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:
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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.
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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.
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PARTICIPATION
COLLABORATION & IMPACT
CONFERENCE THEMES
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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
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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