senior and experienced

consultants who’ve worked

exclusively in the data space

for decades,” says Mishra.

“They were just lacking the

scale and the firepower.

30


Freeing humans for more complex tasks

Mishra summarizes the use of AI in financial

services in three ways: adding new revenue

streams, reducing operational costs and

improving the customer experience.

The growing accuracy of AI voice recognition

means bots can now verify your personal

information. Customers can speak naturally

to bots about problems like password resets,

which are easier to automate, leaving room

for human customer service agents to answer

more complex questions.

The days of IVR [interactive

voice recognition], where

you have to press one or two,

are gone; now you just talk

naturally like you’d speak to a

human being, says Mishra.

While AI can automate simple tasks, it can also

be used to enhance security. As technology

evolves, so does the ability of fraudsters, and

Mishra says AI has strong use cases in fraud

detection. MNP worked with a Canadian

government body to automate auditing of

employee insurance and travel claims, which

reached up to 70,000 claims a year. The

AI MNP developed could track anomalies

like duplicate claims, saving the client up to

$3 million a year and reducing time spent

reconciling the claims for weeks to hours.

“Imagine you predicted a woman’s score is

dependent on her gender, but did not factor

in the same correlation for men. You’ve

introduced a bias without knowing,” he says.

“However, if you’re predicting whether you

have COVID, that is a medical use case. It

is maybe more prone to males, so gender

becomes a critical variable.”

Many banks may start to use facial recognition

to verify the age of potential customers. If

some groups of people aren’t adequately

represented in a dataset, the AI could

categorize people from some ethnicities

are younger or older than they are. “It’s very

important for data scientists building these

models to understand the models and

remove bias,” Mishra says.

Keeping security front of mind

For financial institutions thinking of exploring AI,

Mishra says security, privacy and compliance

with policies is critical. While major cloud

providers like Microsoft invest billions into

cyber security, financial institutions must also

have the right governance processes in place.

“Cloud as a platform offers security, but it’s

the governance around cloud that will decide

whether the application is secure,” says

Mishra.

For more information on how you can leverage

AI in your organization, contact Dev Mishra

MBA, MBAN, BEng, at 416.596.1711 or dev.

mishra@mnp.ca

INSIDER VIEW

Biased algorithms a growing concern

Mishra notes the importance of ensuring

enterprises create unbiased AI applications.

Machine learning, which uses data and

algorithms to make predictions, requires

datasets to train itself. If those datasets

already have bias present, it could build an

application that is itself biased.

For this reason, many large companies have

responsible AI frameworks to ensure they use

AI in an ethical and responsible way. Mishra

provides an example of predicting students’

SAT scores where gender is included as a

variable for prediction.

Dev Mishra

National Practice Lead

Data Engineering, AI and ML at

MNP

31


BUSINESSES

COMPETING

ON SOCIAL

VALUES USE

FINTECH TO

GAIN AN

EDGE

Competition in business is a given. If you

don’t have competition, you probably aren’t in

a mature market or have much of a market

opportunity.

Over time, businesses have learned to

compete on features and capabilities, on

price and on customer service. We’ve learned

to tune our products to customer needs.

Optimized our supply chains and operations

to reduce costs and create margin advantage.

Invested in our people and systems to deliver

the experience customers want. Built our

brands so that customers know what to

expect from us.

But. Our competitors did the same and, with

the Internet enabling global competition, it

has become harder than ever to establish

and maintain a competitive advantage. The

differences between product and service

offerings have dwindled. Sales processes

have elongated. Win ratios are threatened.

Margins are eroding.

To make things more difficult, customers

have started to demand that their suppliers

share their business values: Respect for

the environment. Fair trade supply chains.

Respect for diversity in their communities and

employees.

At the same time, the competition for

employee talent has increased. Millennial

and younger generations want to work for

companies that share their values. They

express, over and over, that they prefer to

work at companies that care. Companies that

make a difference. Companies that improve

the world.

A standard response to this situation

has been for companies to implement

corporate social responsibility (CSR)

programs. These integrate social and

environmental concerns into business

operations and interactions with corporate

stakeholders. They provide businesses

a framework to evaluate the costs and

impacts of their programs. It works.

Companies with successful CSR programs

visibly demonstrate their commitment to

social and environmental issues and win

more business because of it.

32


Unfortunately, CSR programs are typically

complex to understand. This makes it hard to

use them for lead generation. Or, to acquire

and retain employees who say, “Sounds good.

Show me.” It is burdensome to demonstrate

how the customer or employee impacts the

CSR program. And even harder to implement

using traditional payroll deduction employee

giving programs as they don’t enable

customer participation at all.

To solve this complex problem, companies

are increasingly turning to social fintech

to implement components of their CSR

programs. Recent innovations in social

fundraising (crowdfunding) solutions enable

companies to cost-effectively run their own

highly visible social / environmental impact

generation programs. These programs

demonstrate corporate commitment to the

values in their CSR statements. But more

importantly, they provide an opportunity for

employees, customers and supply chain

partners to participate in making the impact,

not just watching it.

For example, Ernst & Young, a global

consultancy, runs an enterprise

crowdfunding program to encourage

employees and customers to contribute

to multiple civil rights charities. These

contributions are matched by the company

which helps participants feel like they are

directing company resources to causes they

personally care about, increasing loyalty

and satisfaction. Through participant’s social

sharing of their support for the causes,

Ernst & Young receives earned social

media coverage and measurable brand

lift and reach. This style of authentic brand

amplification resonates with existing and

potential employees and customers.

Ernst & Young appreciates their ability to

independently run their own crowdfunding

initiatives without charity involvement. This

provides maximum opportunity for brand

alignment through the choice of any number

of beneficiary charities. Central control of

financial workflows ensures accountability.

Their ability to run multiple, simultaneous,

geographically targeted campaigns satisfies

their regional offices’ need to focus on local

causes.

Other examples show how these programs

align with corporate positioning. Nature’s Path,

a fast-growing producer of organic foods,

uses matching contributions to encourage

their employees and customers to support

10 food security charities in North America.

AG Hair, a manufacturer of high-quality

hair care products, engages their supply

and distribution chains in supporting girls’

education in developing countries, increasing

brand loyalty in their predominantly female

customer and employee base. Vancouver

Sun, a newspaper division of Post Media,

demonstrates their commitment to child

welfare by encouraging readers to support

children’s food programs in schools across

BC.

In all of these examples, employees and

customers express feelings of empowerment,

values alignment, and satisfaction through

collaboration. Together, these feelings create

loyalty to the company and the brand. Recent

surveys have shown that, when features,

price and service levels are comparable,

customers will invariably make their purchase

based on their core values. Powerful brand

alignment with these values not only helps

acquire customers but helps keep them

despite competitive pressure. Social fintech is

an easy path to creating brand alignment and

loyalty.

About:

Daryl Hatton

Founder and CEO

FundRazr

Daryl Hatton is a founder and CEO of FundRazr, an innovative,

award-winning global crowdfunding platform. Daryl is an

international speaker and thought leader in online giving and

philanthropy. A serial entrepreneur who loves the challenge

of building companies from scratch, he has founded multiple

start-ups and helped bring one, Optio Software, to a successful

NASDAQ IPO in 1999. Today he serves as board member of

PayPal Giving Fund Canada as well as an advisor to multiple

Canadian and Silicon Valley based start-ups.

CULTURE

33


CULTURE AND

DIVERSITY

LEADERSHIP

TALE OF

TWO DOORS

The ‘Tale of Two Doors’ is part of a culture and

diversity interview that took place on July 30,

2020 at FFCON20: RISE digital conference

between moderator Fatima Zaidi, CEO and Cofounder,

Quill Inc. and Glenn Lundy, Author,

Speaker, Host #RiseAndGrind. The entire

session can be viewed here – enjoy!

Fatima Zaidi: For those who have not had

the pleasure of tuning into Glenn Lundy’s

extremely popular Rise & Grind podcast - you

absolutely should! Glenn is a keynote speaker,

author and has been seen at places like Hustle

and Grind, Grow Your Business, for God’s sake,

and stages across the country. He is also been

spotlighted on channels and publications like

ABC, NBC and CBS. So, I am so thrilled to be

interviewing you today – can you tell us a little

bit more about your background and how it

relates to the topic of Tale of Two Doors?

Glenn Lundy: Yeah, absolutely. So, I grew

up in a really interesting environment. My

dad is black, and my mom is white. They got

divorced when I was roughly 11 years old and

after their divorce, my dad got remarried to a

black woman and my mom got remarried to a

white man and they ended up moving in two

doors apart in a green little garden apartment

complex in Flagstaff, Arizona. So my dad and

his new wife (and her four kids) all lived in

apartment #30, and I lived with my mom and

my sister in apartment 28 with her new husband.

And what was so crazy about it was that every

stereotype you could think of existed in these

two houses. In my Dad’s house it was collard

greens, gospel music, hip hop, Motown, sports

on every television. It was loud. It was it was just

that whole entire environment. And then Mom’s

house was more like country music, maybe a

little rock and roll. She’d be sitting on the couch

reading a book. It was crazy, the differences

between these two environments. And so I

had what I now see as the gift of being able to

grow up with both cultures, and understanding

the different mindsets that come with that.

Fatima Zaidi: I’m sure that everywhere you

go, you can see, hear and feel stereotypes. So

how do we break those down and encourage

different ways of thinking and different

behaviors? And particularly, how do you

respond to those stereotypes?

Glenn Lundy: So I think, you know, right now is

a very interesting season and a lot of eyes have

been opened. And really what I think it comes

down to is an acronym that I use all of the time

called L-E-A-D-D spelt with two D’s. Because

if you break it down, this is what I think it takes.

The L stands for Listen: we have two years,

one mouth. So let’s listen first to whatever

relationship we’re trying to increase or

whatever gap we’re trying to bridge. It all starts

with listening. Listen to what they need, to what

they’re saying, and to what they’re feeling.

E stands for Encourage: and I think too many

people missed this step. They listen only in

hopes to defend or respond. I don’t want you

to listen, to respond. I want you to listen to try

to find something that you can encourage in

that person, something that you can highlight

about what they’re sharing with you.

A is for advice: We’ve created a relationship

where now the other person goes I’m willing to

learn from them because they listened to me

first, and they encouraged me and made me

feel like I have value and I have worth.

D is for Develop: we have to take the time to

lead by development. We can’t just telling

someone what to do, but not showing them,

holding their hand, spending time to nurture

34


and develop skills and abilities, otherwise it

won’t work.

The second D is for Daily: This is something

that we have to do daily. So I think the only

way to really bridge that gap is to follow this

process of L-E-A-D-D. Really start to listen to

these different groups of people, the different

cultural backgrounds. Let’s encourage the

things that are positive there. Let’s advise them

on ways we can do things a little bit better, and

then let’s commit to developing a long-term

relationship so that we can ultimately make

long term change.

Fatima Zaidi: Beautifully said, so on that

note, would you say that or have you ever

encountered a pervasive belief that diversity

and excellence are somehow in conflict?

And John Maxwell was like, it doesn’t make

any sense. Why would cutting the end off

the roast make it better? So, she said, that’s

the way my mom does it. So, he went to her

mom and was like, hey, why do you cut the

end off the roast? Her mom said it makes it

juicier and gives it more flavor, and that’s the

way my mom does it. And so Maxwell was like

this still doesn’t make any sense. So, he went

to his wife’s mom’s mom and asked, ‘why do

you cut the end off the roast. Why do you do

that?’ And she was like, John, back where we

used to live, we had a small stove, and so I had

to cut the end of the roast to get it to fit in the

stove. So, it wasn’t anything to do with flavor or

seasoning and just had to do with the condition

in the environment that they were in at that

particular time. And now it’s been passed down

to generation to generation to generation.

CULTURE

Glenn Lundy: I don’t think it’s necessarily a

conflict, diversity and excellence. There’s a

different kind of definition of what excellence

looks like. For example, if I am an African-

American and I grew up on the streets and in

the hood, my definition of excellence might

mean that I make thirty thousand dollars a year,

and can actually pay my bills on time. Whereas

someone else who maybe grew up in a different

environment with a different upbringing, that

definition of excellence can be so much higher.

It’s just a cultural misunderstanding of the

different levels of excellence and something

that we need to communicate and understand.

What’s considered successful for one person

is not necessarily the definition of success on

the other side.

Fatima Zaidi: And so what advice would you

provide to CEOs, founders, leaders in their

respective areas, who are trying to build a

more inclusive and diverse workplace How

should they be supporting people of color and

otherwise?

Glenn Lundy: It has to be a drastic cultural

shift. I’ll use an example by John Maxwell, one

of the greatest authors of leadership books in

history. He was at a Thanksgiving dinner and

his wife was cutting the end off the roast, and

he said, why are you cutting the end off the

roast? And she said, it makes the roast juicier.

It gives it more flavor. It just makes it so much

better.

Ultimately, as leaders today, we have to

understand that this cultural impact has been

put in place over decades and so there isn’t a

quick fix. We have to put education systems

in place that over time can start to reprogram

some of these cultural thoughts, biases,

and limitations that were passed down and

accepted over decades. With long term,

consistent education that breaks that cultural

mindset that currently exists, and over time, we

can shift it.

Fatima Zaidi

CEO and Co-founder

Quill Inc.

Glenn Lundy

Author, Speaker

Host #RiseAndGrind

35


THREE

HUMAN-

CENTRIC

PRACTICES

TO BECOME

A BETTER

AI FINTECH

LEADER

You’ve seen them before - robo-advisors,

virtual agents, smart banking “platforms”

- yet with each new product launch and

press release, doesn’t it seem that artificially

intelligent tools aren’t living up to their selfproclaimed

smarts?

It happens with every technology wave, and

as far as tech waves go, AI is a tsunami. It goes

a little something like this: new technology

evolves, executives insist it’s just a fad, their

competitors embrace the tech, and then

everyone plays catchup. Generally, endusers

are the ones who feel the impacts of

this cycle, left with an endless barrage of

apps & platforms that don’t solve meaningful

problems.

At this point, I may sound quite pessimistic

about the potential of AI to create

meaningful and measurable value in

the FinTech sector. I’m not! In fact, quite

the opposite - I believe that machine

intelligence has the potential to transform

the banking industry - if we take a humancentric

approach to designing solutions

(while we’re at it, let’s stop creating apps &

platforms and all agree to design solutions

instead).

There are three practices that FinTech leaders

can adopt to bring aspects of a more humancentric

design lens into how they develop

new AI-enabled solutions.

1 - Understand Data Bias

We all have biases. It’s true. They don’t make

you a bad person, in fact, one could argue

that it makes you human. It’s not recognizing

our own biases that can lead to bad decision

making and the same can be said for the data

we work with.

Beyond just collecting and analyzing data,

organizations need to uncover how data

bias can influence the accuracy or reliability

of predictive systems. A comprehensive

understanding of the role that data bias can

play is crucial in building the next generation

of intelligent FinTech solutions. As powerful

as AI and machine learning tools are, they

36


have the potential to also amplify biases that

exist in our data.

positioned to help design clever, impactful

solutions.

A simple experiment to see how bias can

rear its head in an AI-enabled system can be

demonstrated with a Google Images search

for the term “CEO”. Do the results look like

what you’d expect? While at first glance, the

results may be surprising, it’s worth noting that

as of May, 2020, the Fortune 500 included

only 37 female CEOs - a little over 7%.

Data bias can be amplified by algorithms and

it’s important to develop a deep understanding

of how this risk can be mitigated.

2 - Be Curious!

A person’s IQ is of course their “intelligence

quotient” and their EQ their “emotional

quotient” - but what about CQ? CQ, or a

person’s “curiosity quotient”, has been

described by Dr. Tomas Chamorro-

Premuzic as “the ultimate tool to produce

simple solutions for complex problems.”

Given the complexity of working with

an emerging technology such as AI,

individuals with a high CQ are perfectly

Curiosity begins with asking the right questions

and similarly, human-centered design begins

with understanding who you’re designing

for and what problem you’re trying to solve.

Curiosity is a core competency for leaders

wanting to leverage the full potential that AI has

to offer in creating scalable FinTech platforms.

3 - Focus on KPIs Over FYIs

AI gives us the remarkable ability to predict

future outcomes or find proverbial needles in

our data haystacks, but too often organizations

focus on data that doesn’t really matter. Most

executive dashboards bring together data

from across the organization but rarely are

these data points actionable and usually

they are just FYIs. Interesting insights that

give leaders little to no ability to make future

decisions from.

KPIs instead are the data insights that allow

leaders to make strategic decisions, in (near)

real-time, that positively impact the future of

the organization.

CULTURE

FYI - For Your Information

Last quarter or month’s sales performance against

target

Current warehouse inventory levels across distribution

centres

KPI - Key Performance Indicators

Last quarter or month’s requests for support from

internal pre-sales engineers which gives insight into

future sales performance

Social media data to predict future product demand (or

lack thereof)

The latter example was made famous by

PepsiCo who used social media trend data to

forecast changes in consumer behaviour and

a decreased demand for sugar-loaded drinks.

True KPIs (maybe they should be called Key

Performance Levers or KPLs) give business

leaders a true insight, based on which resources

can be allocated and investments made. When

used correctly, AI can be a powerful tool in the

FinTech toolbelt for unpacking and making

sense of complex data.

Just as the Design Value Index showed that

organizations that focus on design outperformed

the S&P by 211% over a 10 year period, this

mindset can give AI Fintech leaders a similar

advantage. The practices outlined above are

the starting point for a repeatable framework for

designing better AI-enabled FinTech solutions.

About:

Ramy Nassar

Head of Experience Design

Olive Group

Ramy is the Head of Design at Olive, the Founder of 1000 Days

Out, and author of the upcoming AI Product Design Handbook.

As the former Head of Innovation for Mattel, he has led teams

in the creation of disruptive digital products & platforms. Ramy

teaches Design Thinking at McMaster and Entrepreneurship at

Ryerson University.

37


GEN Z:

THE END OF

STATUS QUO

BANKING?

Canadians are notoriously loyal to their

financial institution (FI). Only 3% of them jump

ship every year because switching costs act

as a silent yet strong deterrent in banking.

Imagine having to transfer all your recurring

payments and deposits to a new chequing

account. Fears of complications set in, and

you resign yourself to the status quo.

While family and friends are still determining

factors when choosing a lifelong financial

service provider, relying on a history of apathy

simply will not cut it nowadays. Establishing a

meaningful relationship based on true added

value is thus critical for FIs to capture and

retain Generation Z’s attention.

SAME SAME, BUT DIFFERENT

In some ways, Gen Z is no different than

previous cohorts. They want their money to

be safe and make better financial decisions.

Surprisingly, they also value things like branch

proximity and greater trust levels associated

with well-established FIs.

Yet, Gen Z members are a different breed

evolving in new technological times. Word of

mouth defines brand adoption for products

that need to be social, digital, educational,

and offer value over time. If a relevant added

value is not there, this tech-savvy, mobile-first

generation will go somewhere else.

A GAP TO BE FILLED

Current technological shifts have created a

void - some Gen Zers get cell phones before

10 years old and are active on social media by

the time they are 12. Yet, a lot of them do not

have payment cards or bank accounts until

they are 18.

That does not mean that teens will abstain

from mobile banking during those years. It

just means that, in an era where hard cash is

no longer king and online shopping is a must,

traditional banking methods have failed them.

CONNECT EARLY

Financial habits are set as early as seven years

old, which often coincides when parents start

giving an allowance. Remarkably, a lot of

big banks have overlooked the impact Gen

Z will have on their line of business. If FIs do

not connect during this current window of

opportunity, someone else will.

38


As fintech and big tech

players expand their payment

functionality, banks will need to

be invested in teen banking —

or risk being left behind.

In Canada, we can just look to Europe for

a glimpse into the future. Open banking,

neobanks, consumer-friendly legislation and

services like the UK’s Current Account Switch

Service will eventually come to Canada.

And if there is one lesson to be learned, it is

that embracing those changes is crucial. FIs

who were adequately prepared are thriving

in this new environment. By doing nothing,

Canada is at risk of becoming a net importer

of financial technology for teens.

BE RELEVANT

- Morgan Stanley Research

In the end, it all comes down to being relevant

for tomorrow’s mass customers, Generation Z,

right NOW. Gen Z’s appetite for new payment

products and experiences is a no-brainer.

There are clear signs that their demands for

alternative cashless, context-relevant and

rewarding mobile experiences are unmet.

This technologically savvy cohort represents

a massive opportunity for FIs willing to provide

products tailored to their needs. Those FIs

looking for ways to drive meaningful mobile

engagement for Gen Z can rely on Fintechs

such as WALO.

An early value-added relationship between

the youth and FIs will pave the way for loyal

and lucrative lifelong relationships.

About:

Rim Charkani

Co-Founder & CEO

WALO

Rim Charkani is the co-founder and CEO of WALO, a fintech on

a mission to ensure the financial health of future generations.

Prior to founding WALO, Rim has held multiple key roles such

as senior corporate strategy advisor at the Desjardins Group,

Strategy Consulting manager at KPMG Canada, and Digital

Consulting manager at KPMG Australia. Rim holds an MBA in

Information Technology Management from Laval University

and a Master’s degree in Management from EDHEC Business

School (France).

CULTURE

39


HOW

BANKS,

FINTECHS,

AND

CUSTOMERS

WIN

TOGETHER

In our recently published book The Technological Revolution in Financial Services:

How Banks, Fintechs, and Customers Win Together, a group of expert contributors

from North America and Europe share their insights on how the financial services

industry will evolve in the coming decade. The context is the ongoing transformation

in the financial services industry, which is being driven by three structural forces:

heightened regulation that followed the 2008-2009 Global Financial Crisis (GFC),

innovation fueled by new technologies and entrepreneurial fintech startups, and

demographic trends with the rise of millennials and the retirement of baby boomers.

These forces are changing the competitive

landscape of financial services, lowering

barriers to entry and increasing competition

from both inside and outside the industry. Our

book outlines what we see as the successful

strategies for financial technology (fintech)

companies and incumbents, namely banks,

insurance companies, and asset managers.

While there is much to learn from our

contributors, this article shares our main

conclusion and a few key takeaways.

We argue that the winning strategy for the

coming decade will be for banks, insurance

companies and asset managers to partner

with fintech startups to deliver a superior

experience to end-customers.

The media has portrayed fintechs and

financial incumbents as rivals. But the real

threat over the coming is coming from outside

the financial services industry – from large

technology companies such as the Chinese

techfins (Alibaba and Tencent) and North

American bigtech companies (Amazon, Apple,

Facebook, Google, and Shopify). These global

players have platform ecosystems with large

and loyal customer bases, massive datasets

on customer behavior, and well-known

brands. Techfins and bigtech are bundling

financial services with non-financial products

to provide end-customers with the delightful,

easy, convenient and lower cost experiences

they desire.

Faced with these new entrants, we argue that

incumbents need to partner with fintechs,

combining their respective strengths to

provide a better customer experience.

• Banks, insurance companies and asset

managers are product-centric. These

incumbents have millions of customers,

40


expertise in risk management and

compliance, funding and scale. But they

view the world in terms of deposits,

loans, payments, and investments. They

see technology as a tool to reduce costs

and increase profitability while meeting

increased regulatory requirements. They

are more focused on their shareholders

than on understanding their endcustomers.

Fintech companies are customer-centric.

Fintechs are better at understanding

the customer’s needs and their financial

journey. Fintechs leverage technology

to solve customer pain points and offer

a better value proposition. They have

access to talent and are employing design

thinking to develop innovative solutions

that provide a delightful user experience.

So, the technological revolution highlighted in

the title does not refer simply to the emergence

of new technologies or the disruption from

new entrants. It refers to a paradigm shift in

financial services that refocuses on the endcustomer,

their experience and their lifetime

journey.

Briefly, here are three more takeaways:

Technology is not a strategy, it is a tool for

the execution of strategy.

Strategy is the answer to three questions:

where is the organization today, where does

it want to go in the future, and how will it get

there. Technology can provide better tools

for pursuing this strategy, but technological

innovation is not the end goal of strategy

itself. Technology does provide a sustainable

competitive advantage; it is widely available

and can be copied by competitors who are

fast-followers. The biggest barrier to entry in

banking is not technology or even regulation,

but access to customers.

Trust in banking is paramount, supported

by data security and privacy.

become the biggest operational risk. The

approach must be a shift in mindset from “if

we are hacked” to “when we are hacked”.

Finding it fast, disclosing it and dealing with

it immediately, and minimizing the impact on

customers will be critical. Data privacy is a

second critical issue. Consumers and privacy

advocates are acutely aware of the mixed

incentives created by the advertising- based

business models of Facebook and Google.

This is one area where technology (such as

blockchain) and new services (such as digital

identity) can promote trust, by protecting

customer data, privacy, and identity.

Open banking sits at the nexus of these concerns.

We argue that the adoption of open banking

-- in Canada and globally – will increase data

security by putting in place a secure system

for the transmission of data using application

programming interfaces (APIs).

Regulation and risk management remain

pillars of financial services.

Regulation is not going away, nor should

we want it to. Leading financial players –

whether fintechs or incumbents – support

higher regulatory requirements to weed out

bad actors. We argue that maintaining a level

playing field and avoiding regulatory arbitrage

are important. Effective risk management will

continue to be a driver of success in financial

services. Incumbents possess this expertise.

Fintechs and other new entrants will inevitably

need to invest in risk management and

compliance to be successful.

Michael R. King

Lansdowne Chair in Finance

Gustavson School of Business

University of Victoria

IN FOCUS

The loss of trust in incumbents following

the GFC opened the door to new entrants

including fintechs. But trust in financial

services is intertwined with cybersecurity

and data privacy. Cybersecurity has clearly

Richard W. Nesbitt

CEO

Global Risk Institute in Financial Services

41


PRICE

DISCOVERY

IN DIGITAL

CURRENCIES

IS MATURING

Crypto gives users some significant

advantages. The asset doesn’t come from

a government or a human being. You get

a payment rail, anonymous transfer, and a

distributed peer to peer network. And the

network is secured by math.

But how do you accurately price an

asset where every user is distributed and

international? How do you know the price you

pay is the right one?

Price discovery is a fundamental part of every

secondary market on the planet. It helps to

give an accurate value of any asset based on

all known market information.

Every Bitcoin holder and trader relies on price

discovery for buying and selling decisions.

They depend on it for measuring their

performance, determining taxes, and for

accurate payments. And through their trading

activities, traders are also part of the process.

Price discovery helps shape the entire altcoin

and token market where ETH and BTC are

used for purchases, funding, lending and

staking. The elements of pricing come from

an interplay of crypto financial products. One

of these products is crypto derivatives.

Price signals from options and futures

The Bitcoin or Ether price you see on any

crypto exchange represents the price for

worldwide trading. It also represents an

interplay between derivatives like futures,

options, and stablecoin arbitrage flows.

Sophisticated traders use futures and options

to add exposure to cryptocurrencies and

other assets. They also use them to hedge

exposure. Activity at different strike prices and

contract dates send pricing signals across

the market. The pricing in these products

reflects in part the interplay of hedgers and

speculators.

Today you will hear how options volume is

bullish or bearish for BTC based on the put/

call ratio. The press uses futures activity to

extrapolate expectations about BTC’s next big

move. These reports influence readers trading

the spot or cash markets on exchanges.

Stablecoins arbitrage out BTC price

differences

Stablecoins have played an important role in

the price discovery in crypto as well. In the ICO

boom period through 2017, trading provided

large price disparities across international

markets. Dan Matuszewski described how

traders used Tether to quickly arbitrage from

the US to China. In 2017, the market was still

young and unsophisticated.

By using stablecoins in this manner, price

disparities in BTC were reduced around the

42


globe. Today, stablecoins are among the

fastest-growing crypto products, with USDC

doubling its volume in August 2020 alone.

Stablecoins provide faster access around

the cryptosphere, making arbitrage more

efficient. This reduces price differences in the

leading cryptocurrencies around the world. On

Ethereum, the platform is increasingly shaped

by the various smart contract-based protocols.

The explosion of stablecoins has increased

traffic and fees on the platform. And the rapid

expansion of DeFi and yield farming has also

added significant demand shaping pricing.

6,000 projects provide demand for ETH and

BTC

The explosion of DeFi is also part of the

pricing environment. Over 6,000 token and

altcoin projects typically trade pairs using

BTC or ETH. This creates a demand-pull for

ETH and BTC from centralized exchanges to

DeFi. In DeFi, ETH and BTC are used to buy

altcoins that are staked and lent to earn yields

from automated market makers. Now there’s

several billion roaming around this space. All

this staking and lending makes DeFi a growing

part of the crypto price discovery mechanism.

DeFi provides a contrast to the more mature

price discovery in Bitcoin. Various projects in

the DeFi space like the infamous Yam goes

to $150 one day and zero the next. Or the

notorious SushiSwap saga where the integrity

of the anonymous founder shaped pricing.

constant but dwindling supply. A change in the

mining rewards like the 2020 halvening helps

to shape activity around the protocol. But it is

the ongoing securing of the network without

human intervention that adds confidence in

the system. Confidence is an important factor

in price discovery.

The growing dynamism of crypto price

discovery

Prices aren’t simply supply and demand

based. They are dynamic feedback loops

involving an array of financial products and

signals.

Traditional markets have numerous elements

that contribute to price transparency. These

include interest rates, government debt, riskfree

rates, equities, derivatives, and swaps.

Cryptocurrency is quickly developing a similar

structure. Every new crypto product and

service becomes part of the growing nervous

system for pricing.

Accurate real-time pricing internationally

gives clear signals of the value of crypto

assets. Pricing helps with risk transfer from

users to speculators. It helps with insurance

pricing and a more accurate determination

of yields. This, in turn, helps people make

better, more accurate purchasing decisions.

A mature pricing mechanism brings crypto

that much closer to becoming mainstream

finance.

IN FOCUS

The influence of BTC fund flows

Funds are another source of price signaling.

Fund flows indicate the expectation of some

participants in the space. Greyscale’s fund

family is an example of a fund providing

price signaling. Demand for these funds, or

movement out of them, can influence the

demand and supply of the coins they trade.

Other funds, like hedge funds, help to add

another pricing dimension. There are the

originals like Galaxy Digital, Pantera, and Travis

Kling’s Ikigai. These are joined by many other

investment and trading funds contributing to

crypto price discovery.

Crypto miners are the original contributors to

the price discovery process. Mining rewards

and the minting of new coins provide a

Tristram Waye

For Bitvo Exchange

43


WHY IS AI

REQUIRED FOR

THE FUTURE OF

MORTGAGE

LENDING?

The Mortgage Tsunami!

Mortgage lending in 2020 is set to break previous

records. An estimated volume of over $4 trillion

of new mortgages will be signed across North

America. This increase in mortgage volume is

accompanied by massive growth in refinancing,

which is estimated to reach $2.4 trillion, more

than twice the total of last year.

Considering the sheer volume of mortgage

transactions, a vast amount of data is

collected on the borrowers with each passing

year. Mortgage lenders, no matter how big or

small, need to harness the power of this data

to make reliable predictions on the borrowers’

future behaviour. Mortgage lenders rely on

data to underwrite their loans, check eligibility,

and detect fraud. The problem today is that it

takes a significant amount of manual labour to

extract data from paperwork. This lengthens

the process and makes it costly.

What role can AI play in pivoting the future

of the mortgage industry?

One of the main issues with traditional

mortgage processing is its delayed response.

Despite providing details up-front, a borrower

must wait weeks for an approval. Analyzing

customer responses and identifying the

difficulties faced across different stages will

help lenders streamline their application and

approval process. Roughly 40% of lenders

are already using AI in some capacity within

their organization. We can expect automated

underwriting systems to predict the probability

of default for individual borrowers. The

detailed review processes for loan approvals

can be compressed into hours, facilitating a

better decision-making process for lenders

and other parties (such as insurance providers).

Future AI programs will utilize data points and

indicators outside the mortgage application

process (such as social media activity, geolocation,

browsing patterns, and other online

behaviours) to assist in lending decisions.

Streamlining and improving lending

practices

AI helps financial technology (fintech) lenders

underwrite loans faster than their traditional

counterparts, as revealed in a 2018 study

conducted by the Federal Reserve Bank

of New York. While most fintech firms don’t

disclose the exact process, the following is

what it may resemble.

Machine learning allows lenders to capture

and analyze vast amounts of accurate data

and channel it through automated work

processes. It also helps lenders identify

discrepancies in data, assess loan quality

and detect aberrations throughout the loan

origination & due diligence process. This

allows underwriters to minimize time spent on

each file and invest more energy in managing

exceptional cases. In the case of missing data,

an automated system communicates directly

with the borrowers, collecting the necessary

information. The system may require human

input, but as machine learning gets better

trained by larger datasets, it will become

more accurate. In short, machine learning will

automate tasks that were once performed by

their human counterparts.

High-value datasets can be “sliced and

diced” to obtain critical insights into current

operations, design and implement workflow

improvements, and eliminate potential

problems related to lending practices.

Intelligent capture technology will also allow

44


mortgage lenders to address one of the most

critical challenges: high staffing costs. With

advanced AI tools, streamlined processes and

staff efficiencies can substantially decrease

the cost of loans while delivering a more

satisfactory borrower experience. In the

foreseeable future, sophisticated AI programs

will facilitate automation of the decisionmaking

process throughout the loan’s lifecycle.

What does this mean for the future of

mortgage lending?

A personalized and superior customer

experience! In addition to achieving

operational efficiency, mortgage lenders will

become consumer-friendly. Several financial

institutions (traditional and fintech) are using

AI to enhance customer experience. Using

the right datasets, it is possible to create an

application form that can respond intelligently

to clients, adapting to previous answers.

AI modelling can help predict which potential

clients should receive more attention from

their marketing team in order to close the

sale. This helps boost revenues and brings

down the cost per unit. Focusing on stronger

opportunities allows for targeted resource

allocation and eventually produces greater

results at lower costs. The savings achieved

through these efforts can be passed on to

clients in the form of lower rates, which in turn

can help lenders increase their market share.

While AI has made substantial progress in the

past decade, current technology is merely

scratching the surface of innovation in the

mortgage lending industry. The ongoing race

to advance the AI-driven mortgage lending

process is a big win for fintech, lenders and

consumers.

About:

Chris Grimes

CEO & Co-Founder

FundMore.ai

Chris Grimes has over 15 years of experience in the mortgage

and lending space. Seeing an opportunity to automate many

of the tasks within his company LoanDesk.ca, he realized that

he could build a great aggregation tool that leveraged artificial

intelligence and provide a full end-to-end lending platform.

IN FOCUS

Start Funding More Files Today

Visit our website to learn more

Document Management

Scoring System

Automated Underwriting

45


CASE STUDY:

TRANSFORMING

A GLOBAL SAAS

BUSINESS WITH

DATA & AUTOMATION

Challenge:

RapidRatings’ disruptive approach of using

sophisticated analytics to assess the financial

health of companies showed its value during

the 2008 global financial crisis, and the

company has expanded quickly ever since.

The business achieved a consistent 50%

growth for each of the past few years and

expanded its teams.

Previously, the finance team wasted a lot

of energy on error-prone, Excel-based

workarounds and keeping the company’s

Salesforce CRM system up-to-date. Their

QuickBooks software simply wasn’t robust

enough to support RapidRatings’ quoteto-cash,

invoicing, currency conversion,

commissions, or revenue recognition needs.

These cumbersome processes created

month-end bottlenecks that—along with the

company’s increasingly complex reporting

and budgeting needs—became more tedious

as the business scaled, so the team decided

to make the switch to Sage Intacct’s cloudbased

financial management solution.

Results with Sage Intacct:

• Reduced DSO by 20%

• Sped monthly close by 40%

• Deeper insight to product roadmap

• Kept finance headcount flat, despite

50% year-over-year growth

• Software paid for itself in


“We’re able to close billing and recognize

revenue on the first day of every month..., sending

out invoices three times faster whenever a

new deal closes and have reduced days sales

outstanding (DSO) by 20% for customers on

standard contracts,” noted Goldman.

expect to need any new hires. Goldman said,

“We feel confident that we now have the

system and processes in place to be able

to scale with the company as it continues to

expand internationally”.

Results

Contract Insight Drives Product Roadmap

Decisions

Sage Intacct’s dimensions functionality

provides a flexible financial foundation that

adapts to the way the business actually runs.

Users simply “tag” transactions with relevant

business contexts, such as department,

location, product, or project, which makes it

easy for finance to differentiate where costs

are going, and get fast answers to a wide

range of business questions.

In particular, RapidRatings has benefited

from strategic analysis and greater insights

into SaaS contracts and predicted cash

flow, which helps the company know when

to accelerate its product roadmap. While

RapidRatings has more than doubled overall

headcount since adopting Sage Intacct, the

finance team has excess capacity and doesn’t

About:

As a Sage and Acumatica Partner, The Answer Company

offers a wide range of powerful & flexible ERP solutions and

numerous complementary solutions, all backed by industry

expertise. With offices across Canada, The Answer Company

empowers companies to ask the right questions to find

effective & intelligent solutions for their unique needs.

About RapidRatings:

Shawn Ostheimer

Founder & President

The Answer Company

RapidRatings is the alternative rating, research and analytics

firm that enables organizations to most effectively assess the

financial health of their customers, suppliers and investments.

The company’s financial rating and report generation services

are intended to provide visibility and early warning of financial

deterioration or improvement.

IN FOCUS

47


WHAT THE

HECK IS SSI?

(SELF-

SOVEREIGN

IDENTITY)

What if I told you we are on the brink of

another boom as big as the .com boom,

creating a tectonic shift in how we live,

how we do everyday activities, and how we

interact with the world? The .com boom

changed the game, as nearly every company

in the world either created a website and

built a new go-to-market strategy, or were

put out of business by their competitors

who did. I believe we are at the precipice

of another shift, but this time, the consumer

has the control. Every big name in the tech

industry and financial world is racing to

provide the Trust Layer that the internet so

desperately needs.

This Trust Layer has developed enough

that a group of industry leaders have

come together to form an open-source

foundation: Trust over IP. The Trust over IP

mission is to redefine our internet identities

into cryptographically-verifiable digital

credentials. Although there are other

projects focused on digital identity, we

believe that the open-source foundation will

prevail, as only an open-source community

could provide could live up to this definition

for a Self-sovereign Digital Identity.

Why is this important? What does it entail? It

starts with bringing the concept of trust back

to our digital interactions. Through verified

credentials, people trust that it’s you on the

other end and vice versa. This eliminates

the barriers to getting to where you want

to go on the internet and streamlines the

verification process, forgoing the need for

usernames and passwords. Another key

element to SSI is the ability to transfer your

digital identity across all platforms. The

same way your license proves multiple

credentials: it verifies you can drive, if you’re

old enough to drink, if you’re a citizen, etc.,

your digital identity carries and extends

your credentials, preferences, and values

across various platforms and ecosystems.

However, taking it a step further, YOU are

in control of which of those credentials gets

shared on each platform you come across.

This not only increases the users’ control

and privacy of their information, it allows

for higher quality data to be shared. If data

works on a permission basis, that shared

data is subsequently verified by the users

themselves. Ownership of this data also

entails the ability to monetize, putting the

onus on the users as to whether they want

a piece of data to remain private or be sold.

It’s a win-win scenario.

An essential ingredient for this upcoming

boom is for government entities to get

involved, and we’re beginning to see

48


movement towards this phenomenon. On

October 21, 2020, Premier Doug Ford and

Peter Bethenfalvy announced an action

plan to introduce a secure digital identity for

Ontarians by the end of 2021. (Link to Article)

In the U.S., California is leading the way

forward, as citizens voted yes on the Privacy

Rights and Enforcement Act Initiative (Prop

24) this past election to expand upon

the California Consumer Privacy Act (CCPA),

enhancing privacy rights and consumer

protection to give citizens greater control of

their personal data.

The boom is coming and it starts with putting

the power in consumers’ hands with a new,

secure layer of trust on the internet. Change

is in the air and we’re here to keep you up

to date so you don’t get left in the dust. You

can learn more by following KABN as we

develop Liquid Avatar to be the foundation

for SSI. Through our bank-grade verification

platform, we will provide a digital credential.

In the near future, we will be introducing

networks that will accept this credential.

Liquid Avatar is here to show you the path

to SSI and give you control of your identity.

Follow us on Twitter to stay current as the

industry develops.

About:

RJ Reiser

Chief Business Development Officer

KABN Systems North America Inc.

RJ is the Chief Business Development Officer at KABN. KABN

is focused on leveraging Blockchain and Biometrics to protect

Digital Identity in support of consumer protection regulations

like GDPR, PIPEDA and CCPA. Mr. Reiser is known as a

creative thinker and dynamic executive who brings new ideas

to expand business and drive results. He is a self-starter and

motivator who leads global teams to work together achieving

technical and financial breakthroughs, while building innovative

technological advances.

IN FOCUS

49


QR CODES

THE TECH

THAT

CHANGED

CHINA IS

COMING

CLOSER TO

HOME

An excerpt from

“Cashless: China’s Digital

Currency Revolution”

Richard Turrin

The humble QR code is at the heart of both

Alipay and Pay’s systems and is the critical

element of technology that allowed mobile

payments to explode in China. Frankly, their

simplicity and ability to receive payment without

a digital connection that made these systems

such a tremendous success. The big news of

course is that QR codes are making a comeback

closer to home with Apple, Square and PayPal

all announcing the roll-out of QR code-based

systems. So, let’s take a look at how China, the

world’s expert in QR codes, uses them because

you’ll be seeing a lot more of them.

or receiving payment. There are two ways

to pay using QR code systems to make a

payment. You can pay by simply opening

your phone to the payment screen, and your

QR code appears on the screen. This code is

captured by either another phone’s camera

or the bar code scanning devices that exist at

many stores. There is a ping once the scan is

done, password or facial recognition entered,

and your cell phone logs the purchase as

complete. In this method, the investment in

new technology is negligible. The software

is designed to work on just about any lowgrade

smartphones with a camera to make it

easy to adopt, and if you are a retailer of some

size, you already had the bar code scanning

hardware on your point of sale devices.

Mobile payment, no technology required.

QR Codes are an elegant and straightforward

solution for payment.

QR codes are used by mobile payment systems

to give each user a digital identity when paying

Now for the second way to pay using these

systems, and the reason why mobile payment

conquered China. If you are a vendor or

receiver of cash, you can make use of this

system with -no- technology on your side

of the transaction. That is correct; you don’t

need anything electronic. All you need to do

is print out your QR code so that the person

paying can scan it with their mobile phone

and send the money. This made accepting

electronic payment within reach of everyone.

A revolution in the making, and its most

significant impact was on small vendors, who

50


had been excluded from using debit cards

because they lacked the fixed lines and pointof-sale

devices.

An electric bill, with WeChat Pay QR code printed on it.

The magic of QR codes is their simplicity. Instructions:

1) In WeChat click scan, 2) Payment complete after

confirmed. You can print QR codes anywhere at no

cost.

An electric bill, with WeChat Pay QR code

printed on it. The magic of QR codes is their

simplicity. Instructions: 1) In WeChat click

scan, 2) Payment complete after confirmed.

You can print QR codes anywhere at no cost.

TRENDING

QR codes at a local noodle shop.

Technology made simple.

For simple shop keepers and dumpling sellers

in small towns and villages, digital payments

were suddenly and quite miraculously within

reach. They were included in this solution

because they didn’t need to invest anything

more than the cost of going to a local

photocopy shop and printing out their QR

code, to become part of the digital world.

Digital technology was finally at the service

of all, including those -without- the resources

to purchase access from banks. A phone was

all that was needed. It was a revolution in that

it allowed everyone, no matter how humble,

to participate, and was the embodiment of

the high ideals that both the government and

private sector had for it at launch.

QR codes are so simple that you can print

them out on just about anything, from electric

bills to tables at restaurants. There is no

limit to what could have a QR code printed

on it, and this contributed significantly to the

creation of the ecosystem for WeChat and

Alipay that I mentioned earlier. As you walk

around Shanghai, the adoption is so incredible

that almost -any- financial transaction can be

done with mobile payment, and a shocking

array of things have QR codes printed on

them.

The key to such widespread adoption is

that with QR codes, inanimate non-digital

objects can join the digital world to build an

ecosystem. Consider a bill you receive in the

mail from a public utility. Their investment to

make use of digital payments is small. They

simply need to print the QR code for your

account on the bill and add some software

in the backend of their systems to link their

accounts to either WeChat Pay or Alipay.

Restaurants could glue a plastic tag with a

QR code directly on the table to allow you to

order and pay without a server. Within two

years, digital payments exploded in China

because building an ecosystem was cheap,

easy, and useful.

NFC payments

Now compare this to Apple and Google

Pay’s rollout in the US market. If you

were an early adopter, both technologies

required you to upgrade your phone to

near field communication (NFC) enabled

versions. Apple even launched Apple Pay in

conjunction with the launch of the newly NFC

enabled iPhone 6. A not so subtle message to

owners of earlier versions of iPhone that they

would have to upgrade and buy into using the

cashless lifestyle.

Both Apple and Google Pay also required

that shopkeepers update their point of sale

51


52


systems to include the appropriate readers.

The outlay in cash for both sides of the

mobile payment revolution was substantial,

and many smartphone users without NFC

enabled phones were simply left out. During

the early years, your Starbucks may have

had mobile payment, but did you notice that

your smaller local coffee shop didn’t? The

reason is that switching to mobile payments

was expensive for smaller shops, who had

to wait for the price to come down and user

demand to go up. It was as if the technology

manufacturers were intentionally limiting the

digital payment dream to those who could

afford it, rather than inviting everyone to

participate.

Starbucks and QR Codes

Starbucks’ launch of its mobile app in 2009

provides a fabulously successful example of

how QR codes were trialed in the US but flew

beneath the radar for many. It also shows

how early adoption of mobile payment via

an agnostic app helped make Starbucks a

surprise giant in mobile payments. Just like

China, Starbucks designed its app to embrace

Apple, Android, and Blackberry users alike,

and went with QR codes to defray the cost

of launching the system.

To be specific, Starbucks chose QR codes

to digitize its physical card system by using

their existing bar code scanners. No new

hardware was required, and just like WeChat

and Alipay, you could use the app on any

phone. No new phone required for users, no

new tech for Starbucks. It was a win-win for

all.

QR Codes are Coming!

By now it’s clear that QR codes are technology

that simply works! So, it should be no surprise

that both PayPal and Square are rolling out

QR code-based systems. Inspired by the

pandemic and people’s desire for completely

touch free payment, PayPal rolled out QR

codes this year. In PayPal’s words, “a fast,

touch-free way to accept payments in

person.” Not to be outdone, Square launched

a restaurant focused payment system that

allows completely contact free ordering and

payment using QR codes. The system closely

matches a system rolled out by WeChat some

years ago in China and is in use at most fastfood

restaurants.

But the biggest news for QR codes comes

from Apple, which is making all things old

new again, and ensuring QR codes’ longevity

with its Alternate Reality (AR) app Gobi. AR

superimposes virtual information over the

real world, and what better way to trigger an

AR advertisement or notification than with a

QR code. With AR, you use your camera to

scan your surroundings, and when it finds a

QR code, it triggers the AR event. QR’s magic

ingredient for our new AR world is that you

can print it out and paste one wherever you

wish. Just like my local dumpling shop.

TRENDING

Starbucks’ payment system was so

successful that it eclipsed the number of

mobile users of Apple and Google Pay until

Q3 of 2019, when Apple Pay finally overtook

them. Critically, Starbucks was not held back

by the slow rollout of new NFC enabled POS

systems. Starbucks launched its app in 2009,

while the first NFC enabled iPhone 6 models

launched in 2014. The company had a 5-year

lead in collecting digital users, something

truly unheard of in the technology space.

Who says QR codes never made their mark

in the US payment space?

About:

Richard Turrin

Fintech and AI Consultant

Author of Best Selling “Innovation Lab

Excellence: Digital Transformation from

Within”

Rich Turrin is the international best-selling author of “Innovation

Lab Excellence” and soon to be published “Cashless - China’s

Digital Currency Revolution.” He is an award-winning executive

previously heading fintech teams at IBM following a twentyyear

career in investment banking. Living in Shanghai for the

last decade, Rich experienced China going cashless first-hand.

53


CIPO

ISSUES

A NEW

PRACTICE

NOTE FOR

COMPUTER-

IMPLEMENTED

INVENTIONS

Major activity in the Fintech space is increasingly

making headlines that cause even the most

casual observer to take notice. In Canada, the buzz

surrounding Fintech’s most promising solutions

has reached a new pitch with the news of the

NASDAQ’s acquisition of Newfoundland and

Labrador based company Verafin, a company

specializing in fraud detection systems, on

November 19, 2020 for a cool $2.75 billion USD. 1

Fintech’s prominence on the national stage,

as well as the economic potential it clearly

represents, is set to only continue rising. Not

only has use of Fintech in Canada increased

from 8 percent in 2015 to 50 percent in 2019, 2

but research has also recently suggested that

Fintech innovations yield substantial value to

innovators, with blockchain 3 being particularly

valuable.” 4

These innovations consist of proprietary

analytic systems (e.g., facial detection systems,

fraud detection systems, etc.), and are more

often than not designed by technologically

driven companies rather than the traditional

well-established financial institutions.

Governments are racing to get up to speed, to

both understand the technology and protect

consumers (e.g., data privacy). At the same

time, they are striving to create the conditions

for innovation and competition that will

encourage the growth of an industry with the

potential to create millions of jobs and solve

some the world’s most intractable problems. 5

Securing IP rights and ensuring

confidentiality

As Canada strives to adapt innovation

policies and achieve these goals, securing

IP rights on its homegrown innovation will

become an indispensable piece of the

puzzle. Fintech companies will and have

been encouraged to adopt IP strategies

early on. These include filing patent

applications, registering trademarks and/or

copyright, and ensuring the confidentiality

of data as well as trade secrets, if any.

Verafin, for example, is the registered owner

of intellectual property portfolio, including

U.S. Pat. No. 9,792,609 B2, Canadian patent

application No. 2,860,179 A1 and couple

of registered trademarks in Canada and

the United States, all of which are and

were crucial to protecting its proprietary

innovations and solidifying its image as a

reliable fintech player.

54

1

https://www.nasdaq.com/press-release/nasdaq-to-acquire-verafin-creating-a-global-leader-in-the-fight-against-financial (Press release of

November 19, 2020).

2

https://globaladvantageconsulting.com/how-canada-is-adopting-fintech/

3

https://cointelegraph.com/news/what-is-the-difference-between-blockchain-and-dlt

4

Chen et als., How Valuable Is FinTech Innovation? The Review of Financial Studies, Volume 32, Issue 5, May 2019, Pages 2062–2106, https://

doi.org/10.1093/rfs/hhy130, available at: https://academic.oup.com/rfs/article/32/5/2062/5427776.

5

https://wedocs.unep.org/bitstream/handle/20.500.11822/20724/Fintech_and_Sustainable_Development_Assessing_the_Implications_

Summary.pdf?sequence=1&%3BisAllowed=


In the Fintech context, it is important

understand what some of these categories

refer to. Copyright indeed covers all

visual, audio, and video material, but most

relevantly, also extends to computer code

(e.g., source code, pseudo code, machine

code, etc.). Awareness and solid policies for

developers are critical, because the inclusion

of copyrighted source code (or even open

source), even unknowingly, could jeopardize

ownership of a technology. Trademarks can

include a combination of words, sounds,

designs or other forms that distinguish one

company’s goods or services another’s. 6

These serve as a foundation for building

the credibility required by customers before

they entrust their most precious data to a

company. In a world where consumers are

being trained to treat any unknown online

entity as a potential scam, a recognizable

trademark will be what allows many brands

to sink or swim. They are also an invaluable

tool for distinguishing a company or service,

especially as the market floods with new

players.

Patents and the “shifting sands” of

patentable subject matter

Patents, however, represent a particular

challenge. We know that patents are granted

for new, useful and non-obvious inventions,

but Fintech-related patent applications are

often rejected, as they are frequently fall into

the legal grey area of “non-statutory patentable

subject matter”. In essence, what this means

is that if the computer is found to be a nonessential

component of the invention (e.g., can

be substituted by something else), and the only

remaining essential elements are non-patentable

(e.g. an abstract theorem, mathematical formula

(algorithm), etc.), the application would most

likely be rejected by the patent examiner on the

basis of non-patentable subject matter. On the

other hand, if the computer is considered to be

essential to the invention, the claims may define

patentable subject matter.

Distinguishing between what constitutes

patentable and non-patentable subject

matter is no easy feat, and has been the

object of many fierce debates and legal

disputes. 7 Following each of the Amazon.com

and Choueifaty decisions rendered against

Canadian Intellectual Property Office (CIPO),

the CIPO issued in the month of November

2020, a practice note on how to deal with “[p]

atentable subject-matter under the Patent

Act”. 8 This new guidance is expected to

align the patent application examination

process closer to the legal principles set

forth in relevant case law, as well as facilitate

the recognition of eligible subject-matter

related to business methods and computerimplemented

inventions, amongst others.

As Fintech entrepreneurs innovate new

solutions for the purposes of digital identity 9 ,

AML/KYC, digital onboarding, crypto-asset 10 ,

payment (MasterCard, Bank of America,

Walmart, etc.) 11 , they must keep a close eye

on the legislative developments that will bear

significantly on the proliferation and speed of

adoption of Fintech solutions. The best way

for companies to protect their competitive

advantage is to invest in a strong IP strategy

that will put them in a position to protect their

innovations, strengthen their reputation, and

comply with existing (andfuture) policies.

About:

David Durand

Member of the Quebec Bar and advisor

to the NCFA

Durand Lawyers

David Durand is a member of the Quebec Bar and advisor to

the NCFA. Durand Lawyers brings Law & Business Together. It

is a law and business advisory firm specialized in intellectual

property, business strategy, as well as civil and corporate

law. Durand Lawyers is uniquely positioned to help clients in

emerging technology industries, including Fintech, employing

both lawyers and experienced entrepreneur(s). For more

information visit our website at: www.durand-lex.com.Not

legal advice and hyperlinksThis content is provided solely for

information purposes and does not constitute legal advice,

professional advice or similar opinion. If you believe you

require legal assistance, do not hesitate to contact us. The links

contained on this web site which link to third party web sites

are not monitored by Durand Lawyers. Links are provided for

information and convenience only.

TRENDING

6

http://www.ic.gc.ca/eic/site/cipointernet-Internetopic.nsf/eng/wr03718.html.

7

Schlumberger Canada Ltd v. Canada (Commissioner of Patents) (1981), 56 CPR (2d) 204; Re Application No. 2,246,933 of Amazon.Com

(2009) C.D. 1290, Amazon Inc. v. Canada (Attorney General), 2010 FC 1011, and Canada (Attorney General) v. Amazon.com, Inc., 2011 FCA 328

[collectively “Amazon.com”]; and Choueifaty v. Canada (Attorney General), 2020 FC 837, available at: http://canlii.ca/t/j9bxg [“Choueifaty”].

8

http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr04860.html (published on November 3rd, 2020).

9

https://patents.google.com/patent/US10325084B1/en.

10

Fran Casino, Thomas K. Dasaklis, Constantinos Patsakis, A systematic literature review of blockchain-based applications: Current status,

classification and open issues, Telematics and Informatics, vol. 36, 2019, pages 55-81, available at : http://www.sciencedirect.com/science/

article/pii/S0736585318306324.

11

https://www.paymentssource.com/list/6-fintech-patents-to-watch.

55


Fintech

in Atlantic

Canada

The history of the financial services industry in Atlantic Canada goes back to

the early 1800s with the establishment in 1820 of the first chartered bank in

Canada, the Bank of New Brunswick, later followed by the founding in Halifax

of two of present Canada’s largest banks: Bank of Nova Scotia (1832) and

Royal Bank of Canada (1864).

Today, Atlantic Canada is witnessing the

emergence of a unique fintech ecosystem,

powered by key communication infrastructure

and deep expertise in back-office operations.

Venn Innovation has identified over 100

financial technology startups, with products

ranging from cybersecurity, blockchain,

and machine learning to robotics process

automation, AI and data analytics, that are

bringing new life into the region while serving

clients around the world. Atlantic Canada has

been known for its quality of life and costcompetitive

business environment, but now,

during this global pandemic, the region has

proven to be one of the safest places in the

world, adding to these advantages the fast

economic recovery of its companies.

Atlantic Canada has strengths that are

clearly complementary to the financial

industry and can support the growth of this

high impact sector with intentional effort

and focus, gaining a share of this growing

global industry. In NB alone, back office

operations of financial institutions, insurance

companies and communications, employ

some 18,000 people, representing $1.5B for

the economy 1 .

How we identify Fintech companies?

1

https://contactnb.ca/

The fintech sector in

Atlantic Canada includes,

for example, leaders like

Verafin, which launched

in 2003 and raised $515

million in 2019, the

largest tech funding

deal ever in Canada, and

emerging companies like

ProcedureFlow, Oliver POS

(which recently secured a

seed financing round from

European investors), and

SnapAP, which recently

partnered with Oracle and

Sage.

56


Fintech companies in our region have

unique characteristics that largely contribute

to the competitiveness of the region: as the

investment environment is different from

places like Silicon Valley or Tel Aviv, these

companies often do more with less; they

tend to be very lean, have a resourceful team,

be real-world problem-solving focused

and, as a result, provide more customeroriented

value propositions. On the other

hand, it is exciting to notice that we have a

lot in common with many of the world’s top

fintech ecosystems. Compared to places like

Singapore, Sydney, Tel Aviv and others, we

have comparable technology, and a focus

on non-local markets. The high-impact

meetings with industry leaders and the warm

reception our Atlantic Canada delegation

was so fortunate to enjoy at Money2020 last

year are clear testimony to our international

attractiveness.

restrictions imposed by the pandemic, this

initiative now counts participants from coast

to coast. It is also encouraging to note that

Dalhousie University started offering the only

university fintech course in the region last

year. The course focuses on understanding

the landscape in which fintech companies

emerge, grow and compete, and gaining

practical experience by interacting with

fintech companies and entrepreneurs from

the region. Dr. Maria Pacurar works with

undergraduate students from across the

university to inspire the next generation

of fintech leaders. She has also been

collaborating with Alicia Roisman Ismach, of

Venn Innovation and Atlantic Fintech. Their

dream: build the next Singapore or Tel Aviv,

but right here in Canada—on the East Coast.

TRENDING

It’s been exciting to see the evolution of

these companies since then, including the

meaningful progress of solutions like Black

Arcs, which can simplify complex decisionmaking

through its analytics platform for an

array of customers, and Four Eyes Financial,

which offers financial compliance software

from the institutional level to end-users.

Of course, we have to focus on the next

generation. Given the strong pool of talent

in an array of functional areas coupled with

a considerable influx of highly educated

immigrants, excellent quality of life,

affordable cost of living, natural beauty and,

of course, the growing tech ecosystem,

there is no doubt that Atlantic Canada will

see an increased international appeal. But

what about the future? Where and how are

we getting our next generation of talent?

The region’s 16 universities graduating

nearly 18,500 degree holders annually and

performing nearly 60% of the region’s R&D

(more than $200 million annually) 2 are an

important driver in this innovation ecosystem.

This fall, both the Faculty of Management

at Dalhousie University and Venn Innovation

partnered with Coopérathon, the largest

Open Innovation challenge in Canada. Run

digitally for the first time because of the

About:

About:

Maria Pacurar

Associate Professor of Finance

Rowe School of Business

Professor Maria Pacurar is an Associate Professor of Finance in

the Rowe School of Business and Vice-Chair of Senate (Student

Affairs) at Dalhousie University. An award-winning instructor

and researcher, Maria teaches fintech, risk management for

financial institutions, and corporate finance courses in the

regular and executive education programs. She holds a Ph.D.

in Finance from HEC Montréal.

Alicia Roisman Ismach

Head of Atlantic Fintech

Venn Innovation

Alicia Roisman Ismach is a serial entrepreneur and fintech

expert with over 20 years leadership in the industry. Alicia is

a member of the Technology Committee of the Electronic

Transaction Association, Entrepreneur in Residence at Venn

Innovation and leads the fintech initiative in Atlantic Canada.

Alicia holds a Master in Entrepreneurship & Innovation from

Swinburne University of Technology.

2

https://www.atlanticuniversities.ca/

57


THE

RISE

IN BIG

TECH AND

FINTECH

CREDIT

As a Gen Z, technology has played a big role

in my everyday life ever since I was young and

now as a remote intern at NCFA, I’m excited

to share some research and insights on Big

Tech and Fintech credit markets.

Big Tech and its expanding dominance

Lending institutions such as banks and credit

unions have traditionally been the chief sources

of finance in most economies in the world,

however large technology firms are uniquely

positioned to capitalize on a technologyfocused

alternative to financial services. Their

advanced AI and machine learning capabilities

allow these companies to utilize the swaths

of data that their user base generates to

tailor prices, determine creditworthiness, and

screen loans. Amazon’s e-commerce sales for

example, reached a staggering $416.48 billion

in 2020. As online channels expand due to

general trends and the global pandemic, they

pose an existential thread to traditional brick

and mortar models. UBS analysts estimate

that 75,000 brick-and-mortar stores could be

forced into closure by 2026.

Companies like Walmart have seen their

supply-side economies of scale diminished by

competing and efficient online marketplaces

that operate with lower overheads forcing

them to integrate more technology into their

business model. Walmart has already taken

several steps in the Fintech credit direction.

One is the creation of Walmart Pay, a payment

app that enables shoppers to transact at the

register via QR code. Other methods adopted

include a prepaid card plan with Walmart

MoneyCard and a money transfer service

with Walmart2Walmart.

Global Alternative Credit Trends

As illustrated in the chart below, there has

been a surge in popularity in Fintech and Big

Tech credit – collectively known as alternative

credit – reaching an estimate of 795 billion USD

globally in 2019. While alternative credit has

been on rise collectively, the data shows that

global Fintech credit volumes have declined

between 2017-2019 from an estimate of 410

billion to 223 billion USD. One major factor for

this decline is due to the greater regulatory

developments in China. In the same period,

Big Tech credit growth has surged at a more

rapid pace than the previous years, rising from

an estimate of 197 billion in 2017 to 572 billion

USD in 2019.

58


TRENDING

P2P Lending and Fintech Credit in the U.S.

Interestingly while Big Tech seems to be

the dominant player globally in recent years,

Fintech credit is much more prevalent in

the US, accounting for nearly 89% of the

total US alternative credit. Research shows

that the Fintech credit market in the US

is primarily made up of P2P/marketplace

consumer lending with investment coming

predominantly from institutional investors

rather than individual lenders.

Fintech credit describes credit activity

facilitated by online platforms that are not

operated by commercial banks. One popular

form of Fintech credit is peer-to-peer (P2P)

lending, where borrowers are matched

directly with investors through a lending

platform.

Traditionally, one’s FICO score has been the

gold standard of credit bureaus in determining

one’s ability to open a bank account, obtain a

loan, or get a credit card. Now, with the ability to

process lots of data at high levels of efficiency

thanks to machines, Fintech companies are

creating more holistic creditworthiness rating

systems that help alternative lenders better

assess risks and serve up loans to a segment

59


of the population that traditionally has been

shut out of markets.

Prediction for Future

Given Big Tech and Fintech’s competitive

advantages with machine learning and AI, I

believe that they will play an inevitable role

in the future of financial services. This type of

competitive edge that Big Tech companies

have make them ideally positioned to serve

the role of a Techfin, a term coined by Jack

Ma describing tech companies that provide

financial services with a more customer &

technology centric approach.

The COVID-19 pandemic has only exacerbated

the paradigm shift in the financial technology

space. Growing numbers of people consider

the adoption of contactless payment as a

basic need to prevent the spread of the virus,

and I predict the rise of many forms of Fintech

innovations like mobile wallets replacing

physical wallets.

Given the size, resources and efficiencies of Big

Tech and the increasing potential of Fintech,

incumbent institutions are likely feeling the

heat to re-align their products and services

to benefit tech-savvy consumers across

the board, not just us Gen Zs. Incumbents

like Chase have already taken steps in this

direction by investing heavily in their digital

space to offer a more unified experience for

the customer. As a passionate technology

user, I am eager to see what the future has

in store.

About:

Samuel He

NCFA Intern

NCFA

Samuel is currently a senior at Northeastern University studying

finance and mathematics. He is interested in economics and

programming and hopes to pursue a career in data analytics.

60


61

TRENDING


CRYPTO-

CURRENCIES

AREN’T AN

ALTERNATIVE.

THEY’RE HERE

TO STAY.

2020 is winding down and it’s been a hectic

(and often tragic) time for so many of us around

the world. Throughout the year, we’ve seen

some industries struggle while others thrived.

Out of this uncertain time, it’s important to

note the incredible shift toward technologyenabled

financial services. As a longtime

payments and blockchain entrepreneur, I’m

convinced we’ve reached a real moment

in driving awareness and adoption in digital

currencies as more people live their lives

increasingly online.

This year alone, we’ve seen massive progress

in the multi-billion dollar crypto market that

can no longer be ignored: bitcoin soaring

above US$15,000, leading fiat payment

processors jumping on the crypto bandwagon

and rising use among people from every part

of the world.

It’s called the “future of money” for a reason.

Cryptocurrencies have cemented themselves

as a means of exchange for our global, digital

economy.

Better regulatory frameworks, better

processes

Historically, one of the biggest barriers to

entry for cryptocurrencies has been mistrust

and a lack of knowledge among regulators.

It’s understandable. With more than 2,000

different types of cryptocurrencies now on

the market, ambiguous and unclear guidance

from governments has resulted in slow

institutional adoption. But that tide is turning.

With broader global adoption and a better

understanding of the technology behind

cryptocurrencies, regulators are now

equipped to build solid frameworks that

actually work for the crypto community.

Take KYC (Know-Your-Customer) processes

as an example. Early on, there was a strong

perception that KYC would only hinder (and

not help) sales because it added another

layer to the buying process. Instead, we’ve

seen the opposite through streamlined and

straightforward KYC.

62


That is why we have put security and

transparency at the heart of our agenda to

build a fully compliant platform and more

importantly, to pave the way for mass adoption

in a sustainable way.

The crypto community drives choice

Freedom of choice is a significant part of

the crypto community and it has shifted

the balance of power into the hands of the

consumer. At CoinPayments, we work hard

to meet that need by supporting more than

1,900 cryptocurrencies. We feel it’s a critical

part of how we drive adoption among an

increasingly diverse user base.

Just look at this chart below. While bitcoin still

represents approximately 85% of transactions,

we are seeing an increased interest in

stablecoins, both globally and in the U.S.

In APAC, 50% of CoinPayments merchant

transactions were in stablecoins over the last

year.

TRENDING

Fortunately, major fintech players including

PayPal, Square, Revolut, and Robinhood are

taking notice. Even Visa is moving into the

space with its Ternio and ZenGo partnerships.

This is the type of traction that will drive a

rapidly rising level of adoption.

The next adoption wave

It’s only a matter of time before the biggest

ecommerce platforms like Amazon and eBay

embrace digital currencies. This is the moment

we’re all waiting for within the payments

industry and it’s happening at a lightning-fast

pace. It’s hard to believe credit cards took

50 years to gain mass market appeal while

bitcoin is just 11 years old.

Take this chart from a recent report on

CoinPayments merchant activity:

63


This is the story of cryptocurrencies as a

form of payment right now. Will the trend

always be up? Likely no, but we have a

long way to go before it slows. Continue to

watch for major announcements around new

ecommerce platforms and brands opening

their businesses to digital currencies.

In a world where 1.9 billion adults remain

unbanked, don’t underestimate the

importance of financial innovation to help

businesses and individuals realize their full

economic potential. That underlying need is

exactly why we think cryptocurrencies are

no longer a fringe solution.

The importance of education and advocacy

While the case I’ve laid out for mass adoption

of cryptocurrencies as a form of payment

seems inevitable, it’s important to note that

this is a movement that requires continuous

support and education.

In the coming years, we’ll see regulatory

challenges and adoption hurdles, which

is why we’ve made advocacy a priority

at CoinPayments. That includes regular

innovation with our own products and

services as well as industry-focused

initiatives like with NCFA in Canada, and

our recent partnership with Celo Alliance

which is focused on driving financial

inclusion through cryptocurrencies. Through

collaboration, we’ll work directly with leading

charitable organizations to drive awareness

and adoption in developing economies.

About:

Jason Butcher

CEO

CoinPayments

CoinPayments is an integrated payment gateway for

cryptocurrencies. It is the preferred cryptocurrency payment

platform for merchants like Overstock and Quantfury, as

well as eCommerce platform providers like Shopify and

OpenCart.

64


CATCHING

THE WAVE:

CAPITALIZE

ON NEW

OPPORTUNITIES

IN PRIVATE

PLACEMENTS

TRENDING

Private markets just

completed a decade of

explosive growth. According

to McKinsey’s “A new

decade for private markets”

review, 2019 saw record

numbers in terms of private

placement volume, with

global private deal annual

volume reaching $919B.

The opportunity is here, and

it is enormous. This article

covers select insights from

industry thought leaders

on the latest trends in

technology-first private

placement markets.

5 Private Placement Insights

Market Growth

Currently, forecasts are putting global

alternative AUM at over $20 trillion by 2025,

which is twice the value they were at in 2018.

The number of deals more than doubled from

2009 to 2019. Behind these figures is strong

investor demand, supercharged by recent

regulatory changes.

Regulatory Changes

Recent SEC regulatory changes have served

as a catalyst and provided more options for

equity capital markets to source capital from

individual investors, creating a necessity

for organizations to prioritize building out

compliance and syndication processes for

retail participation. Due to the administration

involved with the participation of larger

numbers of investors, many firms have

only made their private deals available to

65


institutional investors, with retail participation

hovering around 10%. Firms looking to

capitalize on the new influx of retail investors

are prioritizing efficiency improvements of

internal processes.

New Investor Class Emerging

According to Blackstone, the percentage of

its capital contribution by retail investors will

shift dramatically in the first half of the next

decade. By 2025 retail investors are projected

to have a level of capital contribution equal

to that of institutional investors. This means

that organizations seeking sustainable growth

in the space need to couple their private

placement strategy with internal technology

projects that prioritize building out compliance

and syndication processes necessary for

retail distribution. Although the demand for

private deals is reaching record highs, there is

not enough accessible supply of investment

opportunities. As a result, competition

amongst quality firms is accelerating to fulfil

investor appetite.

The Bottleneck: Manual Processes

Firms relying on spreadsheets, email, and

physical mail in 2020 will find it increasingly

difficult to scale their business. The main

factor behind the low rate of retail participation

in deals is the inability of firms to increase

the number of investors they are able to

service without significantly expanding their

workforce. The largest culprit is the legacy

systems and processes that bring inefficiency

to workflows such as investor onboarding,

document execution, signature collection,

and payment reconciliation.

On top of not being scalable, these outdated

processes often come with human error and

correction efforts are tedious, expensive, and

create opportunity cost. A situation such as

COVID-19 only exacerbates these issues since

the old processes are simply not equipped to

handle the logistical challenges organizations

are now faced with. Centralizing these

workflows on an online platform is allowing

firms to maintain business continuity while

simultaneously removing old operational

issues.

Top Firms are Digitizing

Even though there is now an industry consensus

on the value added by digital solutions, many

smaller firms have not yet committed to a

necessary digital transformation strategy

like the industry’s largest firms. There are

various reasons keeping organizations from

making technology a priority, however their

competitiveness is declining as a result. While

the goals of digitization projects may vary

from firm to firm, some common business

outcomes that need to be addressed include

lowering operational costs, enhancing

investor experiences, driving new revenue,

and improving reporting and decision making.

3 Must-Have Solutions When Digitizing

Replacing labor-intensive, ad hoc tasks with

standardized and automated workflows will

deliver benefits across all business segments;

accelerate growth through shortening the

deal cycle, enhance investor relationships

and drive cost reduction and back-office

productivity.

It should be noted that back office efficiency is

not the only facet of digitization that delivers

value to firms; the adverse impact that manual

processes have on the quality of investor

experience is also eliminated. Whether it is

during the onboarding process or after the

fact, users should be able to complete all

interactions with a firm conveniently and

access all necessary information in a way

that is intuitive and seamless. Platforms that

help organizations achieve this are going to

be much more than a productivity tool by the

people using them.

1. Investor Onboarding

This crucial part of the investor journey is

perhaps most visibly impacted by solutions

such as the one offered by Katipult. The

onboarding process is currently plagued

with inefficiencies that can be entirely

removed by digitizing the entire workflow.

This includes systems to manage digital

form submissions, ensure compliance, and

automate KYC.

66


2. Subscription Document Generation

(smart forms)

Smart forms are a high impact feature

of private placement software that allow

firms to scale the volume of deals without

expanding the workforce. Smart forms

keep track of appropriate investment

vehicles and investor exemptions, and

merge all required information in a guided

workflow to ensure accurate execution of

signatures and initials.

3. E-Signatures

High on the list of priorities for leading

firms has been replacing “wet” signatures

with their electronic or digital counterparts.

This allows firms to avoid playing tag

with investors whose investments can’t

move forward because of a missing

signature. Collecting these electronically

plays an important part in improving both

the company’s back office efficiency

as well as the investor experience.

It is important to understand the business

fit of an e-signature solution before you go

ahead with the implementation. There are

many off-the-shelf solutions available on the

market and companies need to plan in order

to avoid going through a huge digitization

project that ends up with disjointed solutions

that don’t work together. A fully integrated

solution is key, so whether you decide to

integrate separate solutions or find one

purpose-built for your platform, just make

sure you have a clear path to making the

whole ecosystem work together.

About:

Brock Murray, Head of Global

Development

Katipult | TSXV: FUND

Brock Murray is Head of Global Development & Director

as well as co-founder and founding CEO of Katipult. Under

his leadership the company entered 20 unique regulatory

environments, successfully completed a public listing, and

attracted enterprise customers such as ATB Financial.

TRENDING

67


68


2020 FINTECH DRAFT: PITCHING & DEMO FINALS

AUGUST 27 TH

INAUGURAL 2020 FINTECH DRAFT

Inspired by sports league drafts, the inaugural 2020 Fintech Draft Pitching & Demo

competitions were held virtually on August 27, 2020 where 8 finalists competed for exposure,

prizes, introductions to investors, media and prospective buyers and a complimentary one (1)

year industry partnership with NCFA. The annual program is sponsored by NCFA and open

to Canadian and international companies in the fintech sector and designed to identify and

feature emerging and high growth fintech startups and scaleups. Finalists were evaluated

on a variety of criteria such as strategy, traction, product/market fit and need, differentiation,

innovation, x-factor and ability to answer judges’ questions.

Pitching Judges:

Demo Judges:

Philippe Daoust

Managing Director, NAventures

National Bank of Canada

Elisabeth O’Neill Laett

Managing Partner

Holt Accelerator

Dave Unsworth

Co-Founder and General Partner

Information Venture Partners

Christian Lassonde

Founder and Managing Partner

Impression Ventures

Missed FFCON20 RISE? Checkout the Session Recordings -> here

69


Target Issue:

The real estate market has not experienced the advantages of liquidity like many other markets

that were digitized and with such assets as gold and company stock tradable through modern

technological platforms. It remained tedious, complex, slow-moving and costly. Real estate

investors expect their funds to be locked up for several years; the minimum amounts to invest

are high and there’s a lack of access to great global projects.

Core Benefits:

• Opening the real estate market to everyday investors.

• Lowering investment thresholds – translation: you shouldn’t have to be mega-rich to start

making money in real estate.

• Clearing the way for local-stakeholder fundraising, revitalizing developing nations and

depressed inner-city neighborhoods.

• Removing regulatory hassles that bar all but the largest investors in the most lucrative real

estate development projects.

• Breaking down geographic barriers

• SolidBlock is not conducting a Regulation Crowdfunding offering. Hosted by Wefunder Inc.

Ideal Customers: Consumers (B2C)

Milestones: In 5 years, we will open the real estate market to millions of people with over 1

billion dollars of assets tokenized

Yael Tamar

CMO & Co-Founder, SolidBlock

70


71


Q & A

WITH

YAEL TAMAR,

SOLIDBLOCK

What’s the vision behind SolidBlock?

Very simple - make real estate accessible

for everyone. Once we wrap real estate into

a financial product, investors can buy and

sell it at any time, digitally. It can be sold via

crowdfunding or other digital platforms, as well

as ATSs and exchanges, catering to a variety

of investors, retail, high-networth individuals

and institutions. There’s no reason only a

select few can benefit from the stability and

value growth of this asset class - SolidBlock

has an ambitious goal to bring global assets

to hundreds of millions of new investors.

But aren’t people already using the internet

for loans and investment?

It’s cool that you can apply online for a loan

– from a bank or another big, bureaucratic

mainstream institution. But that’s nothing truly

new. It’s just a digital version of the original –

instead of paper you’re filling out a form on

the website. Same thing with investing. You

have an app that lets you buy, sell, and trade

conventional securities. It’s great, but again, it’s

just a digital version of what we’ve been doing

all along. What SolidBlock is doing is truly

original. We’re disrupting the gatekeeping

function of the financial institutions. They

no longer get to say which projects will get

funded and which won’t. Because what the

internet does best is bringing people together.

Here’s what’s truly disruptive: once you have a

solid business model for your project, SolidBlock

will set it up legally and make it available to

qualified investors from all over the world.

That’s what we did in 2018 with the world’s

first successful tokenization for a commercial

real estate project, for the Aspen St. Regis

hotel in Colorado, which raised $18 million on

our platform. They were pioneers, in a way,

because it was an untested funding method.

But we proved how viable it could be, especially

for projects that are too off the beaten path

for mainstream financial institutions. And now

Aspen Coin is trading on tZero at a, give or

take, 30% premium from just about 18 months

ago when the issuance was completed.

The World Economic Forum predicts that 10%

of the global GDP will be stored on blockchain

by 2027, a total of $24 trillion. The power and

potential of blockchain is already clear. What

SolidBlock is doing is part of that massive

global movement.

What are some other “off-the-beaten-path”

investments SolidBlock has created?

We look for opportunities where mainstream

financial institutions are less comfortable

– but where the profit potential is clear and

exciting. For example, logistics centers, for

product fulfillment and shipping, are a huge

growth area all over the world. But investing

in smaller projects in Israel is risky and not

cost-effective for a financial institution. So

the asset owners approached SolidBlock

to tokenize a logistic center in an industrial

town in Israel boasting production facilities

for Intel, IBM, etc. We know based on other

regions that logistics centers are the future

of the supply chain. And tokenization lets

our investors get in on the ground floor,

before mainstream institutions realize what a

goldmine they’re passing up.

Another industry with a question mark hanging

over it is tourism. According to the UN, world

tourism is down as much as 80%. We made our

name tokenizing the Aspen St. Regis, so we’re

72


very comfortable in the hospitality industry. And

every single forecaster predicts that the industry

will bounce back – cautiously, but soon.

So we jumped into another area where

traditional institutions were still hesitating,

partnering with Best Western to tokenize

a gorgeous beachfront hotel in Phuket,

Thailand. It’s amazing. Thailand has been one

of the safest places throughout COVID-19, and

Phuket is one of its Top 3 tourist destinations.

With the growing Chinese middle class

spending billions there each year, investors

know Phuket is a safe bet. There are lots more

examples, but those two really speak to the idea

that mainstream financial institutions are slow

and bureaucratic. They don’t like to take risks,

even “safe risks,” so to speak. It’s easier for them

to say no, and that creates a huge opportunity

for us – and for our investors.

are potentially getting all this information for

every single property in your portfolio. And

this data is important because it gives you real

insight into what’s going on. But as an investor

you might not want to track all this data with

so much granularity. That’s why we’re going

to see the emergence of the same kinds

of automation, harnessing AI and machine

learning, that we’re seeing with other kinds of

securities. Users will be able to set up alerts

for certain conditions, create automation for

other conditions, like buy or sell orders. So you

don’t need to track it yourself on a day-to-day

basis – though you’ll always have that option.

The transparency of blockchain and the huge

amounts of information available will make it

easier to invest wisely. It will make it easier to

set up funds of tokens with similar parameters,

as well as customize your investment priorities

and level of risk.

FINTECH DRAFT

What makes tokenized real estate different

from other kinds of securities?

The biggest difference is the amount of

data that tokens offer us, in two key areas:

transaction history data and reference data.

Transaction history data means being able

to see the provenance of an asset all the way

back to the time of its creation. This is important

for regulatory reasons, but it’s also extremely

important in reducing the risks of fraud and

operational errors.

But reference data is even more exciting,

because with IoT, the internet of things, this

opens up a whole new world of information that

we can literally attach to the token associated

with a real estate asset. This could be things

like vacancy rate, maintenance schedules,

real estate prices and construction in the

surrounding area, property taxes, and more.

One reason people hesitate to invest

internationally is the proverbial “swampland in

Florida” – they’re afraid of a scam. But with all

this data, it’s going to build confidence that the

investment is legit.

Can investors handle that much data?

What a great question! You’re absolutely right,

it’s a lot of data, especially because investors

How is this different from a REIT?

REITs are a good start, and that’s why they’re

so popular. Everybody wants to invest in

real estate! About 80 million Americans are

already invested in REITs through retirement

savings and mutual funds. But REITs don’t go

far enough, because they’re still tied in with

the big institutions. Public REITs give limited

returns because they are so costly and private

REITs don’t offer liquidity. From over $260

trillion worth of real estate, only 1% is tradable,

mainly through stock exchanges. SolidBlock

is planning to double that number through

tokenization in the next five years.

How can we get more information?

I’m happy to talk to anyone who wants to find

out more – whether they’re a potential investor

or an asset owner looking to raise equity for a

great project. Reach me at yael@solidblock.co

or +1 (347) 757-4638.

Yael Tamar

Co-founder and CMO

SolidBlock

73


Target Issue:

Cheques remain the preferred payment option among an overwhelming number of small

businesses in Canada and the U.S., due to the lack of simple, cost-efficient payment methods

to process high-value transactions. Among these burdens are:

• Interact e-Transfers have a transaction limit of CAD 10,000

• Credit card payments result in high percentage fees (between 2.9% and 4.4% on average)

• Wire Transfers are cumbersome and overly expensive ($14 to $80 and more per transfer)

• ACH file upload to the banks are difficult to reconcile and time-consuming

Core Benefits:

MazumaGo is a payment platform that enables businesses to send and receive no-limit

payments for a flat fee. With MazumaGo, businesses can pay their suppliers, collect payment

from customers, setup recurring transactions and move money between internal accounts at

different banks – all in a single dashboard. It is as simple to use as an eTransfer, but provides

the security and robustness of the banking system.

• Onboard suppliers via email, no collection of routing information required

• Import invoices from your accounting software

• Include direct payment links in invoices you send to your customers

• Customers and suppliers authorize payments directly via online bank sign-in

• Payments are deposited via direct bank-to-bank transfer within 48h or less

• Customizable bank statements allow for easy reconciliation

• Real-time tracking of payment status, like FedEx for payments

Ideal Customers: Consumers (B2B)

Milestones:

• Sep, 2019: Launched DivDot

• Dec, 2019: Closed initial pre-seed round at $146,000

• Feb, 2020: Launched sending money feature

• March, 2020: Douglas Magazine Award “Ten To Watch”

• June, 2020: Oversubscribed funding round to $500,000

• August, 2020: New Ventures BC top-10 finalist

• October, 2020: Processed $17 M with over 145 businesses

• Next fundraising round (Seed round): Spring 2021

Matthew Smith

CEO and Co-Founder, MazumaGo

74


75


MAKING

BUSINESS

PAYMENTS

MOVE.

Unleashing $1.5 trillion in productivity for

small business

It is hard to believe that, in 2018, over 15 billion

cheques were processed in Canada and the

United States alone. That equals to 41 million

cheques every single day. How is that possible

in our digital world, where the news is read on

tablets, birthday wishes are made through

Facebook, and groceries are ordered online?

And why is the North American payments

system so far behind when most European

countries abandoned the paper cheque years

ago?

One of the main factors is the huge gap

between consumer payments and commercial

transactions. Over the past decade, consumers

have consistently adopted digital payment

methods, like Interac eTransfer or Venmo in

the U.S.. The business payments environment

however, is lagging behind drastically. Indeed,

paper cheques remain still the most commonly

used payment method for commercial

transactions.

It is no secret that manual processes and

paperwork are causing supply chain friction,

inefficiency, and revenue losses. What most

people don’t know is that it’s small-to-medium

sized businesses that carry the weight of this

outdated payments system.

Consider the number of cheques processed

compared to the processing volume of cheque

transactions. While the number of cheques

has steadily declined over the past years,

the average transaction size of a cheque has

gone up—indicating that businesses still see

value in these payment types for high-value

transactions.

It is fair to say the absence of a convenient

electronic alternative to process large

payments is the biggest obstacle to the total

elimination of the cheque in North America.

Transaction limits and percentage charges

are barriers of current digital alternatives that

hold back businesses from moving away from

the cheques.

TRUSTED AND REGULATED ACROSS CANADA

Matthew Smith, CEO & Co-Founder of Victoriabased

Fintech start-up MazumaGo discovered

this gap in the market through the evolution

of his previous business idea: a credit card

processing software.

When we launched the credit

card tool, our customers kept

saying that they didn’t want

to pay a percentage of their

transaction’s value in fees. Then

we tried to think of a way to get

around using credit cards.

Businesses incur over $2.7 trillion in B2B

administrative costs—80% of which is paid

by small businesses. While it is particularly

challenging for smaller companies to make

the shift from paper to digital, this is the sector

where it matters most. A recent Goldman

Sachs study suggests the net result of B2B

payments innovation will unleash $1.5 trillion

in productivity for global small business.

Smith and his two Co-Founders, Nick Addison

(CTO) and James Davidson (COO), solved this

problem by building a payments processing

software that enables businesses to send and

receive no-limit payments for a flat fee. With

MazumaGo, they combined the simplicity of an

eTransfer with the robustness of the banking

rails.

76


Payments are processed through secure ACH

transactions, which can easily be initiated and

tracked online through a simple dashboard.

They started by solving payment pain points

specifically for small construction businesses

and then created solutions which would be

accessible for businesses of every size and

industry.

The company launched in September 2019

under the brand DivDot, and was recently

rebranded as MazumaGo. The word Mazuma

is Yiddish for money, also known as a slang

word for Cash. Following the tagline, “Make

business payments move”—the company’s

vision is to eliminate any reasons why

businesses would want to use cheques and to

build a simple, secure network for businesses

to exchange funds.

– 5+ admin hours saved/month

– 10 days faster receivables

– Candace Hobin, Community Manager,

Rhino Ventures:

Rhino Ventures is a Venture Capital firm

based out of Vancouver, B.C., that invests

in early stage tech companies. As the

Community Manager, Candace is in charge

of fund operations behind the scenes of

investments and capital calls.

– “The fact that you can’t actually make a

quick online transfer through the bank is

really frustrating, so I definitely welcome

MazumaGo with open arms. It’s great to

use, super simple, and the way banking

should be.”

– 1 hour faster than a cheque

– Up to $45 savings per transaction

FINTECH DRAFT

Over the first year, the company has seen

significant growth, not least on account of the

global pandemic. For many organizations and

especially small businesses, office closures

and remote working mandates created

an uncomfortable wakeup call. Under the

pressure of staying alive, businesses that still

relied on manual, paper-based processes,

needed to quickly adopt digital ways of

processing funds. MazumaGo offers them

an easy solution to digitize payments without

expensive transformation costs. After all,

the lack of a better solution for businesses

to process payments has long existed, the

changing business environment only brought

it to light.

Here are a few insights into customers’ stories

of how MazumaGo helped them move away

from archaic, inefficient payments processes:

– Dave Philips, Business Operations

Manager, NZ Builders:

NZ Builder specializes in building high

performance, energy efficient homes and

Dave is the man in charge of sending and

receiving high-value payments to keep

everyone happy.

– “If you boil it down, MazumaGo is the

ability to do a massive eTransfer without

the limits. And since it goes through the

BMO security platform, that alone should

make people feel comfortable. The option

to send payment links through your own

direct email adds a level of trust too.”

– Dylan Touhey, Co-Founder, OneNet

Marketing Inc.:

OneNet Marketing Inc. is a digital marketing

agency that helps technology companies

acquire new customers. Co-Founder Dylan

Touhey works with an internal team of

marketing experts and uses MazumaGo to

pay subcontractors.

– “I used to waste hours standing in line at

the bank, talking to tellers, painstakingly

getting them to fill out wire transfer forms

and making sure all the information is

correct. It was a nightmare.”

– 20 hours saved/month

– 40% higher payment success rate

About:

Miriam Rader

Marketing & Communications Manager

MazumaGo

MazumaGo is a Victoria-based Fintech company that enables

businesses to securely send and receive no-limit payments

for a flat fee. Founded by Matthew Smith (CEO), Nick Addison

(CTO) and James Davidson (COO), the company launched

in September 2019 and is now a registered money services

business, processing millions of dollars in transactions for

Canadian businesses every month. For more information, visit

mazumago.com

77


SENSO.AI

LIVE PITCHING FINALIST

Target Issue:

Financial Institutions/Lenders are facing

declining margins in loan portfolios from

market factors including increased competition

from non-traditional lenders and consumer

preference for a “personalized” experience

leading to higher customer churn. Additionally,

lenders are in an unpredictable interest rate

environment with limited access to real-time

data due to legacy systems, which limit their

ability to offer the best solution to customers.

Core Benefits:

Senso embeds predictive revenue intelligence

into lender operations to optimize loan portfolio

retention, acquisition, and product cross sell.

Enable Lenders to:

• Build enhanced communication strategies

• Reprice and target portfolio clients

proactively

• Maximize profitability and client satisfaction

• Protect and generate topline revenue

• Develop personalized marketing

campaigns

Ideal Customers:

Businesses (B2B)

Milestones:

• Technology proven with large Canadian

bank

• Technology in production across multiple

Canadian clients

• Access to historical, market-wide data for

all consumers

• Distribution channels provide access to

100% of the market

• Partnerships are being expanded globally

Saroop Bharwani

Founder and Chief Executive Officer

Senso.ai

78


FUNDMORE.AI

LIVE PITCHING FINALIST

FINTECH DRAFT

Target Issue:

Currently, it takes more than 40 days to

fund a mortgage, costing more than $9000.

Nearly 70% of all mortgage applications are at

least in part fraudulent, according to a study

completed by Home Capital and Equifax in

2018.

Core Benefits:

The fundmore.ai platform allows lenders

to assess many sources of data, helping

them identify viable mortgages that carry

less risk and have a greater opportunity for

profit. This enhanced efficiency will improve

lenders’ response times, decrease costs,

increase their underwriting capacity, and

reduce human error by automating a timeconsuming

manual process. FundMore offers

this as an underwriting service and through

our FundMore platform.

Ideal Customers:

Businesses (B2B), Alternative Lenders, Private

Lenders, Credit Union and Loan Origination

Platforms.

Milestones:

1. Use of product by pilot customers

2. Introduction of the FundMore Score

3. Participation in CDL (Creative Destruction

Labs) programs

4. Finalization of Pre-Seed funding round

5. Launch of product with channel partner

About:

Chris Grimes

CEO & Co-Founder

FundMore.ai

Chris Grimes has over 15 years of experience in the mortgage

and lending space. Seeing an opportunity to automate many

of the tasks within his company LoanDesk.ca, he realized that

he could build a great aggregation tool that leveraged artificial

intelligence and provide a full end-to-end lending platform.

79


WALO

LIVE PITCHING FINALIST

Target Issue:

Canadians are struggling with their finances:

– 1 in 2 are $200 away from insolvency

– 1 in 3 don’t earn enough to cover their bills

A young Canadian who enjoyed financial

education is 3 times more likely to spend less

than they earn, save more and borrow less.

There’s an opportunity to better prepare kids

for a healthier financial future by teaching

them about money early on.

Core Benefits:

The WALO mobile app teaches teens how to

manage money through a simple, convenient

and fun financial education tool using real

money. The app also sparks the money

conversation and empowers parents to get

their kids on the path to financial autonomy

and raise them to become money-savvy

young adults. Key features include spending

analysis, goals-based savings, connected

accounts, and coins & rewards.

Ideal Customers:

Consumers (B2B2C)

Milestones:

• Joined the Desjardins Startup-in-residence

program

• Finalist at the National Bank innovation

competition

• Raised $250k preseed

• Released our BETA app

• In discussion with several financial

institutions

Rim Charkani

Co-Founder & CEO

WALO

80


TRUST ANCHOR

GROUP

LIVE PITCHING FINALIST

FINTECH DRAFT

Target Issue:

Modern infrastructure, digitalization

and fast connectivity has made cars,

buildings, factories, and homes smarter

and smarter. This has led to increased

costs for protection against cyber-crime,

city infrastructure being held hostage for

ransom, identity theft, monetary fraud, and

data breaches.

Core Benefits:

Trust Anchor Group helps smart cities, smart

industries, smart mobility companies, eHealth

providers and smart home companies to

optimize their business by helping them to

monetize their existing and new infrastructure

and by providing a smart life operating system

that includes cyber secure digital identity,

interoperable real-time connectivity, secure

data storage, edge AI and smart payments as

a service.

Ideal Customers:

Customers (B2B)

Milestones:

• Enrolled in IBM Startup program and

Microsoft for Startups program

• Member of IBM Partner World and

Microsoft Partner program

• Selected into Elevate 2030, part of

Urban ICT Arena and the EU Regional

Development Fund

• Delivering smart payment services and

digital identity solutions in South America

• Beta launch with customers in 7 countries

• Selected Smart City Partner in Sweden

and Brazil

Tommy Andorff

Co-founder and COO

Trust Anchor Group

81


CYCLEBIT

LIVE DEMO FINALIST

Target Issue:

Cyclebit provides simple, affordable, and

robust tools for retailers to accept digital

currencies for in-store, online and on-thego

purchases. A global company currently

operating in Canada, the USA, Europe, and SE

Asia.

An all-in-one payment gateway for Fiat

and Cryptocurrency transactions which

supports over 20 of the most popular

cryptocurrencies including BTC, ETH,

LTC, BCH, and more. Additional products

include a Merchant Dashboard and the

My Cycle Card. https://www.cyclebit.io/

Ideal Customers:

Businesses (B2B)

Milestones:

• Launching products and services in

Canada

• Pilot program in USA

• Launch products and services in

Thailand

Core Benefits:

• Universal accessibility and borderless

• No intermediation fees at the point of

transaction

• A high level of privacy, faster settlement

period

• 0% transaction fees for all cryptocurrency

transaction

• Video: https://youtu.be/aLNqNiO4_yA

Sameer Pirani

CEO

Cyclebit

82


CORL

FINTECH DRAFT

LIVE DEMO FINALIST

Target Issue:

There is an $850 billion funding deficit for startups

and small businesses in North America that

is currently not being met by angel investment,

venture capital, alternative lending, or traditional

banking. Corl has identified that this market can be

served by a hybrid of debt and equity. Revenuesharing

investments provide a mechanism

for capital raising, without the burdensome

contractual terms of traditional debt, or the high

cost and controlling nature of equity.

Core Benefits:

Corl Financial Technologies Inc. provides

Capital-as-as-Service (“CaaS”) to startups and

small businesses. The Corl platform is datadriven,

scalable, and uses machine learning to

identify value across high-growth sectors. Core

to our approach is leveraging financial, banking,

social, and customer data to provide founderfriendly

growth capital to help entrepreneurs

and investors reach their strategic financial

objectives. With Corl’s proprietary data,

methods, and machine learning algorithms,

the Company is able to identify asset-light and

revenue-heavy businesses underserved by

traditional investors.

Ideal Customers:

Businesses (B2B) looking for funding or

businesses (B2B) looking to deploy capital.

Milestones:

• Raised $2 million seed round

• Launched Railz.ai (Real-Time Accounting

API), Corl Financial Investments Inc. (Corl’s

royalty portfolio) and signed contract with

the Government of Canada to deploy

fintech-driven loans to Women-owned

and Women-led businesses across

Ontario and launched Corl Financial

Investments Inc. (Corl’s royalty portfolio).

• Launching DeFi royalty portfolio with

Fortuna.ai

Ben Ames

Designation

Corl

83


84


2020

FINTECH

DRAFT

SHORTLISTED

Migrations.ml

Migrations.ml helps asset managers increase

their returns and avoid losses in the bond

market. Using machine learning, it enables

researchers, traders and portfolio managers

to analyze more bonds, make decisions faster

and get more precise analytics.

Location: Toronto

Year Founded: 2019

Vertical: Capital markets / Decentralized

Finance / Crowdfinance

Employees: 1 – 10

Website: migrations.ml

Engaiz

ENGAIZ has developed an AI-Driven SaaS

platform to help enterprises mitigate Third-

Party Risks such as Cybersecurity, Data

Privacy, Regulatory through an effective

Governance and Engagement framework.

Location: Toronto

Year Founded: 2019

Vertical: Third-Party Governance & Risk

Management

Employees: 1 – 10

Website: engaiz.com

FINTECH DRAFT

Finally

Finally is a DIY Financial Planning Simulator

that allows users to create a free financial

plan in less than 20 minutes, and understand

the products and providers that can help you

reach your goals faster.

Location: Toronto

Year Founded: 2019

Vertical: Personal Finance

Employees: 1 – 10

Website: myfinally.com

RAILZ

Railz provides a single API that integrates

with the majority of accounting software

service providers used by small businesses.

They provide quick, low cost and direct

access to both existing and new customers’

accounting software systems and are solving

the traditional challenges the Small Business

lending market has seen for years with

respect to time, cost and risk.

Location: Toronto

Year Founded: 2020

Vertical: Lending / Borrowing

Employees: 11 – 50

Website: Railz.ai

85


Knnct

knnct’s robust P2P platform for brokers &

lenders lets them get mortgage deals done

quicker and easier. Brokers create a digital

mortgage application, post their deal and then

knnct filters & matches the deal with lenders

whose lending criteria matches the deal &

have access to all compliance docs.

Location: Toronto

Year Founded: 2018

Vertical: Lending / Borrowing

Employees: 1 – 10

Website: knnct.com

Sentro

The challenge for group insurers is

administrative complexity. Sentro tailor

plans for every customer. But they try do

it with legacy technology that holds them

back. Sentro lets group insurers offer their

customers and partners choice and flexibility,

in a highly efficient way.

Location: Auckland, NZ

Year Founded: 2019

Vertical: Insurtech

Employees: 1 – 10

Website: Sentro.co

Lagoon

Lagoon empowers investment professionals

in capital markets with data science tools,

without the need to write a single line of code.

The platform places the human at the center

(HITL), allowing the user to customize and

control metrics to generate explainable, datadriven

insights.

Location: Tel Aviv

Year Founded: 2020

Vertical: Digital Banking / Analytics /

Infrastructure

Employees: 1 – 10

Website: www.data-lagoon.com/

Bitvo

Established in 2018, Bitvo is a cryptocurrency

exchange that facilitates buying, selling and

trading cryptocurrencies through its best-inclass

website and mobile applications. Bitvo

offers seven different cryptocurrencies, including

Bitcoin, Ether, XRP, Bitcoin Cash, Litecoin, Dash,

Ethereum Classic and QCAD, Canada’s first

stable coin designed for the mass market.

Location: Toronto, Calgary

Year Founded: 2017

Vertical: Blockchain / Digital Assets /

Cryptocurrency

Employees: 1 – 10

Website: bitvo.com

Kaira Technologies

Their mission is to help people take charge

of managing their personal finances to help

them achieve financial well-being. Kaira’s

Financial Wellness Coach comes in the

form of a mobile, it gives personalized and

proactive advice to relevant events with the

aim of achieving Financial Wellness.

Location: Boucherville, QC

Year Founded: 2018

Vertical: Personal Finance

Employees: 1 – 10

Website: Kaira.ai

Moves

Moves is a financial services platform for

independent “gig” workers. Overlooked or

ineligible for products offered by traditional

financial institutions, this rapidly expanding

demographic needs modern financial

products designed to support them on their

paths to career fulfillment.

Location: Toronto

Year Founded: 2020

Vertical: Personal Finance

Employees: 1 – 10

Website: Movesfinancial.com

86


Finnovate.io

Finnovate.io has established itself as a

trusted software development partner in the

Canadian Fintech ecosystem through a wide

variety of leading edge projects. Working

with companies of all sizes, from start-ups

to Canada’s largest banks, Finnovate.io has

repeatedly demonstrated an ability to provide

technical support and expertise in all stages

of product development.

Location: Toronto

Year Founded: 2017

Vertical: Software Development for Fintech

Employees: 11 – 50

Website: finnovate.io

Numoola

NuMoola is the industry’s first family-focused

consumer banking app that uses real money,

gamified education, and the family network

to teach kids (and parents!) about managing

money, missions, and budgets. The NuMoola

App focuses on family togetherness by

encouraging family goal setting and initiating

conversations about money management.

Location: Pittsburgh, PA

Year Founded: 2017

Vertical: EdTech

Employees: 1 – 10

Website: numoola.com

FINTECH DRAFT

Fidectus

Fidectus automates post-deal processing

in energy trading. They connect market

participants and optimize their working capital.

Their clients optimize their working capital

while benefiting of highest resilience and ROI.

Location: Zürich

Year Founded: 2020

Vertical: Finance / Accounting

Employees: 1 – 10

Website: Fidectus.com

Balance

Balance offers an insured institutional grade

digital asset custody and wallet management

solution to crypto exchanges, OTC desks, and

funds. Assets are kept secure in geographically

distributed offline vaults on dedicated, military

grade hardware.

Location: Toronto

Year Founded: 2017

Vertical: Blockchain / Digital Assets /

Cryptocurrency

Employees: 1- 10

Website: balance.ca

Arbor

Powered by unbiased AI data aggregation,

Arbor is a social spending platform that

educates consumers on the impact of

their spending. Arbor empowers everyday

consumers like you, to make informed

decisions about where and how you spend

your hard-earned dollars.

Location: Calgary

Year Founded: 2019

Vertical: Digital Banking / Analytics /

Infrastructure

Employees: 1 – 10

Website: yourarbor.com

VIEW PROFILES

87


Thanks to our valued industry partners, innovators and leaders

NCFA is grateful to and recognizes the following industry partners/sponsors for their

support and commitment to NCFA Canada’s mandate to develop Canada into a world

class fintech, blockchain, P2P, crowdfunding, alternative finance and innovation finance

centre by providing education and research, advocacy and networking opportunities in

the rapidly evolving Fintech & Funding industry.

88


Powered by NCFA


PARTICIPATION

COLLABORATION & IMPACT

CONFERENCE THEMES

o

o

o

o

o

o

8 Week Virtual Conference

500+ Attendees

100+ Speakers

60+ Sessions

8 Pitching & Demo Finalists

2 Challenges

o 17 Event sponsors + 7 Industry collaborators +

50 Community partners

o COVID Updates & Resilience

o Launches, Demos & Announcements

o Partnerships + Investment

o Diversity + Inclusiveness

o

o

o

o

o

o

o

Scaling Fintech Funding, Innovation and Competition

Open Finance and Future of Paytech

Sustainable Finance

Leadership, Adaptability & Culture

Digital Identity and Blockchain

Currency Wars, Digital Assets & Rise of DeFi

Artificial Intelligence in Fintech

“You cannot discover new oceans unless you have the courage

to lose sight of the shore.” – Andre Gide

More magazines by this user
Similar magazines