The development of a financial technology (fintech) hub in Montreal could propel the city’s reputation as a great home base for budding entrepreneurs looking to setup shop, according to a new report from Ernst & Young (EY) LLP.
The report, entitled Accelerating Development in Montreal’s Fintech Ecosystem, studies the advantages that the city currently has in appealing to developers of fintech products and ideas and the necessary steps to further develop those advantages.
“Investment in fintech has been growing steadily [in Canada],” says Sébastien René, a partner and an information technology (IT) advisory leader for Quebec at EY, in a statement. “But the province is lagging because consumers are unaware that solutions exist. Making Montreal’s fintech ecosystem successful means creating an environment Quebec’s energetic, creative and innovative entrepreneurs can thrive in.”
Investment in Montreal-based fintech firms totalled $152 million in 2014 and 2015, significantly lower than the $684 million Ontario attracted for fintech investment within the same period.
In addition to a designated hub, EY’s report calls on Quebec’s financial services institutions to develop a formal mentoring program in which entrepreneurs connected to a fintech company could learn from financial services professionals and have a physical workspace within those firms.
Another recommendation is the development of a standardized university curriculum in some of the province’s universities that would promote professional careers in technology and financial services.
Furthermore, EY is also calling on regulatory authorities to implement a “sandbox” or testing environment that would allow entrepreneurs to try out their fintech ideas in a controlled environment. “This could help mitigate the financial risks related to the services offered by such firms while driving innovation,” the report states.
These recommendations would accentuate the benefits Montreal currently has, which include competitive government programs and tax incentives to support innovation. The Autorité des marchés financiers has set up a regulatory advisory committee to explore how regulation can realistically allow fintech innovation to flourish while balancing the need for consumer protection and market efficiency, the report notes.
The affordability of working and living in Montreal is also helpful to attracting entrepreneurs, who have access to IT investment funds and venture capital firms and a relatively low overall cost of living compared with other major financial centres, according to the report, which is available on EY’s website.
As well, the city is home to a “high-quality pool of bilingual students and employees” from universities, technology companies and the financial services sector, although the report notes “technology students have yet to fully appreciate [the financial services industry’s] needs and opportunities.”
EY’s report backs up the Toronto Financial Services Alliance’s (TFSA) recent study that suggests Montreal has the potential to move into the top 10 global fintech centres thanks to its cultural diversity, institutional framework and professional talent. The city landed in 13th place behind Toronto, Vancouver and San Francisco in the TFSA’s current ranking of fintech-friendly cities, which was released in January.
See: Toronto is on the of the world’s top fintech centres, report finds
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