23 Nov Metro Vancouver’s ‘Fin Tech’ Sector Takes on the Banking World
Content provided by The Vancouver Sun
If you were to start naming global financial hubs, Vancouver isn’t up there with New York and London.
But that doesn’t appear to be stopping a growing cluster of financial technology companies in this city, all aimed at delivering products and services that challenge traditional notions in the financial services industry.
And it’s a growing area that has been recognized by the BC Technology Industry Association, which has teamed up with PayPal Canada to establish a financial tech hub in Vancouver to incubate and encourage companies that are developing innovative approaches to financial services.
“I think we are poised to become one of those best-kept secrets around fin tech,” said Bill Tam, president and CEO of the Technology Industry Association. “And in the years to come, we’re going to see Vancouver come up with a number of companies you wouldn’t have expected would come out from a centre like Vancouver, which isn’t traditionally known as a financial centre.”
Tam said there are about 70 companies in Vancouver, ranging from start-ups to long-term established companies, focusing on the delivery of financial services. Expand that definition to include all companies involved in financial technology, from accounting software to security, and that number exceeds 100.
The emerging financial tech companies are aiming to disrupt the financial sector, just as Uber did with the taxi business and Airbnb for hotels and travel accommodation.
“They are seeking to improve the customer experience around financial services,” said Tam.
A report earlier this fall by McKinsey & Co. said banks risk losing as much as 60 per cent of their retail global profits as more nimble start-ups use technology to better serve customers.
The report said consumer finance is the area 0f greatest risk for banks, along with mortgages, retail payments, small and medium-sized enterprise (SME) lending and wealth management — all fields covered by Vancouver’s financial tech sector.
“The onset of mobile devices and the control that consumers have in their hands is precipitating a whole wave of different interactions that people have come to expect from every service provider,” said Tam. “Banking institutions are the latest in a range of folks who are feeling that disruption now.
“What we have seen is here in Vancouver (is) we’ve got some very innovative start-ups that believe they can fundamentally change and improve the customer experience around that.”
nTrust is among that companies here that are using technology to bring new solutions to old problems. The problem nTrust tackled is that of coming up with an alternative to cash when cheques, credit and debit cards just won’t fit the bill. It’s for peer-to-peer transactions, paying friends, paying strangers — for instance if you buy a couch on Kijiji — and it’s accepted by some businesses, including some coffee shops and eateries in Vancouver. It’s a mobile payment system that uses an app for easy transfers.
“It’s a platform that replaces cash, coins and cheques in people’s everyday lives,” said nTrust president Rod Hsu. “It doesn’t matter where you are, moving money should be seamless.”
nTrust works by giving you a cloud account, filled either from your bank account or credit card (although you pay a 2.25 per cent credit card fee for that). That money is held in a Canadian Deposit Insurance Corporation-insured financial institution.
The arrival of Apple Pay in Canada this week, although only for American Express cardholders, could help fuel mobile payments, just as Apple’s arrival into everything from music to smartphones elevated early adopter status to mainstream in those areas.
While nTrust is free for transfers in Canada, the company makes money by offering services in other countries around the world and with cross-border transfers.
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