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About the Banking Sector
Canadian Bankers Association

Technology-led innovation in banking

Summary Points

Article

Technology is changing the way financial products and services are accessed and used by Canadians. The innovative financial technologies (FinTech) being introduced by banks and FinTech businesses in Canada are increasing choice and improving convenience for customers.

Banks in Canada have a longstanding commitment to technological innovation and in recent years have taken an increasingly active role in supporting the development of financial technologies, whether through in-house initiatives or external partnerships. To be sure, all banks are making significant investments in the digital side of their businesses and in technology writ large. These investments have greatly improved the way banks connect to and interact with their customers and how they operate internally. Banks also increasingly finance or partner with FinTech companies to help provide access and exposure to innovative products and solutions that benefit customers, while FinTech upstarts benefit from having access to capital and a pre-existing client base to help scale their operations. In addition, banks also invest in financial technology by acting as trusted incubators and accelerators in order to stimulate new ideas, tap into high-skilled tech talent and help get innovations to market more rapidly.

FinTech is a tremendous opportunity for Canada’s financial industry because it can be very nimble and innovative. On the other hand, Canada’s banking sector is known for its strength, stability, brand recognition and significant customer reach. Banks are today finding ways to improve collaboration between the banking sector and innovative FinTechs to the benefit of both parties and, importantly, their customers.

New FinTech powers

The 2018 amendments to the Bank Act, the federal legislation that governs how banks operate in Canada, introduced new FinTech powers. The changes implemented through the Bank Act review removed the barriers that restricted certain types of relationships among banks and FinTech companies, including lengthy approval processes and restrictions on the type of investments banks can make in FinTech. This was a positive step in the right direction to help banks continue to seize the opportunities that FinTech represents. Banks in Canada can now invest in or partner with FinTech, thereby leveraging their respective strengths.

Convenience through technology

Banks have a long history of using technology to deepen relationships with their customers, enhance products and services development, improve their operations and modernize legacy IT systems. The pace of technological change is accelerating, bringing new challenges, however banks will continue to meet evolving customer preferences while also bringing trust to the technology equation.

Technology is only one part of the transformation taking place in banking. In the digital era, trust is also at the centre of change. It is trust that underpins the fundamentals of banking: a great customer experience, strong prudential oversight, and a dedication to protecting privacy and data.

Banks and technology companies, for instance, have both recognized the enormous opportunities presented by artificial intelligence (AI) to improve the speed and accessibility of services and to provide a more customized and personalized experience for customers. This includes using chatbots that are available 24/7 to provide customer support, as well as deploying AI-powered as “robo-advisors” to automatically allocate clients’ funds and manage and optimize their assets. The potential innovations that AI can unlock is just beginning and will be a significant area of competition between banks in the coming years.

Online marketplace lending is another growth area that banks have supported in recent years. Online marketplace lending permits the match of potential borrowers with potential lenders and generally caters to consumers and small and medium-sized businesses that may be unable to obtain loans from traditional sources. Borrowers can request a loan for a specified amount through the platform, and investors on the platform can choose to lend to a particular borrower, based on information such as interest rates and credit scores. The level of customization that this model allows simplifies the underwriting and adjudication process for both borrowers and lenders.

The below information provides examples of recent FinTech innovations in the banking industry, categorized as follows:

  1. In-house development of new technologies;
  2. Technology sourced from or developed in partnership with FinTech companies; and
  3. Banks as tech incubators in collaboration with the FinTech community.

I. In-House FinTech Developments



 

bmo logo

September 2021
AI
BMO Financial Group and Riskfuel Analytics a Toronto-based start-up, today announced a partnership to develop models for pricing and scenario analysis of structured derivatives transactions. This comes following a successful pilot project, which saw quantitative researchers from both firms develop a solution to speed up valuation of autocallable notes which previously presented significant runtime challenges when priced using traditional valuation methodologies

As an early adopter of this technology for front office pricing, BMO's partnership with Riskfuel Analytics adds to its track record as an innovator in Capital Markets, employing AI to improve the client experience and operational efficiency simultaneously. Working with Riskfuel will reduce reliance on slow and expensive financial models to calculate pricing and risks of structured products.



cibc logo

February 2021
AI
CIBC launched its new CIBC Insights feature, which offers clients personalized and actionable data-driven recommendations based on their financial transactions. Using AI and machine learning, CIBC Insights notifies clients of savings opportunities and unusual transactions, while providing guidance that can support better everyday spending decisions.



laurentian logo

February 2023
Payments
Laurentian Bank has announced the launch of a new line of credit cards. Starting today, Retail customers can now apply for a Laurentian Bank credit card online and, upon approval, have access to a virtual card within seconds. This means that they can start using their new card right away, without having to wait for the physical card to arrive in the mail. The new credit cards also offer one of the most flexible rewards programs on the market allowing customers to redeem their way as well as access payment options at a reduced interest rate through instalments.

This launch is part of the strategic partnership between the Bank and Brim Financial announced in December 2021. In addition to the newly redesigned cards, through this partnership, the Bank has made size its advantage by leveraging Brim's technology to offer an enhanced rewards program and best-in-class digital banking services.



national bank logo

August 2021
Consumer-directed finance
National Bank of Canada invests $103M in Flinks, including $30M in growth capital towards acceleration of the Montreal-based fintech's expansion activities in North America.

The investment follows a successful launch by Flinks in the United States. This investment will also allow Flinks to continue its fast-paced growth and meet the demands of fintechs, asset managers, credit unions and banks with tools that enable innovation with financial data in North America. The company is also planning to grow its market share in the wealth and lending spaces, in addition to further enhancing its offerings in analytics & data enrichment.



rbc logo

June 2021
Digital tool for entrepreneurs
RBC has launched RBCx, a full‑service platform to accelerate the entrepreneurial journey at every stage of growth - providing access to capital solutions, innovative products and services, and operational expertise to help technology companies scale. RBCx supports entrepreneurs – from startup to scale up – who are disrupting business models, industries, and sectors.

RBCx is a holistic market‑defining platform that will offer differentiated products and solutions for technology clients across their entire journey from inception to IPO and beyond, including:

• Innovative financial products, including credit and specialized banking
• Deep sector expertise in specialized tech verticals, including clean tech and life sciences
• Exclusive offers from industry-leading providers within the RBCx marketplace
• Counsel from operational specialists across a number of key disciplines
• An inspired network of founders and funders engaged through curated events and content
• Proprietary research and guidance
• A suite of custom personal banking services, including credit cards, wealth management and personal finance



scotiabank logo

December 2021
AI
BestEx Research Group, LLC, a provider of high-performance algorithmic execution and measurement solutions for equities, futures, and foreign exchange trading, today announced a strategic agreement with Scotiabank to reshape electronic trading for Canadian equities. Scotiabank will be the only Canadian bank to provide access to this trading platform in the Canadian market through its cross-asset electronic suite of products, ScotiaRED.

BestEx Research's algorithms are built on research-driven, quantitative order placement logic, a departure from the heuristic-based approach of most providers and includes a cloud-based Algo Management System (AMS) that provides unprecedented transparency and control over orders in real time. This next-generation platform, expected to launch in the second quarter of 2022, will build on Scotiabank's commitment to investment, performance, and best execution, featuring state-of-the-art technology designed to serve the unique needs of the Canadian market, rather than relying on execution algorithms originally designed for U.S. markets.



td bank logo

January 2022
Cloud provider
TD announced the strategic acceleration of the Bank's move to establish an enterprise level data estate on Microsoft Azure. This initiative, that now includes a multi-year agreement with Databricks, will further enhance analytical capabilities to help power new customer experiences and enable employees to collaborate with more agility across the Bank.

The new agreement between TD and Databricks will help TD unlock data at scale and achieve broader benefits with the move to Azure by leveraging Delta Lake for access to high-quality, governed, and secure data across the enterprise.



VersaBank logo

February 2021
Digital Currency
VersaBank announced it plans to launch a strong encryption based digital currency represented one-to-one by a Canadian dollar bank deposit with the Bank, to be known as VCAD. VCAD is expected to be the first digital currency to represent a fiat currency, as well as the first in the world digital currency issued by and backed by deposits with a North American bank. As such, VCAD will offer the highest level of stability and security amongst all digital currencies in the market today.

II. Recent Bank Partnerships with FinTechs



alterna logo

October 2019
SME
Alterna Bank announces their limited release of the Alterna Bank Digital Small Business Banking solution. In partnership with nCino, Alterna Bank now offers a streamlined business account opening process that is available 24/7, online and on mobile devices.



bmo logo

April 2023
Digital Banking
BMO today announced it is enhancing and expanding its online NewStart® Pre-Arrival Account Opening program to help newcomers to Canada make real financial progress and easily transition to their new lives.

BMO's newly enhanced, industry leading pre-arrival account opening capability provides a seamless online experience for new Canadians. Starting today, NewStart® Pre-Arrival Account Opening will now be primarily automated, allowing online applicants in eligible jurisdictions to have their BMO Pre-Arrival bank account applications processed instantly.

In addition to program enhancements, BMO now enables applicants from 13 countries to open a bank account and an International Student GIC if eligible, before they arrive in Canada, making their financial transition easier and quicker. The program is now available to residents of several countries that are a part of the Government of Canada's Student Direct Stream accelerated student visa application process, including: Antigua and Barbuda, China, Colombia, Costa Rica, India, Morocco, Pakistan, Peru, Philippines, Senegal, Saint Vincent and the Grenadines, Trinidad and Tobago, and Vietnam.



bmo harris logo

August 2018
AI
BMO Harris Bank announces a partnership with Genivity to bring AI technology to its wealth advisors and help them engage clients through life stage, health risk and elder care cost planning (i.e., it helps wealth advisors engage in important health care discussions with clients and estimates future long-term health care costs).



cibc logo

August 2022
Consumer Directed Finance
CIBC announced a data access agreement with MX to enhance the CIBC client experience through secure data sharing, providing clients with a safe and seamless way to share their financial information.

By using application program interface (API) technology, CIBC's 11 million clients will no longer need to share their banking login ID and password to connect their banking information with third-party fintech applications that partner with MX.

The fintech applications that CIBC customers will be able to utilise cover a range of financial services including financial management, budget planning and credit-building tools. This collaboration with MX reflects CIBC's commitment to innovation and will enable modern, digital client experiences.




canadian western bank logo

December 2022
Payments
Canadian Western Bank (CWB) will expand its partnership with Brim Financial through a new business credit card offering in 2023. Driven by a focus on the unique financial needs of Canadian businesses and their owners, CWB is excited to offer a suite of cards that matches what clients want and need from a modern credit card solution. Brim, one of Canada’s fastest growing fintechs, and globally ranked as a best-in-class credit card as a service platform provider, will lever its robust technology platform and embedded business banking solutions to power the suite of cards.

Clients with a CWB business credit card will benefit from the speed and efficiency of Brim’s product capabilities and business workflows.



coast capital logo

September 2019
Account Opening
Coast Capital has partnered with Thirdstream to launch a digital account opening platform. The real-time membership and account opening take less than five minutes with a full end-to-end integration with immediate access to digital banking.

Equitable bank logo

July 2022
Consumer Directed Finance
EQ Bank, powered by Equitable Bank, Canada's Challenger Bank, has partnered with Flinks, a leader in open banking, to provide EQ Bank customers with the ability to share their financial data securely with third-party fintech applications of their choosing.

This partnership, and the integration of Flinks Outbound, an open banking environment, provides EQ Bank with the framework to quickly deliver flexible open banking capabilities and easily launch and operate new API data sharing methods while providing the bank with critical new data management capabilities. EQ customers who provide explicit consent will have the visibility into what data are they sharing, with whom and for how long.

With Canada's fast growing network of fintechs apps, Flinks enables easy adoption of these APIs by managing the onboarding, accreditation, and support.

motusbank logo

May 2019
Money management
Motusbank partners with US-based FinTech MX to introduce the latter’s new, self-guided financial wellness tool, Pulse, to its customers.



national bank logo

September 2018
SME
National Bank partners with Thinking Capital to expand financing options for Canadian Small Business. Small businesses across Canada can conveniently apply online for a term loan and receive a decision within a few minutes. Thinking Capital’s proprietary FinTech platform uses AI and algorithms to make lending decisions to streamline the process of evaluating SME loan applications and ultimately qualify applicants more quickly.



rbc logo

November 2022
Payments
RBC launched Swift Go, a new solution that enables Canadian businesses to send cross-border payments of up to $10,000 in foreign currencies with speed, security, predictability and efficiency. Implemented in collaboration with J.P. Morgan and Swift, RBC is the first Canadian financial institution to introduce this capability for its business clients.

Currently available to clients through the RBC PayEdge™ platform, Swift Go will provide small- and medium-sized enterprises with added flexibility and choice in how they pay suppliers around the world.



scotia bank logo

March 2022
AI
Scotiabank announced the launch of Ethics Assistant, in collaboration with Deloitte Canada, to further enhance the Bank's investments in data and analytics to derive customer insights that are more accurate, personalized, and free of bias.

Ethics Assistant also ensures that data collected by Scotiabank is leveraged in a manner that reinforces the importance of transparency and trust in how customer information is accessed and used.

The tool helps practitioners think about ethical considerations early on before AI and machine learning projects are deployed improving consistency, transparency, and fairness.



tangerine logo

September 2018  
Money management/Financial Insights
Tangerine partners with Meniga, a personal finance management (PFM) solutions provider. Meniga’s first known client in Canada, the bank sets out to offer its customers a clearer view of their finances through more accurate categorisation of their transactions and a more customised banking experience.



td logo

January 2023
Digital Banking
TD announced an exclusive two-year strategic relationship with CanadaVisa, one of the leading sources of Canadian immigration information.

The TD and CanadaVisa strategic relationship will give newcomers access to a consistent and reliable stream of content that can help bolster their acumen across important financial topics, such as - understanding different types of bank accounts, saving for the future, building a good credit score, buying a home, and much more.

 

November 2017 – BMO, RBC, Scotiabank, TD
Financial management
Sensibill enables partner banks to incorporate receipt management functionality into their existing digital banking applications, and provides customers with insights into their purchases.

III. Banks Collaborating with the FinTech Community as Incubators



bmo logo

May 2017
The "DMZ-BMO Fintech Accelerator" program is launched in 2017 with the goal of fostering Canada's top financial technology start-ups looking to expand, through an exclusive four-month incubation and mentorship experience. The program includes:

• a four-month incubation period in Toronto for the top six selected entrepreneurs;
• mentorship from BMO leaders throughout the process; and
• an event where each finalist will pitch their technology to a panel of BMO and industry-expert judges for a chance to execute a pilot with the bank and additional cash prizes.


cibc logo

August 2021
CIBC , Itaú Unibanco , National Australia Bank and NatWest Group launched the Global Open Finance Challenge, a virtual event encouraging innovation and the development of new solutions for a global open finance ecosystem.

The four banks, in collaboration with cloud computing leader Amazon Web Services (AWS), are inviting entrepreneurs and innovators to prototype new customer solutions on a global scale. The ideas will address some of the most pressing challenges in the financial services industry, cultivating an open finance ecosystem that allows secure data sharing among financial institutions, and enabling the banks to deliver more choice and customized product offerings for clients around the world, and the public at large.



national bank logo

October 2019
National Bank is launching the Innovation Competition, a large-scale challenge that will bring together Canadian fintech start-ups, students and other teams of individuals from across Canada. Participants will develop new solutions to help individuals save more efficiently and manage their money.
The competition, created in partnership with Flinks and OSMO, will take place over a 6-month period. Finalists will get the opportunity to pitch their business and technology solutions to a panel of National Bank executives, venture capitalists and tech leaders.

rbc logo

April 2019
RBC and with Franklin Templeton sponsor the opening of Southern California’s first FinTech incubator, EvoNexus. There will be a focus on AI, including machine learning, bank/wealth/payment technology, capital markets technology, cybersecurity, block chain, digital cash, P2P lending, 56, IoT, edge computing and more.



scotia bank logo

October 2017  
Scotiabank announces a partnership between Canada and Latin America’s start-up accelerator, NXTP Labs, allowing Scotiabank to access the most promising FinTechs in Mexico, Colombia, Chile, and Peru, and leverage these countries’ innovative start-up ecosystems. NXTP Labs is a premier Latin American start-up accelerator. Through this partnership, the bank ultimately expects to gain early visibility on transformative trends and technologies affecting financial services.



td logo

September 2022
Non-profit fintech development organization Fintech Cadence has received a $200,000 grant for the next two years from TD Bank Group to expand the Fintech Hub across Canada, one of their latest flagship initiatives. From bold ideas to thriving startups, the Fintech Hub provides a centralized base for ambitious Canadian fintech leaders to build, grow and scale their solutions through free access to the following services: coaching hours, peer-to-peer connections, discounted software and service providers, business workshops, content related events and access to a wider fintech network of leaders.

The Fintech Hub, a fully virtual no-fee no-equity program and a newly added flagship program to Fintech Cadence's roster of initiatives, is dedicated to founders in their early stages of validation, discovery and also welcomes startups up to pre-Series A that are using technology to build a more accessible, dynamic and diverse financial products and services landscape for Canadians. Founders are able to choose which opportunities fit their objectives - whether it be validation, product market fit, compliance, raising funds and more - and have access to one-on-one support from the Hub Lead to help them align their involvement with their growth goals. It covers a wide variety of themes and is open year-round.


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