Technology is changing the way financial products and services are accessed and used by Canadians. The innovative financial technologies (FinTech) being introduced by banks and FinTech businesses in Canada are increasing choice and improving convenience for customers.
Banks in Canada have a longstanding commitment to technological innovation and in recent years have taken an increasingly active role in supporting the development of financial technologies, whether through in-house initiatives or external partnerships. To be sure, all banks are making significant investments in the digital side of their businesses and in technology writ large. These investments have greatly improved the way banks connect to and interact with their customers and how they operate internally. Banks also increasingly finance or partner with FinTech companies to help provide access and exposure to innovative products and solutions that benefit customers, while FinTech upstarts benefit from having access to capital and a pre-existing client base to help scale their operations. In addition, banks also invest in financial technology by acting as trusted incubators and accelerators in order to stimulate new ideas, tap into high-skilled tech talent and help get innovations to market more rapidly.
FinTech is a tremendous opportunity for Canada’s financial industry because it can be very nimble and innovative. On the other hand, Canada’s banking sector is known for its strength, stability, brand recognition and significant customer reach. Banks are today finding ways to improve collaboration between the banking sector and innovative FinTechs to the benefit of both parties and, importantly, their customers.
New FinTech powers
The 2018 amendments to the Bank Act, the federal legislation that governs how banks operate in Canada, introduced new FinTech powers. The changes implemented through the Bank Act review removed the barriers that restricted certain types of relationships among banks and FinTech companies, including lengthy approval processes and restrictions on the type of investments banks can make in FinTech. This was a positive step in the right direction to help banks continue to seize the opportunities that FinTech represents. Banks in Canada can now invest in or partner with FinTech, thereby leveraging their respective strengths.
Convenience through technology
Banks have a long history of using technology to deepen relationships with their customers, enhance products and services development, improve their operations and modernize legacy IT systems. The pace of technological change is accelerating, bringing new challenges, however banks will continue to meet evolving customer preferences while also bringing trust to the technology equation.
Technology is only one part of the transformation taking place in banking. In the digital era, trust is also at the centre of change. It is trust that underpins the fundamentals of banking: a great customer experience, strong prudential oversight, and a dedication to protecting privacy and data.
Banks and technology companies, for instance, have both recognized the enormous opportunities presented by artificial intelligence (AI) to improve the speed and accessibility of services and to provide a more customized and personalized experience for customers. This includes using chatbots that are available 24/7 to provide customer support, as well as deploying AI-powered as “robo-advisors” to automatically allocate clients’ funds and manage and optimize their assets. The potential innovations that AI can unlock is just beginning and will be a significant area of competition between banks in the coming years.
Online marketplace lending is another growth area that banks have supported in recent years. Online marketplace lending permits the match of potential borrowers with potential lenders and generally caters to consumers and small and medium-sized businesses that may be unable to obtain loans from traditional sources. Borrowers can request a loan for a specified amount through the platform, and investors on the platform can choose to lend to a particular borrower, based on information such as interest rates and credit scores. The level of customization that this model allows simplifies the underwriting and adjudication process for both borrowers and lenders.
The below information provides examples of recent FinTech innovations in the banking industry, categorized as follows:
- In-house development of new technologies;
- Technology sourced from or developed in partnership with FinTech companies; and
- Banks as tech incubators in collaboration with the FinTech community.
I. In-House FinTech Developments
BMO has nationally launched a digital solution that brings speed and convenience to the Canada home buying journey. BMO’s Digital Pre-Approved Mortgage application allows homebuyers to apply for a mortgage pre-approval online and receive an instant decision.
Reset PIN online
BMO has introduced the ability to reset or change a MasterCard PIN via online or mobile banking. The bank has also introduced a suite of credit card self-service capabilities over the last several months.
To help customers gain better control of their financial lives, BMO has introduced a new personal financial management solution, BMO Insights. The solution leverages artificial intelligence (AI) to deliver personalized, automated, and actionable insights for everyday banking customers to help them manage their day-to-day finances and cash flow. BMO Insights is fully integrated into the mobile banking experience.
BMO launches new lending solution, which provides customers the simplicity of applying for a personal line of credit directly from their mobile devices. Customers are now able to apply for credit by completing a short and user-friendly digital application and will receive a decision on their loan in minutes.
BMO’s Quick Pay is a new way to pay bills, enabling customers to email their bills to BMO – and leveraging machine learning capabilities to recognize the biller, account number, amount and due date across a range of corporations and statement formats.
Text notification alerting clients
CIBC introduces text messages notifications alerting clients when there are insufficient funds in their account to cover an upcoming payment. The first-in-Canada CIBC Smart Balance Alert provides clients a reminder to transfer funds to avoid a returned payment.
CIBC will instantly replace a lost or stolen credit card on your mobile phone. For clients using cards in mobile wallet, the replacement card is uploaded automatically and ready for use.
CIBC announces entrepreneurs and professionals may now digitally and securely open new CIBC Business Operating Accounts and customize their CIBC SmartBanking for Business experience using their mobile phone or tablet without visiting a bank centre. This feature eliminates the need to scan and upload lengthy business documentation.
CIBC Smart Banking for Business digital solution gives business owners a comprehensive view of their company's finances, including accounting and payroll insights, and makes it easier to manage their business. The digital platform provides financial insights to help make real-time business decisions.
CIBC launches a data lab in Waterloo in a bid to tap the local technology talent pool and develop innovations to give the bank a foothold in the digital economy. The lab had four full-time data scientists working with three co-op students from nearby universities
CIBC introduces in-app voice commands to simplify mobile navigation.
Digital Account Opening
RBC announces the launch of enhanced digital deposit account open processes for personal and business clients, providing them with the flexibility to fully open an account from wherever it is most convenient for them.
RBC offers clients the ability to digitally verify their identities when opening an account in branch. The RBC Mobile App now uses AI to check a client’s government-issued identification against the security features and characteristics of driver’s licenses and passports. The App also uses Near-Field Communication (NFC) so clients can tap the electronic chip on newer versions of Passports.
RBC announces the launch of RBC Insight Edge platform for its business banking clients across Canada. RBC advisors will use Insight Edge to provide clients with relevant insights about their industry performance, customers, and markets.
RBC has launches RBC Express Track Wire Payments solution leveraging SWIFT’s global payments innovation technology. Now business clients can track their wire payments from the moment it leaves RBC to the time it reaches the beneficiary’s bank at no additional cost.
New features on the mobile app includes:
• Pay bills with a photo.
• Debit card lock with a touch.
RBC personal and business clients can now easily add a new bill payee by taking a photo of their bill or uploading their e-bill.
RBC launches NOMI Budgets, a new solution available through the RBC Mobile app. A first-of-its-kind in Canada, NOMI Budgets uses AI to proactively analyze a customer’s spending history, recommend an appropriate budget and send timely updates to help keep them on track in a seamless and convenient way.
A new addition to the NOMI family, NOMI Budgets keeps an eye on their finances and tracks their spending habits. Powered by NOMI Insights, the program will recommend a personalized, monthly budget in five areas.
RBC launches an API developer portal that allows external software developers to access select RBC APIs. Each API package delivers data elements and business logic required to deliver the end to end business process. Featured APIs include branch location info, down payment info, amortization schedule info, and information on RBC credit card rates and fees.
RBC introduces two new capabilities to help clients automatically track spending and look for ways to save their money, both of which are powered by predictive analytics:
• NOMI Insights helps clients manage day-to-day finances with timely tips and advice and helps clients keep track of spending, plan for upcoming expenses and provide timely alerts, such as when a regular monthly payment is higher than usual.
• NOMI Find & Save acts as an automated savings account. The technology monitors clients’ transaction patterns, finds pockets of money in a client’s cash flow, and automatically moves that money into savings.
RBC introduces MyAdvisor, a live video platform that connects clients with advisors in real time. Through the new platform, an advisor can connect digitally with a client to talk about financial objectives and plans. Both can view and manipulate a dynamic dashboard that shows the client’s savings and investment goals; they can then have a real-time discussion of possible actions to achieve those objectives.
Scotiabank launches eHOME, a tool modernizing how Canadians can get a mortgage. Canadians can apply for a mortgage completely online, track the application status through real-time updates, and complete the closing with a lawyer without requiring an in-person appointment with a mortgage specialist or financial advisor. Supporting documents are easily uploaded to a secure vault and, if needed, a dedicated team of specialists is a phone call away.
The ScotiaConnect Mobile Banking for Business app allows corporate treasury departments, CEO's and owners of small- or medium-sized businesses to use their smartphone to view balances and transactions, approve and submit payments and create, submit and approve account transfers and bill payments.
Scotiabank opens a 70,000-square-foot “digital factory” in downtown Toronto, where hundreds of data scientists, artificial intelligence researchers and other top tech talent were brought in to develop new FinTech capabilities.
TD has launched TD GoalAssist, a new mobile app designed to help Canadians set financial goals and invest with confidence. Through a simplified, guided app experience, users can build a goal-based investment plan and select investments to help them invest towards their goals.
TD announces artificial intelligence to be used to deliver more personalized, contextual advice and information to its customers through a new experience called MyTD. While still in the test phase, the experience will seek to combine data about monthly spending patterns and account balances with machine learning to help manage their finances.
The TD Wheels mobile app will allow users to obtain prequalification for vehicle financing (in December 2019) up to a specific amount and for a specific rate. TD Wheels helps evolve the car-buying experience for Canadians by offering a personalized digital tool.
Future of Work
TD announces the launch of a new initiative called the TD Mindpower: Analytics for Social Good helps non-profit organizations leverage data and analytics to grow their community impact. The initiative pairs non-profit organizations with a team of TD data analysts to help draw new insights from their data. The TD team develops analytics-powered dashboards, forecasting key trends, and new methods of growing their community impact through data.
TD announces a new control feature on all TD Visa consumer credit cards that allows cardholders to temporarily block their Canadian credit card from unauthorized access.
TD launches its digital mortgage application, an integrated, digital solution created to make the process of buying a home easier and more convenient for customers. The application provides 24/7 access, save and resume, status tracking, and document upload. Mortgage Specialists are also readily available to assist consumers throughout the digital application.
II. Recent Bank Partnerships with FinTechs
Alterna Bank announces their limited release of the Alterna Bank Digital Small Business Banking solution. In partnership with nCino, Alterna Bank now offers a streamlined business account opening process that is available 24/7, online and on mobile devices.
BMO, in partnership with Intuit, has completed the development of a new secure data portal. The portal will allow customers to share their BMO financial data with Intuit QuickBooks Online. The data portal provides business customers with the option of efficient sharing of their BMO transaction data with Quickbooks Online and associated applications.
BMO announces an expanded partnership with leading digital lending platform, Blend. BMO is working with Blend to deliver digital mortgage and home equity experiences to customers in the U.S.
BMO will continue to work with Blend to enhance digital services for customers in Canada and the U.S.
BMO announces a partnership with Toronto-based BioConnect to deliver a biometric authentication platform offered to commercial and corporate clients through BMO Online Banking for Business. The technology enables customers to authenticate transactions using fingerprint, voice, face or eye via BMO's desktop and mobile solutions to augment authentication using the username and password method.
BMO Harris Bank announces a partnership with Genivity to bring AI technology to its wealth advisors and help them engage clients through life stage, health risk and elder care cost planning (i.e., it helps wealth advisors engage in important health care discussions with clients and estimates future long-term health care costs).
CWB Financial Group partners with Temenos Infinity to deliver a personalized digital experience for small-to-medium-sized business owners. The partnership will enhance CWB’s digital experience by enabling customized insights, powered by big data and AI, to help clients more effectively manage their cash flow and financial decisions.
CWB and Payfirma announce a new strategic partnership that will provide the bank’s business customers with the technology needed to accept payments online, in store, and on mobile devices. Payfirma offers a white- labelled omnichannel payment processing platform, giving business customers seven ways to accept payments, including a virtual terminal, mobile payments, recurring billing, traditional terminals, eCommerce, integration APIs, and electronic invoicing.
Coast Capital has partnered with Thirdstream to launch a digital account opening platform. The real-time membership and account opening take less than five minutes with a full end-to-end integration with immediate access to digital banking.
Motusbank partners with US-based FinTech MX to introduce the latter’s new, self-guided financial wellness tool, Pulse, to its customers.
National Bank partners with Thinking Capital to expand financing options for Canadian Small Business. Small businesses across Canada can conveniently apply online for a term loan and receive a decision within a few minutes.
Thinking Capital’s proprietary FinTech platform uses AI and algorithms to make lending decisions to streamline the process of evaluating SME loan applications and ultimately qualify applicants more quickly.
National Bank partners with LUGE CAPITAL to back Montreal FinTech startup Flinks, to accelerate growth and market an AI-powered risk assessment solution.
National Bank announces leveraging Mobeewave technology in launching its “Easy Pay” service, which allows merchants to accept credit card payments in person using a compatible smartphone without the use of peripherals.
After registering for the Easy Pay solution, merchants simply download the Easy Pay app to accept payments from customers using an eligible contactless credit card or via the customer's digital wallet. The system leverages the NFC capability that is built into many mobile devices.
National Bank and Nest Wealth sign multiple agreements, which include a strategic minority investment of $6 million by National Bank in Nest Wealth and a commercial agreement between the two companies. Rather than launching its own robo-advisory service, National Bank’s financial advisors will use Nest Wealth’s digital platform to help advise clients.
RBC an its AI research institute Borealis AI have partnered with Red Hat and NVIDIA to develop a new AI computing platform designed to transform the customer banking experience and help keep pace with rapid technology changes and evolving customer expectations.
Scotiabank licenses software provided by DeepLearning to help it collect debts. The software analyzes customer behaviour and existing datasets to make connections to credit card collection, and uses a type of artificial intelligence known as a neural network.
Money management/Financial Insights
Tangerine partners with Meniga, a personal finance management (PFM) solutions provider. Meniga’s first known client in Canada, the bank sets out to offer its customers a clearer view of their finances through more accurate categorisation of their transactions and a more customised banking experience.
TD announced a new data-access agreement with Intuit, maker of TurboTax, QuickBooks and Mint, which lays the groundwork for customers to request that TD transfers their financial data for services they want to use, including personal financial management apps supported by Intuit. At the customer’s request, TD will transfer the customer’s financial data to Intuit through secure technology known as Application Programming Interfaces (APIs).
TD announced a new data-access agreement with Finicity, which lays the groundwork for customers to request that TD transfers their financial data for services they want to use, including personal financial management apps supported by Finicity.
In partnership with Kasisto’s leading Conversational AI platform, TD launches Clari, a new chatbot integrated into the bank’s mobile app that empowers customers with real time personal spending insights, branch locations, help with financial services and everyday transactions. Clari is powered by TD MySpend.
Integration of APIs and AI into self-directed investing platform
TD and Hydrogen Technology Corp. enter into a licensing agreement involving the use of Hydrogen’s technology to offer clients who invest with TD a complete, end-to-end digital investing experience. The first phase offers clients the ability to independently create financial plans and investment portfolios, all seamlessly integrated in customers’ online brokerage account.
Also planned for subsequent phases is the creation of a direct access digital advisor, and several new capabilities for TD retail banking customers. And as adoption of the platform increases among TD clients, artificial intelligence features are planned for integration into both existing and future applications.
TD acquires artificial intelligence start-up Layer 6, which was created as a leading AI platform for prediction and personalization in real-time, using advanced Machine Learning solutions. Through this partnership, TD will be able to deploy the technology in both internal business processes and customer facing products. Example use can include product recommendations, next best action, personalization and prediction of attrition.
TD announces an agreement with Kasisto (AI provider) to integrate the company’s KAI Banking platform into TD’s mobile app. The platform will give customers instant support and access to real-time spending insights through an interactive chat interface. KAI-powered chatbots are fluent in banking and multi-lingual so they can fulfill requests and solve problems in a secure way.
TD app users will be able to check account information, review transaction histories and monitor spending levels.
November 2017 – BMO, RBC, Scotiabank, TD
Sensibill enables partner banks to incorporate receipt management functionality into their existing digital banking applications, and provides customers with insights into their purchases.
III. Banks Collaborating with the FinTech Community as Incubators
The "DMZ-BMO Fintech Accelerator" program is launched in 2017 with the goal of fostering Canada's top financial technology start-ups looking to expand, through an exclusive four-month incubation and mentorship experience.
The program includes:
• a four-month incubation period in Toronto for the top six selected entrepreneurs;
• mentorship from BMO leaders throughout the process; and
• an event where each finalist will pitch their technology to a panel of BMO and industry-expert judges for a chance to execute a pilot with the bank and additional cash prizes.
As part of an international banking alliance, CIBC introduces Global Alliance Fintech Link, a global online portal developed to help drive client-focused innovation by facilitating collaboration between the banks and FinTechs.
Through the digital platform, FinTechs can submit creative technology solutions in response to a wide range of opportunities identified by the banks. Upon receiving the proposals, the banks will consult directly with the technology firms.
National Bank is launching the Innovation Competition, a large-scale challenge that will bring together Canadian fintech start-ups, students and other teams of individuals from across Canada. Participants will develop new solutions to help individuals save more efficiently and manage their money.
The competition, created in partnership with Flinks and OSMO, will take place over a 6-month period. Finalists will get the opportunity to pitch their business and technology solutions to a panel of National Bank executives, venture capitalists and tech leaders.
RBC and with Franklin Templeton sponsor the opening of Southern California’s first FinTech incubator, EvoNexus. There will be a focus on AI, including machine learning, bank/wealth/payment technology, capital markets technology, cybersecurity, block chain, digital cash, P2P lending, 56, IoT, edge computing and more.
Scotiabank announces a partnership between Canada and Latin America’s start-up accelerator, NXTP Labs, allowing Scotiabank to access the most promising FinTechs in Mexico, Colombia, Chile, and Peru, and leverage these countries’ innovative start-up ecosystems. NXTP Labs is a premier Latin American start-up accelerator. Through this partnership, the bank ultimately expects to gain early visibility on transformative trends and technologies affecting financial services.
TD earmarks $3.25 million from its FinTech investment pool to provide patent application funding and expertise specifically to new ventures. The TD patent program for FinTechs and start-ups is designed to support companies at the seed stage with funding and assistance with the rigorous patent application process in Canada, the US and elsewhere, helping them tap into the value patents can offer in supporting their growth. All patents will belong to the start-up and be held in their name. In return for the funding, TD will be granted a non-exclusive license to such patents.