Canadians slow to adopt fintech

As financial services institutions deepen their engagement with digital innovation, the once-prevailing narrative of financial technology (fintech) as a disruptive force that would undercut incumbents’ grip on the industry has given way to increased collaboration between these two groups.

That was the message from Andrew Irvine, head of Canadian banking and BMO partners with Toronto-based Bank of Montreal (BMO), during a panel discussion at the Toronto Region Board of Trade’s fintech symposium in Toronto on Monday.

“The narrative is one where we’re embracing fintech,” Irvine says. “Two, three years ago, the narrative we heard was of this fear of disruption.”

There may be growing pains in trying to adapt new technology to make it compatible with existing operations, he notes, but that’s a challenge all traditional financial services firms face.

Read: Toronto facing challenges in growth as a global fintech centre

“We’d rather disrupt ourselves than have someone else disrupt us,” Irvine says, citing the bank’s launch of its own robo-advisor platform, BMO SmartFolio.

David Rawlings, CEO of J.P. Morgan Chase Canada, who was also among the panelists, echoed Irvine’s assessment of the industry’s pivot toward cozying up to fintech firms — especially those that are far more capable of solving a particular issue much faster than if established institutions started from scratch.

“My guess is we’ll partner more than buy over time, and help those companies scale,” Rawlings says. “We may take an investment and help you scale, but that’s where we’re trying to be different.”

J.P. Morgan provides an in-house residency for startups to further develop their products or services over the course of six months using the firm’s resources while they retain a majority stake in their company once it hits the market, Rawlings adds.

Last year, BMO launched a similar initiative in partnership with the Digital Media Zone at Ryerson University in Toronto. As part of the program, six fintech startups have four months to pilot their technology and secure venture capital funding through BMO’s network.

Fintech startups may be accelerating the pace at which the establishment adopts new technologies, but Toronto’s march to become a high-ranking, global leader in fintech may owe some credit to Canada’s big banks, which have increasingly worked to back fintech startups while giving them room to remain independent.

“We’re seeing more emphasis on trying new capabilities, more willingness to do that,” Irvine says. “The velocity of activity has really moved. Toronto is becoming much more attractive as a place to establish a fintech business, and a big part of that [push] is [from] the Canadian banking system.”

Photo copyright: adiruch/123RF