Canadian Fintech: What's in the budget? 👀
Canada Drives goes off road. Pay your rent with credit card. TD's m&a hiccup.
Morning!
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💰 Funding
Online auto dealer Canada Drives has received creditor protection and is restructuring, months after raising $50m. Why?
A mix of macro headwinds like reduced demand for cars, rising rates, and a depreciation in used car values. Canadian competitor Clutch, let go of 65% of staff earlier this year.
Equisoft, a financial advisor platform, raised $125m. The fintech acquired CompuOffice, an insurance research software earlier this year.
RealSage, a data analytics platform to help multi-family rental asset managers improve their pricing & reduce vacancies, raised $2m.
🤝 M&A
TD agreed to buy Tennessee-based First Horizon Bank last year for US$13.4b, but its stock is down 20% and deposits are down 10% since SVB’s failure. What happens next?
Just months ago, US regulators were blocking this deal on account of bank concentration and TD’s reputation in the US as being over reliant on overdraft income. But in a post SVB world, US regulators care more about bank liquidity and will want this deal to go through.
TD stands to benefit if they can force FHB back to the negotiating table for a better price.
PureFacts, a fee calculation & billing platform for financial advisors acquired Toronto based Xtiva, a sales compensation management tool. Why?
The products that financial advisors sell carry different fee structures (amount, schedule, etc) and commission incentives. Managing all of these pricing rules gets complex quickly. This is a perfect use-case for revenue management software and an excellent marriage between two providers.
Westland Insurance, Canada’s largest independent insurance broker acquired Shephard Ashmore Insurance, a specialty broker for the music industry.
🚀 Product
Consumer rewards app Drop hit 100m users in the US.
Chexy a fintech that lets you pay rent with a credit card launched in beta.
This model was tried unsuccessfully by RBC Ventures company GetDigs.
More successfully by PaySimply, for paying taxes, educational fees, etc. by card.
And by Plastiq, that deals with vendor bill pay for businesses.
Wealthsimple’s feature velocity is really astounding. This month, users can now:
receive funds to their cash accounts via Interac e-transfer, Canada’s interbank debit transfer system.
invest in private credit funds managed by Sagard (their owners). High yield alternative assets like these are not usually available to mid income investors.
Bidmii, a marketplace for homeowners to find and pay for contractors partnered with BNPL Humm to offer installment payments.
This type of home improvement financing would typically be done through a HELOC or directly through the dealer via lenders like Simply or Financeit.
3 reasons to attend the Bankers Summit
🤝 Book meetings with prospects! Thousands of curated meetings are being scheduled in our networking app.
🤑 Buy, sell & discover new fintech solutions! Hundreds of banks, credit unions, and fintechs are looking for their next partner.
🦄 Hear from CEOs of the largest fintechs & banks in Canada! It’s a who's who of Canadian fintech.
See ya in Toronto on May 17th!
⚖️ What’s in the federal budget for Canadian fintech?
The Liberals released their 2023 federal budget last week. Here’s the TL;DR.
Lending
Subprime lending: the federal criminal rate of interest will be lowered to 35% APR from 47% APR.
Payday lending: payday lenders have historically been exempt from the criminal code rate cap. But this budget introduced a $14 cap on charges for every $100 borrowed.
Mortgage lending: banks are “kindly” being asked to provide relief to distressed borrowers by extending amortizations, adjusting payment schedules & authorizing lump-sum payments.
Payments
Major credit card companies have agreed to reduce interchange fees by 27%. This will save merchants approximately $1 billion over five years.
Financial crime
A public and searchable beneficial ownership registry of federal corporations will be launched this year.
Operating as an unregistered money services business (MSB) is now a crime.
Crypto
Federally-regulated pension funds are now mandated to disclose their crypto exposure to OSFI. A wink at CDPQ & OTPP losing over $100m each on their investments in Celsius & FTX.
What’s missing?
No status update on open banking despite being months past the deadline set out in the 2021 Open Banking Advisory Committee report 😢.
No status update on the Scientific Research and Experimental Development (SR&ED) tax incentive program review.
👀 Who’s hiring?
Equitable Bank, Group Product Manager Growth (Toronto)
Flinks, Data Team Lead (Remote)
Interac, AVP Data Governance (Toronto)
Building a Canadian fintech? Reply to this email.
Have a great week! See ya 👋
Great roundup of stories!
Not being registered and operating as an MSB was borderline legal until now 😳. Oh, and not surprised about "no surprise" on open banking.