Canadian Fintech: Predictions for 2024 🔮
The future of Canadian embedded finance, data aggregation, business banking & more!
Happy new year! Welcome back to Canadian Fintech, a newsletter for founders, operators & investors.
As is tradition, this week I’m sharing my 5 Canadian fintech predictions for the year.
Want to see how I did on last year’s? Click here. Overall, I’d give myself a B+.
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1. Mortgage originations get vertically integrated
There are 2-3 million mortgages originated every year in Canada according to the CMHC.
Mortgage brokers do 40% of it.
Most lenders getting into this market start out as brokers. It allows them to build their tech and brand, with far less capital and compliance requirements.
Rocket Mortgage, Pine, Nesto and Ratehub all did this.
Now I’m noticing a new lender/broker trend emerging in Canada.
Lenders are acquiring and launching their own real-estate brokerages. It allows lenders to get in front of a home-buyer much earlier in the sales process.
I predict that this m&a trend will pick up in 2024. My money is on Homewise and HouseSigma both being acquired by lenders.
2. AI is coming for accounting
Accounting technology has historically focused on automating manual workflows:
Auvenir streamlined audit and review
Countable is doing it for compilations
Wave auto categorizes transactions
Now with generative AI, a whole new area of accounting can be automated - personalized research and insight generation.
I predict that this year we’ll see AI co-pilot features creep into every major bookkeeping platform.
3. Data aggregators move beyond bank accounts
The fintech industry runs on financial data APIs.
First it was bank account data courtesy of Flinks.
This unlocked huge fintech gains from cash flow loan underwriting to online KYC.
Now we’re seeing the next wave of financial data APIs:
Wealth accounts (Wealthica & SnapTrade)
Crypto accounts (Vezgo)
But what about payroll and benefits accounts?
I predict that a local HR data API will launch before a US-based one takes over the market.
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4. Embedded finance matures
Offering embedded financial services to shoppers has become the default:
Pay-by-bank at checkout (PayDirect & Paramount Commerce)
BNPL at checkout (Paybright & Tabit)
Product warranties at checkout (Walnut)
Travel disruption insurance at checkout (Hopper)
Now way more niche financial services are being embedded:
Accounting software (Teal.dev)
Wealth management (OneVest)
Cards and deposit accounts (Neo & Synctera)
Payroll (The Nmbr Company)
This is definitely going to get even more niche.
The embedded finance products I predict we’ll see in 2024 are:
Corporate treasury accounts. Low risk, highly liquid investment accounts similar to Moment and Atomic in the US.
Corporate deposit accounts. Shopify, Square & Wave all offer deposit accounts in the US, but not Canada.
5. The race for business banking will get confusing
Consumer banking in Canada has clear competitors:
Fintechs like Neo, Koho and Wealthsimple
Banks like EQ
On the business banking side it’s less clear:
Fintechs that look like banks (Loop & Vault)
Fintechs that look like corporate cards (Float)
Fintechs that look like AP / AR automation (Plooto, Notch & Procurify)
All offer similar features: online payments, FX, accounting integrations, cards, expense management.
All target similar clients: SMBs.
In 2024 I predict that the lines between them continue to blur as they all build towards a full service business banking solution.
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Have a great year! See ya 👋