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Canadian Fintech: Shopify refocuses 🔎
TD calls off the wedding. Bank of Canada ❤️ crypto. AI for insurance brokers.
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Koïos Intelligence, an AI assistant for insurance brokers to help collect client info, recommend products, and produce quotes raised $6.5m.
Tal’s take: So much of fintech today is about cutting out the middleman, the broker, the investment banker, the dealership, etc. Just as compelling though, is fintech designed to empower the middleman. My go-to example is always Lendesk, a platform to make Canada’s 30,000 registered mortgage brokers more efficient, not replace them.
A question for readers: when do you think it makes sense for fintechs to cut out vs empower the middleman? Any examples?
Diagram, the fintech venture studio arm of Power Corp raised a fresh $100m fund. Power Corp has their hand in all of your fav Canadian fintechs - Wealthsimple, Koho, Borrowell, Nesto…
💸 Pulling out
Amid increased regulatory scrutiny, big Crypto is having a tough time in Canada:
Binance, which has roughly 30% market share, is exiting Canada… again.
Paxos, Blockchain.com, OKEx, & Deribit have all peaced out.
Coinbase & Kraken are still in talks with regulators.
Others in the online dealership space like Clutch and Canada Drives have also struggled as used vehicle prices have crashed back to earth.
TD has finally called off their takeover of US bank First Horizon, after push back from investors on the rich price tag. TD will pay roughly $300m in damages… the bank merger equivalent of “I’m calling off the wedding, but you can keep the ring” 💍.
The deal would have made TD the 6th largest bank in the US.
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Online travel agency Hopper, has partnered with Uber. The Montreal based company will allow UK Uber users to book flights in-app.
Hopper also embeds “travel fintech” products like flight insurance, price freezing, and price drop guarantee into third parties like Capital One and Kayak. This b2b offering represents 40% of their business.
Wealthsimple clients with more than $500k will now get access to financial planning tools, through a partnership with Conquest Planning. These two are also both part of the Power Corp fam.
Shopify sold off their logistics business and launched a new fintech product.
Why refocus? Because over 50% of Shopify’s revenue already comes from financial services: payments, lending, banking… and now expense management / bill pay.
Most of these services are provided by third parties and embedded into Shopify. New revenue without long cycles of dev or maintenance? I’ll take another slice of that embedded fintech please!
Desjardins launched a new financial product called an “ESG swap” intended to incentivize creditors to hit emission targets. If targets are hit, cashback on the facility is unlocked. If targets are missed, the cash back is donated to charity and Desjardins matches.
The Bank of Canada is holding a public consultation on Central Bank Digital Currency (CBDC). The BoC has been chatting about this since 2013, but now that 11 other countries have adopted digital cash, this feels within reach.
This would allow the central bank to issue digital currency, much in the same way they issue fiat, but with the added perks of being programmable. Meaning the BoC can track the movement of money, distribute it instantly, and circumvent the traditional expensive plumbing of the banking system by depositing it directly into everyday Canadian’s digital wallets.
The BoC has hinted that they may be open to tweaking rules governing Canada’s 25,000 retail payment service providers (PSP’s) in order to be more inclusive. Many of these PSP are tiny startups that will find it difficult to manage the compliance costs.
🎂 Number time!
14% - The avg drop in home prices year over year. According to CMHC, it will bottom out this quarter and increase by over 7% next year.
$1,741 - The average refund on Canadian tax returns, per the CRA.
6.1% - The percentage of Canadians who files their taxes by paper or over the phone 😕 (see graph).
Have a great week! See ya 👋