In this video, Brigitte Goulard and Konata Lake provide a brief introduction to
the series followed by a discussion on developments that are
happening in the Canadian fintech space. They discuss key emerging
trends such as:
- the increasing use of Embedded Banking
- fintech offerings for small and medium-sized businesses
- how blockchain is being integrated into the industry
Click here to see other videos and webinars in
this series.
Video transcript
Konata Lake (00:06): Hello my name is Konata,
I’m a Partner here at Torys LLP. I lead our Startup and Venture
Capital Practice focusing on technology-related startups. And
I’m here with my colleague, Brigitte.
Brigitte Goulard (00:17): Yes, hello. I’m
Brigitte Goulard, and I’m a Senior Counsel here at Torys,
co-chair of the Fintech space, and then co-chair of our Consumer
Protection Practice, which often interrelate so I’m really
happy to be here to talk about fintechs with Konata. In our chapter
that we’ve authored, us and a number of our colleagues, we talk
about developments in 2022 in the fintech space, and it was really
difficult to narrow it down to three because there are so many.
Every time I turn around, there seems to be a new development. But
we’ve narrowed down to three that we’ll discuss today. And
obviously these trends are our best guesses of where it’s going
to happen. We don’t have a crystal ball but 2022 and the
following year is promised to be really exciting. So looking
forward to seeing what’s going to happen.
Konata Lake (00:55): One of the first things we
talk about in chapter we’re going to talk about today is
embedded banking. And so, from the space where I sit working with
startup companies and investors in startup companies, one of the
things that we’re seeing a lot of is tech companies generally
offering some kind of financial-related product. And so that, in my
simple explanation, is kind of what I think of as embedded banking,
but maybe you can talk a bit more about embedded banking and what
we can expect there?
Brigitte Goulard (01:23): So embedded banking,
you know, to say it simply is when you integrate a financial
solution within a business offering. And the easiest example is
actually the “buy now, pay later” loan product that is
being offered now. Anywhere I turn around on the website, you know,
Amazon and so on, there’s an offer I can buy something for four
easy payments with no interest. So those are the type of financial
solutions that are being integrated with retailers offering. And
the reason why I’ve identified this as big for this year is
because Klarna in early 2022 entered the Canadian market. Klarna is
one of the big offers of “buy now, pay later”. Apple
announced that they would have their Apple Wallet. Again, financial
services integrated with the Apple Pay offerings. So we’re
seeing big names starting to spread in that space. So lots of
different offerings will be coming up. And there are advantages for
all the players I think. You’re a retailer, it means more
sales, you’re a consumer, it means alternative financing that
you might have problems finding, you’re a financial
institution, another distribution arm, and you’re a fintech, it
means that you can then offer your own products and services. So
everybody’s winning and hopefully they’ll continue to win
and the way to do this is to pay down debt. You pay down your loan
when it comes due.
Konata Lake (02:50): Right, and it really does
seem to be a collaborative space because everyone can bring
something to the table to provide the services to consumers. And so
you talk about embedded banking, generally. What about within
Canada, specifically? Is it popular in Canada?
Brigitte Goulard (03:03): So it’s becoming
more and more popular in Canada, well Apple announced that
they’ll be in the States in 2022, we’ll assume they’ll
be in Canada soon after. And it’s not as popular here as what
we see in other countries like Australia or the UK because
they’re a little bit more advanced than we are. We expect that
the embedded banking offerings will become much more popular when
the open banking framework comes into force, so into effect, which
hopefully will be soon. We’ve been waiting for years and years,
but the government seems to have its game together now so it should
happen. We’ll have a video on open banking some time in the
future. And so yes, it’s coming. It’s been slow, it
continues to be slow, but I expect some movement this year.
Konata Lake (03:56): One of the other areas we
cover in the chapter is products for SMEs, small and medium
enterprises. Maybe you can talk a bit there about what are some of
the kind of fintech-related products we’ve seen.
Brigitte Goulard (04:09): So SMEs are very
important to Canada. There are 99.8% of all Canadian businesses
would qualify as a SME so as you can imagine, the SMEs do well,
Canada does well. And fortunately, the fintechs have offerings that
will allow SMEs to do well. And some of those offerings, as
we’ve mentioned, is alternative lending. So that if you’re
a SME that has alternative lending on your website, you have a
chance of getting more clients. There’s also lots of different
options for payment processing that didn’t exist before. So
again, better for the SME. One of the key advantages I think that
fintechs can offer the SME market is actually helping with their
daily headaches that they have for payroll, payment processing,
they have digital invoicing-so all of those little things that make
up the business. Fintechs can certainly help with those. So I think
fintechs in general are an excellent news for the SME market.
Konata Lake (05:14): And that certainly aligns
with what we see from our startup clients. One of the consistent
things we hear is the challenge with larger, more established
financial institutions can be speed. Being able simply to do
anything on your smartphone, for example, When you open an account,
get access to an account and what have you, and certainly we’ve
seen fintechs were able to deliver solutions that allow for that. A
small and medium enterprise could find that speed to be quite
advantageous.
Brigitte Goulard (05:41): Yes, exactly.
Konata Lake (05:42): So that’s another
topic we discuss, kind of the products and services for SMEs.
Another area we cover in the chapter is blockchain. So it seems
like everywhere you go you hear about blockchain. Cryptocurrency is
probably the most popular usage of blockchain. But maybe talk a bit
about blockchain in the fintech space, what we’re seeing and
what we can expect to see.
Brigitte Goulard (06:08): A number of the
articles and news feeds that I look at every day have dubbed 2022
“The Year of Blockchain”. So what does that mean? It
means I think that people are going to start looking at how they
can use the blockchain technology in order to enhance their product
offering or enhance their processing or handling of data. And one
of the advantages of blockchain is the unbeatable security that it
provides, which is really important, because when you’re
talking financial transactions, there’s always a risk of fraud.
And blockchain really reduces that risk significantly. And
there’s also accelerating of asset transfers and payments and
so on. So the advantages of blockchain is going to make it much
more popular as companies and people become more comfortable with
the concept of blockchain. And as well, central banks across the
world, including Canada, are looking at the possibility of having a
central bank digital currency, of which blockchain is a key
component, obviously.
Konata Lake (07:18): Right, and certainly to
the extent the central bank embraces the technology, we can expect
to see just more comfort with it across our fintech market,
generally. Thank you very much for joining us. That concludes the
first in our fintech video series.
Brigitte Goulard (07:34): Thank you.
Konata Lake (07:34): Thanks.
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