FinTech centre draws much attention

Specifically, TMX will leverage its partnership with MaRS to complement TMX’s eXplore TMX Innovation Lab, a new design and development space designed to bolster tech innovation at TMX.

“By engaging with and participating in local innovation networks, we aim to evolve our services and products with a particular focus on big data analytics and capital markets research,” says Mathieu Labrèche, manager, corporate communications and public affairs, with TMX.

TMX’s partnership with MaRS is not the only one that the not-for-profit MaRS has signed with an established, incumbent financial services institution eager to get involved in developing the FTC.

Several other prominent names recently joined original MaRS partners Canadian Imperial Bank of Commerce, PayPal Inc. and UGO Mobile Solutions LP. In August, Interac, Canada’s largest debit payment platform, partnered with MaRS to collaborate on technology developments with new ventures in the FTC.

“Interac joined because it’s looking at innovation around debit payments,” says Adam Nanjee, the FTC project’s lead at MaRS.

The Canadian banking system also has taken notice of the FTC, Nanjee adds: “We’re starting to see a very positive attitude from a lot of the banks, which are recognizing the fact that [the FTC] companies are here. [The banks] have two choices: either decide not to work with [FTC partners] and potentially be threatened, or work in parallel with them and find a conversion spot for [the bank’s] own legacy technology.”

The number of companies participating in the FTC is growing rapidly. The cluster launched in February with just a handful of ventures, but now has 100 startups under its belt. By Nanjee’s count, there are only about 150 fintech startups in Canada.

“The pace of [the FTC’s development] has been absolutely blistering,” he says. “Having been in technology for several years, I’ve never seen a hotter market.”

MaRS’ FTC focuses mostly on late-stage startup firms that have been through the angel- and seed-funding stages and are delivering revenue from commercially usable technology. Seventy-five of the companies in MaRS’ FTC stable have progressed through advanced funding rounds, indicating an increasing maturity in the market.

For example, Toronto-based robo-advisor firm Wealthsimple Financial Inc. was one of MaRS’ inaugural FTC partners. The company received $30 million in A-round venture funding in April. Another member of the FTC, personal-loan firm GroupLend Inc., raised $10.2 million in its own A-round venture funding in August.

Not all members of the FTC are pure startups, though. Montreal-based Thinking Capital Financial Corp., founded in 2006 and now employing 180 people, joined MaRS’ FTC in October.

Thinking Capital, which offers online alternative lending services for small and medium-sized businesses, developed a unique approach to credit scoring. Specifically, Thinking Capital created a software algorithm that processes new applications entirely online. The firm uses data that includes reviews from social media websites, says Anthony Lipschitz, the firm’s chief strategy officer, adding that Thinking Capital can get money to a successful applicant in as little as 24 hours.

Being part of MaRS’ FTC gives Thinking Capital access to a network of experts that the firm needs as it expands the technology side of its financial services.

“[The FTC] gives us the opportunity to collaborate with [experts] and to look at other companies in the [FTC] that may be helpful to what we’re doing,” Lipschitz says.

Firms such as Thinking Capital also get access to international expertise, as well thanks to other partnerships that MaRS has developed. In March, MaRS signed its first international partnership with StartupBootcamp, a London, U.K.-based fintech accelerator; in September, MaRS signed a deal with CUBO Coworking Itaú of Brazil, another fintech hub.

These relationships give companies involved in MaRS’ FTC better access to international partners, Nanjee says: “If a Canadian FinTech company wants to go to Brazil or London, they have access to all of the financial [services] institutions, all of the technology scene and the entire venture-capital community in these particular jurisdictions.”

These partnerships are important because fintech companies face a challenge when entering new markets. Financial regulations vary among countries, and startups need access to local legal and accounting expertise to get up and running, Nanjee explains.

To expand that reach beyond England and Brazil, MaRS is close to signing similar partnerships with hubs in Hong Kong and Singapore, Nanjee says, adding that the Asia-Pacific region is particularly important to the fintech scene because of its market size.

Still, Nanjee envisions Toronto as the go-to destination for fintech firms wanting to test their technology in Canada’s smaller market before launching in the U.S. In fact, he says, there still isn’t a solid fintech cluster south of the border, and that’s a gap MaRS’ FTC is intent on filling.

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