As the Canadian fintech sector looks to rebound from challenges brought on by the pandemic, its future global strength will depend, in part, on the willingness and ability of all ecosystem players to foster innovation, collaborate and expand internationally, finds a new report from Accenture.
The global report, Collaborating to Win in Canada’s Fintech Ecosystem, benchmarks four Canadian technology hubs against 16 other leading and emerging fintech hubs around the world. Overall, Toronto ranked 8th, Vancouver 12th, Montreal 14th, and Calgary 16th out of 20. The report also examines global investment growth trends across all hubs, noting that that Canada punches above its weight in terms of number of deals closed while total deal value is more subdued compared to leading global hubs.
The analysis found that Canadian cities are already benefitting from strong foundations provided by government support and high-quality talent, but they are behind tech hubs such as Hong Kong, London and Singapore when it comes to overall fintech adoption.
“We are optimistic about the future potential of the Canadian fintech ecosystem and the role of startups and other institutions in how they embrace change that will benefit the overall financial services industry in Canada,” said Robert Vokes, senior managing director and financial services lead at Accenture in Canada.
“Canada has much to learn and much to contribute to our global peers, including those who are developing open banking, digital identity and data portability solutions. Our ecosystem of Canadian fintechs, major financial institutions and policymakers are coming together to transform and reinvent business models that address the changing digital habits of Canadians – they are shaping and developing future standards that will support the industry while preserving the strength of our financial system.”
The report used a proprietary benchmarking model to identify how Calgary, Montreal, Toronto, and Vancouver performed in comparison to global peers, distilled into five key metrics:
- Government Support: All four Canadian hubs performed relatively well due to high-quality national regulation and the ease of starting a business in Canada.
- Business Ecosystem Maturity: Canadian hubs trail others in attracting a greater degree of foreign direct investment. A renewed focus on encouraging and retaining cross-border investment may also benefit Canadian hubs given the negative impact of COVID-19 on 2020 fintech deals.
- Fintech Activity and Financing: Canadian hubs scored lowest in this area while Silicon Valley took the top spot. Canadian cities and governments should consider continued promotion of regional fintech investment and the attraction of VCs to increase competitiveness in this area.
- Talent Pool and Innovation: Toronto is a close second after Berlin. Canadian hubs could improve their overall score in talent pool and innovation with more focus on the commercialization of homegrown technology through greater collaboration between academia and industry.
- Technology Availability and Adoption: Canada lags many of its U.S. and Asian peers due to high speed internet connectivity challenges for remote populations. Canadian hubs could improve by looking at how leaders such as Hong Kong, Silicon Valley and Tel Aviv encourage businesses to embrace disruption and develop products and services based on the latest technologies, e.g., fintech-friendly policies and incentives.
“As we look beyond the pandemic, the Canadian financial services ecosystem remains poised to grow. Canadian fintechs are adopting a borderless mentality, raising international investor interest, while financial institutions are taking on the mindset of technology companies now more than ever,” said Vikas Shreedhar, managing director and cloud leader at Accenture in Canada.
“With both market and regulatory forces pushing Canadian fintechs into the spotlight, the financial services ecosystem will have the potential to deliver the most personalized and seamless digital experiences Canadians have ever seen thanks to advances in cloud, artificial intelligence and application programming interface capabilities.”