Canadian Fintech: 2025 Predictions🔮
Canadian digital banks, fintech IPOs, emerging fintech sectors and more!
Good morning and happy new year!
Welcome back to the Canadian Fintech Newsletter, an industry roundup for founders, operators and investors.
Every Monday we break down the hottest topics in your industry in under 3 minutes.
But since this is the first Monday of 2025, we’re doing something different! Below you’ll find my 2025 Canadian fintech predictions.
Want to see how I did on last year’s? Click here.
Was this forwarded to you? Become one of our 11,660 subscribers by clicking below.
2025 Canadian Fintech Predictions 🔮
1. Canadian digital banks come of age
Digital banks internationally are hitting major market share milestones:
Nubank has 100m customers in South America.
Revolut has 50m customers in Europe and a UK banking licence.
Chime, Dave & SoFi all have close to 10m customers in the US.
For a population of 40m, Canadian digital banks are making big gains too:
Wealthsimple has 3m customers and $50b in assets in 11 years.
Neo has 1m+ customers and 13,000 retail partners in 6 years.
KOHO has 1m+ customers and is in the second phase of their bank license application in 11 years.
EQ Bank (digital arm of Equitable Bank) has 500,000 customers and $8b in deposits in 9 years.
But what about Canada’s older cohort of digital banks?
These are all Schedule 1 banks, with a focus on digital. They are either owned by a big 5 bank or by major retailers.
They’re around the same size, but have taken way longer to get there:
Canadian Tire Bank, owned by Canadian Tire, has 2m customers and $7b in credit card receivables in 64 years (depending on how you count).
PC Financial, owned by Loblaw, sold off its digital banking products to Simplii in 2017 but is now rebuilding them internally. It has $5b in assets in 29 years.
Simplii, owned by CIBC, has 2m customers in 29 years.
Tangerine, owned by Scotiabank, has 2m customers and $40b in assets in 28 years.
These numbers don’t put a dent in RBC’s $2t in assets and nearly 25% market share today, but the writing is on the wall.
My 2025 prediction is that:
Neo, Wealthsimple, KOHO and EQ all double their customer base this year
The older digital banks stay flat.
2. Float at a crossroads
Float is emerging as Canada’s whale in the spend management space. Why?
Competitors that launched around the same time have pivoted (Caary discontinued its card and is now an issuance platform for other cards)
International players have not entered the market (Brex and Ramp have their hands full in the US)
The biggest innovators in the business banking space have focused on FX as their differentiator, not expense management (Loop and Vault have killer SMB offerings here)
So where does Float go from here?
Keep building for SMBs - likely would be an FX focused solution
Go up market to serve enterprise - likely means more HRIS, ERP, & SSO integrations and a dashboard for companies with multiple bank accounts
Move into accounts receivable - customer onboarding & invoicing
Something totally different - allow clients to use non-Float cards with Float’s expense management platform. This “bring your own card” model was pioneered by Navan in the US.
My 2025 prediction is that:
Float doubles down on SMBs - it’s a poorly served, massive market
An international competitor enters Canada to tackle enterprise
3. Fintech x Supply Chain
Retailers have traditionally viewed product returns as a sunk cost. The price to accept a return often doesn’t justify the resale value.
It’s a problem at the intersection of fintech and supply chain:
Fintech: it’s appraisals, customer wallets, processing transactions and refunding.
Supply chain: it’s drop off / mail-ins, refurbishing, cross border shipping and package tracking.
Canadian fintechs are coming to market to solve this:
SecondShop, a marketplace for manufacturers to sell overstocked items at a discount, raised $2m.
Sellit9, a platform for retailers to accept used items as currency towards new purchases launched.
ReturnBear, a platform for retailers to manage their cross border returns signed a deal with The Bay and expanded into the UK.
My 2025 prediction is that we see a dozen launches, 3 VC financing rounds, and an acquisition in this space.
4. AI goes from cost cutting to revenue generating
2024 was the year of the AI co-pilot. Fintechs adopted AI to help automate manual tasks and save valuable hours of human work:
Fraud detection - Minerva’s sanctions list monitoring
Customer support - KOHO’s chatbots
Data cleansing - Wave’s expense labelling
But AI is moving into a new phase of value creation - the AI agent.
AI co-pilots assist humans by providing insights and suggestions, but require human oversight.
AI agents automate tasks, making decisions and taking actions with minimal human intervention.
We’re already starting to see agents at work:
Asset management - Boosted AI’s market research and portfolio construction for institutional investors
Document processing - Discrepancy AI turning bank statement PDFs into JSON for instant document verification
SR&ED processing - Shadow Inc creates smart data rooms for advisory firms to process hundreds of SR&ED applications
My 2025 prediction is that we see more agentic driven fintech like:
Payments - agents fully handling transactions routing and dispute resolution
Lending - agents fully automated small dollar consumer loan originations
Pricing - agents creating & executing personalized prices for loans and policies
5. Canadian fintech IPOs
2024 was the year of go-privates.
Over a dozen Canadian publicly traded technology companies were acquired by private equity, including several fintechs:
Q4 acquired by Sumeru
Nuvei acquired by Advent
MDF Commerce acquired by KKR
Absolute Software acquired by Crosspoint Capital
Lightspeed announced it is up for sale
But markets are shifting. Interest rates have dropped, venture capital has returned and valuations are back to their covid highs. Wealthsimple was recently revalued at $5b, just above its 2021 peak.
This means that public markets are an attractive option again in 2025.
My 2025 prediction is that 3 of the following fintechs will announced IPOs this year:
Wealthsimple
Hopper
1Password
GeoComply
Plusgrade
Raising money for your fintech? Fill out this form
Want to invest in Canadian fintech? Fill out this form
Want to get in front of 11,660 fintech decision makers? Reply to this email to become a sponsor.
Have a great week! See ya 👋