Fintech firms look to world markets for next transactions
Country's solid banking industry, track record of invention lay the foundation for companies like Finn.ai to grow beyond borders
When you need to do banking, Jake Tyler hopes you can meet your new best financial friend – a virtual banking assistant.
Say hello to Finn, a personalized bank-bot launched in September by Finn.ai, the Vancouver-based company that Mr. Tyler founded and runs.
The Finn Virtual Banking Assistant deploys artificial intelligence (AI) to deliver a facsimile of a personal banker to your phone or tablet. "Think Siri or Google Assistant, but just for banking," Mr. Tyler says.
The company markets its technology to banks and credit unions, saving them the time and trouble of having to develop their own apps.
Customers can log into their accounts via Facebook Messenger using Finn and ask it something like, "When is my credit card bill due?" or, "Did I really debit $200 on pumpkin spice lattes last month?"
The company launched its first Finn-based service with Western Canada's ATB Financial of Edmonton, and it's expanding soon to South Africa, Central America and at least one other part of Canada.
"We do have experience exporting. We are building a product for the rest of the world," Mr. Tyler says.
It's conceivable that by next year as much as 75 per cent of Finn's business will be done outside Canada, he adds.
As Canadians and Canadian firms work to develop global-ready products and services, exporting of financial technology, or fintech, is one of the country's strong points. According to research by the Conference Board of Canada, even two years ago finance and insurance services were Canada's largest and fastest growing services sold internationally.
Fintech is helping Canada power its way into moving from being an exporter of raw materials and manufactured goods to a service export powerhouse. Already by 2015, services accounted for 44 per cent of Canada's exports and 43 per cent of foreign affiliate sales.
It's not surprising that we're doing well, says Jennifer Reynolds, who speaks for the Toronto financial sector.
"We have a really strong financial hub – [in Toronto] we're rated second in North America [after New York] and seventh globally," says Ms. Reynolds, president and chief executive officer of the Toronto Financial Services Alliance. (This is according to the Global Financial Centres Index, published twice a year by Z/Yen Group in London and China Development Institute; Montreal, Vancouver and Calgary are also in the top 100.)
"We also have strong financial institutions; particularly after the  financial crisis, this is known globally. And when you add what has been happening in our tech sector and how we're growing fintech, we have certain advantages over other countries."
It's not all sunshine though. The dark clouds of protectionism around the world are looming, and the increasingly hard-line positions of U.S. President Donald Trump's administration in renegotiating the North American free-trade agreement raise questions as to whether Canadian fintech might be shut out by some countries.
"There is no doubt that the current uncertainty with trade agreements has a massive impact," Ms. Reynolds concedes.
In RBC Global Asset Management's most recent monthly economic webcast, RBC chief economist Eric Lascelles put odds at 25 per cent that NAFTA will be scrapped after negotiations resume in the first quarter of 2018, with a further 15-per-cent chance that the deal will be changed for the worse from Canada's perspective. Yet the overall forecast is for "good growth" globally.
Mr. Tyler at Finn.ai contends that the uncertainty over trade could actually bring benefits for Canadian fintech.
"Canada will have a lot of winners," the CEO says. "One thing we have is our ability to build an international team," particularly as the United States is making life more difficult for prospective immigrants.
"We're hiring one new person per week. Vancouver, Toronto and Montreal all have good early stage ecosystems for fintech. They have the ability to access talent."
Canadians in the fintech sector seem to have a strong understanding about how people are more and more comfortable with technology, says Jan Pilbauer, chief information officer for Payments Canada, the country's clearing and settlement system for transactions.
"The disruption [in finance] is similar to what happened in the music and film industries," Mr. Pilbauer says.
"New technology is coming out everywhere," he adds, and in Canada, at least, people seem to embrace it. That makes Canada a good place to develop and market-test new fintech, because the country is open to experimenting and learning from others' mistakes, he explains.
"Payments by tapping [debit or credit cards] are growing by nearly 70 per cent per year in Canada, and among those who pay by tapping, more than 80 per cent say they like it."
Electronic transfers are growing in Canada by 50 per cent every year, too.
"We still write cheques, but more than 65 per cent of Canadians say they're willing to get rid of them if they have a substitute," Mr. Pilbauer says. "We're becoming more digital. We don't have patience."