Written by Jessica Liu
On Wednesday September 28th, 2016, more than fifty Western students from the Ivey FinTech Club and the Nspire Innovation Network at Western sat down for a roundtable discussion with three FinTech professionals:
- Hitesh Rathod, Founder and CEO of NexusCrowd
- Kevin Stewart, VP Digital Enablement at Scotiabank Digital Factory
- Scott Wilkinson, Sales and Corporate Development at RPM Technologies
The roundtable was facilitated by HBA students Jack Bunce and Shan Srikanthan. Nspire is a Canadian student-run not-for-profit organization that focuses on the intersection of business and technology. The Nspire Ideas Exchange is a series of events (in spaces such as Western’s Propel Entrepreneurship centre), where students from all backgrounds can interact with professionals who work on disruptive projects in various industries.
Financial technology, or ‘FinTech’, is a rapidly emerging area focused on the digital delivery of financial products and services to the public via the internet or mobile phones. Most FinTech companies are founded to disrupt incumbent banks and other financial intermediaries by providing consumers with more accessible, decentralized financial solutions.
Below are some highlights from the roundtable discussion:
- Technology is breaking down barriers to entry, reducing the importance of size and scale, and bringing innovations and financial services to everyone. FinTech is a growing area that goes much farther than providing everyday retail banking solutions. As with any mature industry, banking features many incumbents who are striving to optimize efficiency by cutting costs, as well as FinTech start-ups looking to disrupt incumbents through new technology and ideas. NexusCrowd, for example, provides crowdfunding for exclusive real estate investments alongside professional investors. RPM technologies is an example of a company that provides the wealth management back-end services for four of the five major Canadian banks. Scotiabank has announced a new 300-person Digital Factory to rapidly develop and roll-out a better digital experience for its customers. Technology giants such as Apple and Google are also looking to break into financial services with payment applications such as Apple Pay and Google Wallet.
- In comparison to other countries, the FinTech sector in Canada is small, in part due to Canadian policymakers taking a cautious stance to these start-ups. On the other side of the globe, governments in Australia, Hong Kong, Singapore, and the United Kingdom have set up regulatory ‘sandboxes’ to allow FinTech start-ups to experiment with new technology that may not currently be in compliance with existing financial regulations.
- FinTech start-ups face countless legal and regulatory barriers that act as a barrier to entry. While technology companies such as Uber and Airbnb have disrupt their respective industries by skirting regulations, the speakers at this event stressed the importance of FinTech start-ups working with policymakers and treating them as an equal partner. Regulators and public servants are more open to discussion once they understand the business model and how potential risks to the public and the financial system are being mitigated.
- Consumers are a large part of the equation, with FinTech start-ups aiming to capture market share from traditional financial institutions. In response to this threat, forward-thinking banks, such as Scotiabank, are developing new business models to pilot traditional services that are more convenient and efficient for consumers.
- Western students and speakers identified education as a significant barrier to entry for start-ups looking to displace traditional banks. Money is a sensitive area and consumers may be driven away by the unknown of ‘technology’ and the risk of cyber-theft. Educating the public while emphasizing transparency and ease of access will be a shared responsibility amongst FinTech companies and incumbents alike. Traditional banks have the advantage of established client relationships and the all-important ingredient “trust”. This barrier explains why the peer-to-peer lending platform, Kabbage, chose to partner with Scotiabank to provide streamlined small business loans to Scotiabank’s existing client-base. This relationship is an example of countless partnerships between incumbents and start-ups that will emerge in this evolving global FinTech ecosystem.
Nspire would like to thank the following sponsors for making this event possible:
- The Scotiabank Digital Banking Lab at Ivey
- RPM Technologies
- Propel Entrepreneurship Centre at Western
The Nspire Ideas Exchange Western finds disruptive, up-and-coming, technology related industries and facilitates roundtable workshop discussions with students and leaders of the industry. Click here to subscribe to the Nspire mailing list and learn about upcoming events.
The Scotiabank Digital Banking Lab at Ivey is dedicated to research, education and outreach on the digital transformation of banking and financial services. For more details on upcoming events, please visit our website here.