Canadian fintech firms have been waiting with bated breath for the first phase of open banking that was set to launch later this year. Instead, many in the industry have been left in a state of uncertainty after the 2023 federal budget made no mention of the initiative, which would ultimately allow consumers to share their financial data with a third-party provider.

The budget also didn’t include anything on a move toward payments modernization. Fintechs have been calling for legislative amendments to allow federally regulated payment service providers to join Payments Canada, a non-profit organization that reports to the government. Membership would give service providers access to the forthcoming Real-Time Rail payment system which is designed to support instant payments, but has been facing its own delays. 

Meanwhile, fintech investors are waiting on the sidelines amid the downturn. While Canadian venture capital, private equity and mergers and acquisitions in the sector slowed to US$1.3 billion in 2022 after a banner year in 2021 (US$7 billion), KPMG forecasts fintech deals will pick up toward the end of the year. 

As the industry waits on Ottawa to make open banking and the Real-Time Rail a reality—and as upstarts try to innovate in the meantime—here’s a look at some of the key players shaping the future of Canadian fintech.

The payments supervisor

Ron Morrow

In January 2023, Morrow was appointed the Bank of Canada’s executive director of supervision, where he is responsible for the oversight of financial market infrastructures and retail payment service providers (PSPs). The latter likely includes domestic players like Neo Financial, Koho and Wealthsimple, as well as large foreign firms that handle payments for Canadian consumers.

PSP regulation is still in the early stages. In February, the Department of Finance published draft regulations under the Retail Payment Activities Act (RPAA), legislation the government passed in 2021 to establish rules for the country’s burgeoning payments sector. Morrow will lead the design and implementation of the Retail Payments Supervision Framework. Aia Raafat, spokesperson for the Bank of Canada, told The Logic the central bank expects the finance department to publish finalized regulations for the RPAA later this year. In turn, the bank will release guidelines related to the provisions of the regulations to give the industry more insight into the bank’s supervisory expectations. PSPs must begin registering with the bank in 2024; in 2025, the bank will start supervising PSPs’ compliance with the regime, which will ultimately let PSPs join the Real-Time Rail, Raafat said. 

The open banking lead

Abraham Tachjian

In March 2022, the federal government named Tachjian as its open banking lead, with a term that will end in September of this year. The former lawyer and digital banking expert previously ran the government’s consultations with industry stakeholders in late 2020 on how Canada should design the system. His new mandate was to develop a “made-in-Canada” regime based on recommendations outlined in the final report of the advisory committee on open banking. So far, he has participated in over 200 stakeholder consultations and established industry working groups, which ran from July to October, and resumed in mid April. Tachjian is now shifting his focus from external engagement to internal policy development using the advisory committee’s recommendations gathered from external consultations. 

Farrah-Lilia Kerkadi, press secretary for Randy Boissonault, associate minister of finance, told The Logic in an email that the government of Canada remains committed to presenting a read-only model of open banking in 2023.

The fintech investor

Adam Felesky

The co-founder and CEO of Toronto-based Portage Ventures, the venture capital arm of financial-services conglomerate Sagard, oversees the firm’s global investment strategy in fintech and financial services. In July 2022, the company launched Portage Capital Solutions, based in both Toronto and New York, with a target fund size of US$1 billion to meet rising demand for structured equity investments for late-stage fintech companies. The news came shortly after Portage announced the close of its third venture fund—its largest so far with US$655 million under management, underscoring the firm’s dedication to fintech despite the challenges companies in the sector are facing amid the downturn. In March, Portage Capital Solutions made its first growth investment, leading a US$40-million equity financing round for Houston-based commerce and digital marketing-platform P97 Networks. The industry will be watching where Portage, and Portage Capital Solutions, puts its money next. 

Felesky is also a board director with fintech firms including Alpaca, Boosted.AI, Borrowell, Clark, Hellas Direct, Koho, Integrate.ai, LoanStreet, Socotra and TheGuarantors. He is also executive chairman of Grayhawk Investment Strategies. 

The fintech lobbyist

Alex Vronces 

The executive director of Fintechs Canada has been working on behalf of the country’s fintechs, aiming to increase competition in the financial sector and ultimately provide more options for consumers. 

Fintechs Canada’s goal is to act as a megaphone so the federal government can hear and consider the perspective of Canadian fintechs. Part of that work includes raising awareness of the sector’s policy priorities, commissioning independent research to inform national debates, and joining public policy debates themselves. 

“We’re running out of time to make progress on the industry’s near-term priorities, which really hinge on open banking and payments modernization,” Vronces told The Logic in an email. In the year ahead, the organization plans to keep pushing for a more balanced approach to open banking governance, as well as lobbying to get the Real-Time Rail up and running and expanding access to it. 

Since its launch, Fintechs Canada and Vronces have also been working with the government to help reform competition laws, introduce a retail payments oversight framework, expand access to payment systems, reduce transaction fees for merchants, and review the financial sector’s legislative framework to manage the risks posed by crypto and stablecoins. Current members of the association include EQ Bank, Borrowell, Wealthsimple, Koho, Mogo, Peoples Trust Company and Wise. 

The early-stage whisperer

Layial El-Hadi

El-Hadi is executive director of Montreal-based Fintech Cadence, a non-profit with a mission to develop the fintech leaders of tomorrow. In her role, she works to create cohesion between academia and the fintech industry, by applying university research to improve the financial sector (topics might include blockchain use or behavioural psychology and its role in financial health).

In January, Fintech Cadence expanded beyond Ontario and Quebec into the Atlantic region by partnering with Moncton, N.B.-based Atlantic Fintech, which will give the latter access to Fintech Cadence’s support hub for pre-Series A startups. El-Hadi has been working to increase engagement between fintechs and the financial industry to help startups understand integration requirements, learn how to navigate regulations and understand the needs of Canadian consumers. Fintech Cadence also helps startups collaborate with others in the industry, as well as gain support and capital. 

The organization’s notable programs include Ascension, where startups are led through the fundraising process, and the IFH Lab, which supports the development of startups looking to solve financial health challenges for Canadians. 

Outside of Fintech Cadence, El-Hadi is part of Payments Canada’s Stakeholder Advisory Council. She is also on the board of Queen’s University’s Master of Financial Technology program.

The data aggregator

Yves-Gabriel Leboeuf

The co-founder and CEO of Flinks has been steering the Montreal-based data aggregator, whose software acts as a bridge between financial institutions and third-party financial service apps, so that consumers can ultimately share their data. With open banking set to significantly increase the amount of data shared with third parties, Flinks stands to be a leader in the space. In 2021, National Bank acquired a majority stake in the company for $103 million, a bet on Flinks and the idea that financial products offered by tech companies will play an increasingly important role with Canadian customers. 

The company has notably been at the forefront of open banking in Canada, launching Outbound (formerly known as Open Banking Environment) in 2021, the first open-banking platform for data sharing between Canadian banks and fintechs. While the majority of fintech apps currently gather banking data via a screen scraping technique (which comes with security concerns and is typically done without institutions’ consent, unlike how it would work with open banking), Flinks’s platform allows financial institutions, like National Bank and EQ Bank, to share data with any company that passes an accreditation process.

The fintech darling 

Michael Katchen

The co-founder and CEO of Toronto-based Wealthsimple recently announced in a LinkedIn post that the fintech now has three million Canadian clients. It also manages $20 billion, Juanita Leon, communications manager at Wealthsimple, told The Logic. 

Launched in 2014, the company hit unicorn status in October 2020, when it closed a funding round of $114 million, bringing its valuation to over US$1 billion. Less than a year later, it raised $750 million at a post-money valuation of $5 billion. At the time, Katchen wrote in a blog post that “it may be the largest tech investment ever in Canada” and took it as a challenge to revolutionize the financial industry and better compete against Canada’s largest banks. Then, as tech firms contended with the downturn last year, the company faced writedowns from investors Power Corp. and IGM. 

While the Real-Time Rail is still facing long delays, Wealthsimple became the first non-bank or credit union in late 2022 to be approved by the Bank of Canada for a direct settlement account, meaning it will have direct access as soon as the Real-Time Rail system, which will enable instant payments, goes live. At the time, Katchen told The Logic the “decision has the potential to shape the future of financial services in Canada.” The move will help Wealthsimple, along with other challengers, better compete with big banks, which previously had a monopoly on access to direct settlement.

Katchen has been vocal about the high cost of living and young Canadians’ financial burdens, and how they would benefit from innovative financial services at a lower cost. Last month, for example, Wealthsimple launched its second alternative investing product called Wealthsimple Private Credit, which lets retail investors lend money directly to private companies and collect interest on the loans. Typically, only institutional or ultra high-net-worth investors could access that capital. 

The banking veteran disruptor

Rasha Katabi

After a 20-year career in capital markets, Katabi launched Toronto-based Brim Financial in late 2016. In March 2021, the credit-card fintech became one of a handful of women-led early-stage companies in Canada to complete a funding round of over $20 million (the round, led by Desjardins Group and Epic Ventures, totalled $25 million). The company was recognized in November by Deloitte’s Technology Fast 50 program for a 2,904-per-cent increase in revenue growth from 2018 to 2021. In a release, Katabi credited Brim’s credit cards and banking technology platform-as-a-service for the company’s strong momentum. 

Brim has partnerships with Canadian Western Bank and Laurentian Bank. The banks not only offer Brim’s credit cards, but also use its platform-as-a-service and credit card infrastructure, which includes card issuance (Brim claims it’s the only fintech in North America licensed to issue credit cards), onboarding and self-service portals, customer support, and analytics, among other things. Other fintechs offering credit cards will turn to issuers—for instance, Neo Financial’s Neo credit cards are issued by ATB Financial. Customers can gain virtual access to Brim’s cards within seconds while they wait for a physical card to arrive. 

Correction: This story has been updated to reflect that Portage Ventures is the venture capital arm of Sagard.