Canadian Fintech: A first for Canadian CU's 🫰
Caary kills their card. Requity Homes & Trice raise funds. Webull comes to Canada.
Good morning! Welcome back to Canadian Fintech, a newsletter for founders, operators & investors.
After a short holiday break, we’re back with our regular fintech updates! If you missed last week’s newsletter, you can check it out here. I lay out 5 predictions for the industry this year.
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💰 Funding
Requity Homes, a rent-to-own platform for home buyers, raised $26m in debt & equity.
Requity purchases a home on behalf of a client and rents it back to them with a portion of the rent buying into the equity of the property. 80% of clients buy back their homes in 18 months.
Merchant Opportunities Fund, a private debt fund focused on lending to other lenders, raised a $130m credit facility from BMO.
AppDirect, a Montreal based marketplace for businesses to discover and buy enterprise software, raised $136m from Quebec’s public pension fund.
The funds will go towards AppDirect’s Capital Invest division, which lends money to software companies on their platform.
The fintech is co-founded by Nicolas Desmarais, who is part of the billionaire family behind the fintech investment fund Power Corp.
Senso.ai, a knowledge management tool that helps Credit Unions create bespoke offers to their members, was accepted into YC.
Trice, a payments infrastructure company that helps American FI’s get onboarded onto FeNow (the new US real-time payments rail) raised their seed.
Trice and FedNow both launched in 2023. Trice was incubated at Diagram in Montreal.
🤝 M&A
RBC’s $120b takeover of HSBC was finally approved by Finance Minister, Chrystia Freeland. Due to loud opposition by the Conservatives, some pundits thought we were going to see a repeat of 1998 Liberal Finance Minister (and future Prime Minister) Paul Martin’s bank merger rejection.
Martin exercised his power under the Bank Act to stop the merging of RBC & BMO and then CIBC and TD.
CPP, Canada’s largest pension fund acquired a real-estate portfolio from Signature Bank, a US FI that went into receivership last March during the brief bank run panic that also claimed SVB.
Similarly, last year National Bank acquired SVB Canada’s book of loans to technology companies.
ABCU Credit Union (Alberta) and Innovation Federal Credit Union (Saskatchewan) will be Canada’s first inter-provincial Credit Union merger.
Most Credit Unions are regulated provincially, but thanks to revisions made to the Bank Act in 2012, some Credit Unions (like IFCU) have transitioned to federal oversight, in order to offer services outside of the province.
Credit Union mergers are becoming more common. Last year major CU’s connectFirst and Servus Credit Union announced their merger, which makes them one of the largest in the country at $31b in combined assets.
League Data, a core banking provider to Atlantic Credit Unions acquired Technicost, a loan origination software also focused on the Credit Union market.
League Data acquired Technicost from Co-operators, a large Canadian insurer. Co-operators bought the company themselves only five years ago, which had me scratching my head at the time.
This deal makes sense for all parties involved: loan software is non-core for Co-operators and highly strategic for League Data.
TMX Group, Canada’s largest stock exchange, acquired VettaFi, a US-based ETF provider.
TMX is on the hunt to diversify revenue away from Canada as domestic IPOs have flatlined and delistings have increased.
IN PARTNERSHIP WITH SYNCTERA
How do Shopify, Uber & Tim Hortons use embedded banking?
Embedded banking is one of the most significant developments in Canadian fintech. It allows non-bank companies to offer banking products to their customers.
To learn how it actually works, the experts at Synctera put together a comprehensive guide explaining everything you need to know.
Read the full guide to learn:
What really is embedded banking?
How does it work?
Which companies are using it and why?
🚀 Product
Caary, a SMB credit card provider has killed their card program. The fintech says it will pivot to becoming a program manager for other companies launching credit cards.
Brim, a credit card company also originally launched as a direct to consumer product and then later expanded into a program management for other FI’s like CWB & Laurentian.
In advance of open banking implementation in Canada, FirstOntario Credit Union has tapped Everlink, a payment company to help them set up their open banking system.
Everlink is delivering this through a partnership with Flinks, who’s Outbound product is already providing open banking services for EQ Bank and National Bank.
Smaller institutions like FirstOntario, have the most to gain from open banking, as the system will make it far easier for customers to switch between FIs.
Webull, a US-based discount stock brokerage, launched in Canada.
Questrade and Wealthsimple are the most well known local discount/free offerings.
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Have a great week! See ya 👋