Canadian Fintech: Smith bags another lender 🏦
BNPL reports to credit bureau. FTX 💔 Bitvo. Borrowers getting triggered.
Welcome back to Canadian Fintech, a newsletter for financial services operators. Was this email forwarded to you? Become one of our 6,081 subscribers by clicking below.
Vegzo, an API that allows fintechs to connect to crypto accounts (exchanges, DeFi wallets, NFTs, etc.) raised $750k, with strategic investment from Flinks, a similar API focused on connecting traditional bank accounts. Vezgo spun out of Wealthica, a consumer facing platform to manage investment portfolios across asset classes and accounts.
My take: this is as strategic for Vezgo, as it is for Flinks. Plaid, a US based aggregator launched their own crypto integration tool earlier this year.
Goeasy, one of Canada’s largest subprime consumer lenders, raised $50m in bought deal financing led by BMO Capital Markets.
Wiseday Financial, an online mortgage broker focused on pre-approvals, announced a $5m Seed raised last year. The fintech will compete against the likes Perch and Homewise.
Smith Financial is acquiring alternative mortgage lender Home Capital for $1.7b. Namesake, Stephen Smith is building a Canadian non-prime financing empire as he is also:
the founder of First National Financial, the country’s second largest mortgage finance company
the largest shareholder of Equitable Bank, Canada’s largest Alt A mortgage provider
the co-owner of Fairstone Bank, a large Quebec based subprime consumer lender
Identity verification platform Certn has acquired competitors this year in the UK and Australia. The company helps employers and property managers run background checks, credit checks and education checks.
Shopify has acquired Remix, a web framework for building commerce sites. This plays into the “composable commerce” trend, where developers stitch together best of breed solutions from multiple providers, rather than using off the shelf toolkits. Canadian composable commerce startups Myplanet and Elastic Path raised $14m and $60m respectively this year.
ClearEstate, an estate settlement fintech, has partnered with Concentra Trust, the largest trust provider to Credit Unions across Canada. Concentra will now discontinue their proprietary “Executor Ease” product, and instead resell ClearEstate to all of their CU partners.
My take: this is big fintech news considering that estate execution is a core piece of what Trusts do. Huge props to Concentra for recognizing that they can capture more value and scale faster by partnering with a fintech, rather than trying to maintain their own legacy solution.
In other Trust news: new kid on the block Odyssey Trust received approval to expand across Canada, bringing some competition to the Computershare and TMX Group duopoly. Odyssey also claims to be Canada’s first female founded federal financial institution.
Buy-now-pay-later Sezzle will allow Canadians to start reporting tradelines (loan repayment history) to credit bureaus. Until now, BNPL tradelines were not collected by bureaus, meaning they could not positively or negatively impact a Canadian’s credit score.
POS lender Flexiti has grown its loan book (receivables) to $1b. Flexiti is wholly owned by subprime lender Curo.
FasTab, a restaurant POS launched in Winnipeg. Similar fintech, CHK PLZ was acquired by French competitor sunday last year, and then shut down over the summer.
Canada has a new subprime consumer lender: Fora Credit. Fora is owned by Propel Holdings, which operates MoneyKey and CreditFresh in the US.
There’s a better way to get small business insurance
Zensurance helps Canadian small business owners, entrepreneurs, independent contractors, and self-employed professionals avoid the traditional hassle of buying coverage. Instead, they help them get fast, low-cost policies online with the support from highly rated brokers specializing in business liability insurance.
Why choose Zensurance?
Policies starting at only $19 a month
We shop over 50+ providers
Apply, get a quote and purchase in just a few clicks
No matter what you do or how small your business is, Zensurance is the leading source for small business insurance in Canada, serving hundreds of industries.
📌 Updates to past Canadian Fintech stories
The awkward thing about writing a newsletter is that when your predictions are proven wrong, everyone knows it. Here are updates to two stories I covered earlier this year.
1. FTX & Bitvo
Remember in June when I wrote that FTX was entering Canada through its acquisition of crypto exchange Bitvo? Well… that didn’t exactly go to plan. Here’s what happened:
Pateno Payments, a Canadian payments provider launched Bitvo, an Alberta regulated crypto exchange
Pateno agreed to sell the company to FTX, who was on the hunt for regulated entities in new markets
The transaction was still pending when FTX filed for bankruptcy
Bitvo was mentioned as an FTX asset in the bankruptcy filing
CEO Pamela Draper set the record straight:
Bitvo formally terminated the deal
They have now returned to prior operations, suffering zero technical exposure to FTX as no integration between the companies had begun.
2. TD & Canada Post
Remember last month when I wrote that TD and Canada Post had partnered to offer unsecured consumer loans in regions with sparse bank branch presence? Well… that’s over now.
A TD spokesperson said that the program has been paused indefinitely due to “processing issues”.
🔫 Borrowers are getting triggered
13% percentage of Canada’s 7m outstanding mortgages have hit their “trigger rate”.
What does that mean?
For fixed payment variable interest mortgages, a trigger rate is the point at which a borrower's payment no longer covers all of the interest accrued from the previous payment.
In other words, the entire mortgage payment is going towards paying interest and zero is going towards principal.
See the below example from the Bank of Canada:
The most likely outcome is that lenders will increase monthly payments on triggered borrowers.
As rates continue to climb, more Canadians will trigger and start experiencing payment increases.
🎂 Number time!
$755m - the amount BMO owes in damages for an alleged ponzi scheme. The Canadian bank acquired Marshall and Ilsley Bank in the US in 2011 who allegedly facilitated the fraud. BMO is appealing the decision.
$3.36b - total Black Friday sales on Shopify.
$240m - average daily liquidity savings to Canada’s wholesale payments system if quantum computing was used to efficiently reorder settlements.
👀 Who’s hiring?
Koho, Senior Product Manager, Credit (Remote)
Homebase, Partnerships Manager (Toronto)
Ripple, Lead Product Manager, Crypto Ledger (Toronto)
Interested in sponsoring? Reply to this email.