Technology is changing the way Canadians access and use financial products and services. Innovative financial technologies, introduced by banks and financial technology (FinTech) companies in Canada, are giving consumers more options and improving convenience.

Banks in Canada have a long history of supporting and embracing technological innovations. In recent years, they have gradually taken on a more active role in supporting fintech, whether through internal initiatives or external partnerships. But it is clear that all banks are investing significantly in technology in general and in the digital side of their business in particular. These investments have greatly improved the ways in which banks connect and interact with their customers, as well as the internal processes of these banks. In addition, it is becoming increasingly common for a bank to finance or partner with a fintech company. This gives the bank an opening and access to innovative solutions and products that will benefit all of its customers, and the young fintech company gains access to capital and a ready-made customer base that will allow it to grow. Additionally, banks are investing in fintech as trusted incubators and accelerators that drive the generation of new ideas, tap into the highly skilled talent pool, and help bring innovations to market faster.

Agile and innovative, the fintech space represents a dream opportunity for the Canadian financial sector. At the same time, the Canadian banking sector is known for its robustness, stability, brand image and large customer base. Today, banks are strengthening their collaboration with innovative FinTech companies, a positive step for both parties, but especially for consumers.

New powers in financial technology

The 2018 amendments to the Bank Act , the federal law that governs the activities of banks in Canada, introduced new powers for fintech. These amendments removed barriers that prevented certain types of relationships between banks and FinTech companies, including lengthy approval processes and restrictions on the types of investments banks can make in FinTech. This is a step in the right direction for banks to continue to capitalize on the opportunities presented by fintech. Banks in Canada can now combine forces with FinTech companies through investments or partnerships.

Technology for convenience

Banks have always used technology to strengthen their relationships with customers, enhance the products and services they offer, improve their operations and modernize their IT systems. While the pace of technological change is accelerating and bringing new challenges, banks will continue to respond to changing customer preferences with reliable technology solutions.

Technology, however, is only one facet of the evolution of banking. In this digital age, trust is at the heart of change. It is trust that underpins the very essence of banking: a great customer experience, strong regulatory oversight, and a commitment to privacy and personal data protection.

The online lending market, supported by banks, has grown in recent years. This market matches potential lenders with potential borrowers, typically individuals and SMEs who would otherwise be unable to obtain credit from traditional sources. The borrower, on the platform, can request a given loan amount, which the investor can grant if the interest rate and credit score are suitable. The level of adaptability of this model simplifies the pricing and adjudication process for both the borrower and the lender.

Here are examples of recent innovations in banking financial technologies, in the following three categories:

In-house financial technology solutions

Financial technology solutions through partnerships between banks and FinTech

Incubators for FinTech companies

Artificial Intelligence

BMO Financial Group and Toronto-based start-up Riskfuel Analytics announce a partnership to develop models for pricing and scenario analysis of structured derivatives transactions. This announcement follows a successful pilot in which quantitative researchers from both organizations developed a solution to accelerate the valuation of callable notes, which previously presented significant execution challenges when priced using traditional valuation methods.

As an early adopter of this technology for front-end pricing, BMO’s partnership with Riskfuel Analytics adds to its track record as an innovator in Capital Markets, using AI to simultaneously improve client experience and operational efficiency. The collaboration with Riskfuel will reduce the reliance on slow and costly financial models to calculate the pricing and risk of structured products.

This investment follows a successful launch of Flinks’ operations in the United States. The growth capital will enable the company to continue its rapid growth and meet demand from fintechs, wealth managers, credit unions and financial institutions for products that enable them to innovate with financial data in North America. The company also plans to use the investment to increase its market share in the investment management and lending sector, in addition to consolidating its leadership in the analytics and data enrichment sector.

Laurentian Bank announces the launch of an all-new line of credit cards.

This launch is the result of the strategic partnership announced in December 2021 between the Bank and Brim Financial. Through this partnership, the Bank can not only roll out newly redesigned cards, but also leverage its scale by leveraging Brim’s technology to offer its customers an enhanced rewards program and cutting-edge digital banking services.

Digital tools for entrepreneurs

RBC launches RBCx, a full-service platform that accelerates the entrepreneurial journey of technology companies at every stage of their growth by providing access to working capital solutions, innovative products and services, and operational expertise. From start-up to scale-up, RBCx supports entrepreneurs who are pushing the boundaries of business models and industries.

• Innovative financial products, including credit and specialty banking
• Deep industry knowledge in specialized verticals, including cleantech and life sciences
• Exclusive offerings from leading RBCx Marketplace providers
• Advisory services from operational specialists in key disciplines
• Extensive network of founders and funders who participate in curated events and content
• Proprietary research and advice
• Suite of tailored personal banking services (credit cards, wealth management, personal financing, etc.)