First centre for financial tech opens

Financial services institutions are eager to take advantage of new opportunities in financial technology, Nanjee says. As well, he adds, venture-capital firms have said they would be more likely to invest in these entrepreneurs if there was a central place that would validate what these entrepreneurs were doing.

“MaRS decided to launch Canada’s first dedicated financial-technology cluster as the bridge to connect those three ecosystems,” Nanjee says. “The main goal is to foster innovation and help these financial-technology companies grow.”

Currently, the FinTech Cluster features several early-stage companies that previously were working with MaRS, including two Toronto-based robo-advisor firms: Wealthsimple Financial Inc. and Nest Wealth Asset Management Inc.

Although both Wealthsimple and Nest Wealth are targeting investors predominantly, those firms also are developing platforms to allow financial advisors to make use of those firms’ services.

Another company, Nvest Inc., provides a new social media network for stock-pickers that’s going squarely after institutional stock-pickers, challenging them to document their investment track record electronically and prove their worth to potential clients.

“If you go to a financial advisor at a bank and ask what the alpha or beta of a mutual fund is, they don’t even know what you’re talking about,” says Fredrick Zhou, NVest’s co-founder and CEO, about commodity investment advisors at the banks. “These people have no idea what they’re recommending.”

Nvest will help investors evaluate the performance of higher-end brokers and advisors that participate, Zhou says: “At a higher level, people who are managing and recommending stocks, you will know exactly how well they’ve performed in the past.”

Nvest is operated in conjunction with the University of Toronto’s science department, which helps to analyze and find value in investment data. Says Zhou: “We are trying to be the LinkedIn for stock recommendations. We care about credibility, transparency, completeness and reputation. We welcome all those who are able to beat the market consistently, and give them the reputation they deserve.”

Technologies such as these have the potential to disrupt the financial advisory market, warns Sonia Strimban, manager of venture operations at MaRS: “It’s a space that hasn’t been innovated in a lot. It’s still very ‘1.0.’ The question is how is the [financial services] industry going to react to that? Will they come on board and support this movement, or find it threatening?”

MaRS’s FinTech Cluster wants to find collaborative ways for the old school and the new school to work together, Strimban adds.

That’s something that has been happening in Waterloo, Ont., 110 kilometres from Toronto, between Communitech Corp. and  Manulife Financial Corp. since August 2014. That year, Communitech, which runs a 50,000-square-foot space dedicated to fostering collaboration and innovation for members of Waterloo’s technology community, and Manulife opened RED Lab.

The goal of this research lab is to nurture new technologies for Manulife that could provide that firm’s clients with enhanced access to its services.

The venture also provides Communitech’s early-stage firms with access to a large financial services company, as Iain Klugman, Communitech’s CEO, said at the time of RED Lab’s launch.

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