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Why It Makes Sense To Test and Build Your FinTech Solution In Canada

Andrew Zola
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I have many passions, but the main one is writing – learning about new things and connecting with diverse
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FinTech in Canada is booming thanks to venture capitalist-backed investments. This turn of events should pique your interest as it completely goes against current global trends.

While funding is on the decline in major FinTech markets like the United States, Canada is thriving in this niche. Furthermore, Canada has also revitalized its startup scene and has attracted a new breed on local venture capitalists looking to invest in young FinTech startups. So at present, everything from banking to fraud security is getting revamped.

The current interest that it’s generating also doesn’t show any signs of waning anytime soon. It’s a riveting phenomenon because, let’s face it, the financial industry has been historically averse to change.

But Canada is fortunate to have a progressive financial sector, supportive government, and international interest which has been the foundation that’s driving the nation’s FinTech sector forward.

Six of the most powerful banks in the country have also accepted that innovation is inevitable, so they have become active participants rather than risk being disrupted externally.

All this activity is expected to add up to a total spend of $15 billion on technology by the Canadian financial sector by this time next year

Canada Offers the Perfect Test Market

When compared to the global stage, Canada has a relatively small market. But what may come as a surprise to some is the fact that it’s a highly suitable country to build a company around innovation.

This is because Canada offers the ideal test market to first perfect your offering and then take it worldwide. What makes Canada perfect for FinTech is nation’s robust infrastructure for financial services.

So it makes sense that venture capital funding for Canadian FinTech hit $138 million last year, up more than 35% on the previous year. The acceleration of funding within the FinTech sector also corresponded with the decline of investments in the U.S. (30%) and U.K. (25%). Furthermore, Singaporean FinTech took a major hit and tumbled by 65% during the same period.

As a cohort of Canadian startups like Hootsuite, Shopify, and Wattpad mature on an international stage, it has also brought a lot of attention to the Canadian tech ecosystem as a whole.  So it makes good business sense for foreign entities like Goldman Sachs to invest in Toronto-based nanoPay and Financeit.

Additionally, one of the world’s largest technology services companies, Japan’s NTT Data Corp and MaRS recently partnered to help Canadian startups expand into the Japanese market while giving NTT access to their technology.

Canada is Unique and So is its FinTech Environment

Toronto, Ontario, in particular, is quite unique in that it has the highest concentration of tech companies outside of Silicon Valley. This is probably thanks to cheaper costs compared to the Bay Area and a few universities in the region churning out developers and engineers.

The city of Toronto alone is home to 12,000 financial firms that employ approximately 360,000 workers. That makes up about 37% of the national GDP making it a strong economic center in the country.

But it’s not just Toronto alone as Montreal and Vancouver (home of Payfirma, FrontFundr, and Zafin) are also thriving. This can be attributed to a strong collaborative culture of entrepreneurs who are making a huge contribution to the accelerated development and implementation of a lot of these innovative solutions.

With close proximity to Silicon Valley and strong ties to Asian markets, you can understand the appeal the country may have for talent professionals looking to put down some roots.

As the traditional financial industry in the country is accepting of technological startups, FinTech in Canada is far from a disrupter. Instead, it’s rather an enabler that’s driving the industry forward to ensure that it remains relevant in the years to come.

With tech giants like Apple, Facebook, and Google being more likely to disrupt the traditional financial business model than their startup counterparts, it has created a collaborative environment that’s unconventional yet fertile ground for innovation.

Furthermore, with the Canadian government committed to bringing the country to the forefront of digital innovation, you can expect to hear a lot more from Canadian FinTech in the months and years to come.