Canadian banks and fintech startups more collaborative than combative, for now at least

The showdown between Canada’s big banks and fintech startups may feature more co-existence and cooperation than competitive combat, judging by a panel discussion held Monday.

Two of Canada’s largest financial institutions – RBC and Scotiabank – showed up to debate two fintech startups – online lender Grow and cloud accounting firm Wave – in a roundtable titled “Fintech Battle: Who will win, startups or banks?”

Yet the event at the 2016 Canadian Fintech Summit in Toronto ended in a very polite (thus, very Canadian) draw.

“These are big markets and there’s a lot of opportunities for financial services startups to co-exist with the big players,” panelist Les Whiting, vice-president of financial services at Wave, told the audience.

L to R: Sean Silcoff (moderator), Gabriel Woo (RBC), Les Whiting (Wave), Jeff Marshall (Scotiabank) and Kevin Sandhu (Grow).

Canada’s biggest banks are boosting their own in-house digital activities, from providing more mobile apps and payment options to heavily investing in predictive analytics to develop personalized marketing programs. Yet Monday’s event ended up highlighting how those powerful longtime incumbents are increasingly finding ways to collaborate with emerging digital disruptors.


Whiting explained how these partnerships can work. Although Wave still operates as a separate startup company, RBC is the exclusive provider of Wave’s Canadian financial transaction and processing services.

The deal means Wave can help its SME customers access certain financial services in an easier, more convenient way that complements traditional banks rather than trying to replace or compete with them, Whiting said.

Such partnerships also allow fintech startups to maintain their identity as innovators while leveraging the trust, brand power and distribution channels that big banks have built up with consumers during the past century, said Kevin Sandhu, CEO of Grow (formerly known as Grouplend).

Other examples of banks collaborating with fintech startups include the Digital Factory incubator launched by Scotiabank last fall and the Thinkubator opened this February by Tangerine and Ryerson University. Both facilities are located in Toronto.

Threats vs. enablers

The conciliatory tone of Monday’s event echoed the findings of a PwC report released last month.

“Not all fintechs pose the same threats – or opportunities – to banks. In many cases, they can be viewed as enablers to traditional innovation and continuous improvement. It is important that banks continue to embrace a long-term approach to investment and risk-taking that gives innovation the space it needs to flourish. In the end, these efforts will help build a Canadian fintech ecosystem whose members are able to take on global competitors – and win,” the study concluded.

Whiting: “Lots of opportunities” for startups and banks to co-exist.

Event panelist Jeff Marshall of Scotiabank conceded that Amazon and other online retailers have motivated traditional banks to respond to customers in a more agile way and adopt a less hierarchical culture. Banks can’t meet those challenges overnight, however, since they’re saddled with obstacles that startups don’t face: regulatory constraints, thousands of employees to train and $2 billion in annual legacy IT costs.

But the idea that recent banking innovations are simply a knee-jerk attempt to compete with startups has been overblown, Marshall added.

“I think there’s a bit of a misperception that the banks are reacting to fintechs. What we’re actually reacting to is a changing customer,” said Marshall, a vice-president at Scotiabank who also heads up Digital Factory.

Sandhu agreed, saying his startup Grow is focused on solving the problem of meeting customer needs, “not an adversarial situation” of banks vs. startups “where someone’s going to win and someone else is going to lose.”

The real winners

While Canadian startups like Wave have opted to partner with banks, other fintechs will inevitably choose the route of being acquired by banks, said panelist Gabriel Woo, vice-president, innovation, RBC.

Sandhu: More choice means customers could be the ultimate winners.

Pointing to the success of Ottawa-based ecommerce provider Shopify, Whiting said there’s a good chance a Canadian startup in the fintech space could also stick it out independently to compete at the global level.

The future financial services landscape described by the panel, then, would consist of fintech startups, traditional banks and collaborations between the two. If it panned out, it would provide more choices, products and services to customers in Canada, including businesses.

If that happens, the answer to the question in the event’s title – “who will win, startups or banks?” – could be “hopefully, the customer,” said Sandhu.

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Christine Wong
Christine Wong
Christine Wong has been an on-air reporter for a national daily show on Rogers TV and at High Tech TV, a weekly news magazine on CTV's Ottawa affiliate. She was also an associate producer at Report On Business Television (now called BNN) and CBC's The Hour With George Stroumboulopoulos. As an associate producer at Slice TV, she helped launch two national daily talk shows, The Mom Show and Three Takes. Recently, she was a Staff Writer at and is now a freelance contributor.

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