Canadian Fintech: open banking framework now law 🧑⚖️
AutoTrader.ca on sale for $4b. VersaBank acquires another bank. Fintechs no longer need banks to connect to payments infra.
Good morning! Welcome back to Canadian Fintech, a newsletter for founders, operators & investors.
I’m not sure what’s been harder this week: keeping up with Copa and Euro soccer games or keeping track of Canadian fintech policy.
This week lawmakers gave royal ascent to Bills C-59 & C-69. Both are HUGE milestones for Canadian fintechs. More on that below.
We also received clarity on when lending laws are changing, penalties for violating RPAA, and expanded AML regulations. Canadian regulators have been busier than the Czech / Turkey match referee.
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💰 Funding
Leasey.AI, a platform to screen and manage residential tenants won $100k from the DMZ.
In possibly the trendiest headline of 2024… Hut8, a Canadian founded bitcoin miner raised $200m and pivoted from powering crypto to powering AI.
Data centres used to mine bitcoin can also be used to provide “compute” for AI companies.
Hut8 merged with a US competitor last year.
Clariti, a Vancouver based permitting & licensing software for governments, raised $10m in debt from CIBC Innovation.
Gaiia, a billing & workflow automation platform for internet service providers (ISPs) raised $18m.
The Quebec City based company spun out of Oxio, an ISP last year.
IGM Technology, a Toronto based enterprise financial reporting and budgeting software received an undisclosed investment from growth equity firm Lead Edge.
🤝 M&A
VersaBank received OSFI approval for its $17m takeover of US based Stearns Bank.
A major business line of Versa is purchasing receivables portfolios from point-of-sale lenders for large ticket items like an HVAC or commercial equipment. This is a $3b portfolio for them growing at 26% yoy.
This acquisition will allow them to expand this product into the US.
Trader, a Toronto based automotive finance software company is reportedly up for sale for $4b by their PE owners Thoma Bravo.
Thoma Bravo also owns J.D. Power, a data company for the automotive industry which they have also been trying to sell this year.
Trader acquired all of Cox Automotive’s Canadian assets including Dealertrack, Kelley Blue Book & VinSolutions in 2022.
Trader also acquired Teranet’s collateral management registry earlier this year.
🚀 Product
CRA is piloting an automated tax filing service to help low income Canadians who do not typically file taxes, still receive the benefits & credit payments that they are entitled to.
Haventree Bank selected Temenos as their new core-banking provider.
Fidelity Investments Canada was approved to launch a full service wealth-management dealer.
Fidelity is one of Canada’s largest asset managers. This now allows them to provide financial advice and hire advisors.
TD signed a referral partnership with MPOWER, an international student lender to become their borrower’s preferred bank.
This is TD’s second fintech partnership’ this year focused on acquiring Canadian immigrants.
⚖️ Policy
Lending:
Notices of Security Interest (NOSIs) can no longer be registered against consumer goods in Ontario, like an HVAC in your home for example. Existing registered NOSIs have now automatically expired.
A drop in the maximum rate of interest from 48% to 35% APR will take effect on Jan 1st, 2025.
Open Banking:
Canada’s open banking framework is now enshrined in law for the first time ever.
Payments:
Payment Canada will expand membership to payment service providers (PSPs), meaning that fintechs will be able to directly connect to payments infrastructure instead of relying on bank intermediaries.
Fintechs who violate the Retail Payment Activities Act (RPAA) or do not register under the program at all, may receive fines as high as $10m from the Bank of Canada.
Payments Canada, the non-profit org in charge of payment infrastructure has a new CEO. Susan Hawkins was previously TD’s global head of enterprise payments.
Banking
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Have a great week! See ya 👋