“We see fintech innovation in many of the provinces”

Paytech, a subcategory of fintech, has grown considerably in recent years (Getty Images / Thomas Barwick)

Fintech has for several years driven significant growth both globally and here in Canada. To get an understanding of where the industry currently stands, we spoke with Rajeev Shankar, partner, finance transformation and financial services, with KPMG Canada. Shankar has a wealth of experience implementing large-scale transformation initiatives and has consulted with clients across industries ranging from retail and financial services to oil and gas and telecommunications.

Here, Shankar outlines some of the big fintech trends in Canada and elsewhere and how they affect CPAs.

CPA CANADA: As the fintech industry grows, we’ve seen a number of sub-sectors emerge – from wealthtech (digital solutions that simplify wealth management processes) to insurtech (insurance technology). Do you expect this to continue?
RAJEEV SHANKAR (RS): Yes, definitely. But if you go back to the origins of the industry, it is interesting to see that financial services were the first to foster – and I would even say incubate – the innovation that emerged in this space.

A number of digitally savvy players began playing with technology and looking at how it could act as an enabler in the financial services ecosystem. Indeed, this is how fintech was born. Then, over the years, different segments like insurance and payments and even agriculture started leveraging the same technology. That’s when we started seeing the emergence of categories like insurtech, paytech and even agritech.

I think we will continue to see new types of businesses develop as time goes on. That’s the beauty of the innovation that comes with the whole fintech space.

CPA CANADA: At one point, payment technology (paytech) accounted for 25 percent of all fintech players in Canada. Is this still true?
RS: Yes, paytech has grown considerably in recent years, and names such as Klarna and Revolut have become quite well known. And again, this has been driven by market trends.

When you look at financial services as an industry and what happens right from the moment customers choose a financial institution to the types of products and services they choose (accounts, loans, mortgages, etc.), to the way they actually shop, see that many share of the process is cumbersome and outdated. There is often a lag time with traditional financial institutions compared to the faster and more seamless options available with fintechs. For example, it is cheaper and easier to open an account with Revolut than it is to recreate the same experience with a traditional financial institution.

CPA CANADA: The Toronto-Waterloo region is known as a fintech hub. Does the area continue to grow?
RS: Yes absolutely. At the same time, we have seen fintech innovation across many of the provinces. For example, a number of successful fintechs have grown up in Calgary, Edmonton, Atlantic Canada, Vancouver, Montreal and Quebec City – these are all fintech ecosystems in Canada.

And it’s exciting because any time you talk about promoting innovation, it’s an exciting proposition.

CPA CANADA: Do you see many CPAs moving to fintech?
RS: Yes. Many people I have worked with – especially Gen Z – are attracted to organizations such as fintechs, because they feel that this will give them the opportunity to apply their knowledge in a direct and practical way. They like the idea of ​​being nimble and creative and innovative to help drive the growth of these organizations. And I think that trend is only going to increase.

Fintech is also for those who are passionate about technology and CPAs are becoming more and more engaged in new technologies. Fintech simplifies financial transactions for consumers and businesses. CPAs with their skills are able to adapt easily.

CPA CANADA: What are some of the areas where CPAs can best use their skills?
RS: Today, CPAs have a wealth of options. With the high level of use of digital services in many organizations, they can use these technologies to help drive higher value-added work than might have been associated with traditional controller positions, which were often bound by the limits of manual processing.

In other words, CPAs can use their skills to really help drive operational efficiency and growth across an organization. I think it’s a fascinating time.

CPA CANADA: Some say that while Canada has amply demonstrated its prowess in fintech, many players get bought out or move to the US when they reach a certain size. What’s Your opinion?
RS: It depends on what problems these players are trying to solve. I have seen Canadian fintechs that have reached a certain size and decided to expand into larger markets like the US or even Europe or Asia.

At the same time, I have also seen fintechs that have grown quite successfully in Canada and have decided to remain in the country.

CPA CANADA: With sustainability at heart these days, Canada has become a leader in cleantech. How do you see the area developing?
RS: Canada has a great opportunity to take the lead and drive the adoption of cleantech. And given the emphasis we place on ESG, a clear need for this type of technology is established. And it drives a healthy level of innovation and competition.

Likewise, when it comes to fintech in general, Canada has given birth to a lot of great innovation and shows great potential. But I think we are often underplayed when it comes to the global fintech ecosystem – and that has to do with our conservative nature as a nation. Nevertheless, I would like to see Canada placed among some of the global players. It certainly deserves to be there.

FOCUS ON FINTECH

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