Canadian Fintech: Open banking needs a new PR agency
Rollup the rim to... get a credit card? Credit Union M&A. Buy your house online.
Morning!
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💰 Funding
Doormat, a platform to close residential real estate transactions online, raised $1.25m. Canadian fintech Deeded, provides similar services, minus the in-house counsel.
Novisto, a software that helps companies compile and report ESG data to shareholders, raised $20m.
Aomao, a startup that allows individuals to encrypt and sell their data consensually, raised $1.7m. Aomao is targeting corporate clients in the gaming & crypto industry. Canadian fintech Reklaim, offers a similar data brokerage service for the advertising industry.
🤝 M&A
Hostaway, a short term property rental management software (marketing, backoffice, etc.), sold a significant stake to a European private equity shop.
Servus Credit Union acquired Stride Capital, a heavy equipment lessor. Why?
Last month, Servus announced that it’s merging with fellow Albertan credit union, connectFirst, giving them one of the largest CU balance sheets in the country. Adding Stride to the mix gives them deeper banking ties into the province's commercial industries like oil and gas, forestry, and construction.
🚀 Product
Tim Hortons is launching a financial services division, starting with a credit card linked to its loyalty program. They join several other major Canadian retailers that have expanded into banking - Canadian Tire, President's Choice and Rogers. And even more that have launched branded cards - Costco, Air Canada and Hudson’s Bay. Why?
Embedding financial services (gift cards, branded credit cards, loyalty programs) into non-finance brands creates a stickier client relationship. But it also creates new revenue - interchange fees, late payment fees, interest income and a flow of low cost deposits.
Tim’s has over 5,000 branches (I mean stores) in 15 countries, creating a network that could eventually develop into cheque cashing, remittance, etc
Zūm Rails, a Montreal based payment gateway crossed $1b processed per month.
Fuse Financial launched a small business bank that combines deposits, invoicing, accounting, and cards. The offering is very similar to Pillar (RIP 🙏) that folded earlier this year. Fuse is built on sponsor bank, DC Bank.
⚖️ Policy
An MP and a Senator are forming a non-partisan “Emerging Tech Caucus” to study / play legislative catchup on the risks of AI & blockchain.
A recent survey by the FCAC, showed that 15% of Canadians would participate in open banking, 29% might, and 52% would not. Yikes! Open banking, which is the lifeblood of the fintech industry, is a term that describes how banks share financial data with fintechs.
My guess is that if the survey asked, “would you like to remove all of your FX fees” or “would you like a 10,000x higher yield on your deposits” or “would you like to save 50 hours reconciling your company’s books”, most Canadians would say “yes, please!”
I’ll be the first to admit that whoever came up with the name open banking, should retire immediately from PR because that name sucks. It’s a scary name! Open banking sounds like someone who doesn’t use their entire body to cover their ATM pin.
My guess is that this is a branding / explainability issue, not an outcomes issue.
Finance Canada is doing a public consultation on:
RBC’s acquisition of HSBC
The expansion of AML regs to fintechs and factoring companies
🎂 Number time!
$13b: the amount of cash Canadian VCs are sitting on according to BDC
9%: the amount of Canadians that are aware of open banking according to the FCAC. Tbh that’s way higher than I expected.
> $1b: the amount Canadian insurers paid out due to auto theft last year. It was a ~50% increase in Quebec & Ontario.
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Have a great week! See ya 👋