The Toronto-Kitchener-Waterloo corridor fintech ecosystem has a “significant opportunity” to increase its share of global deals, says a report from Toronto Finance International (TFI), researched and written by Accenture and McMillan LLP.
Released March 25, the report, Seizing the Opportunity: Building the Toronto Region into a Global Fintech Leader – Update 2019, is the follow-up to a report released in 2017. The report aims to assess the progression of the Toronto region fintech ecosystem through interviews with executives and stakeholders in the government and in the financial services and fintech sectors, says TFI.
This year's report found that fintech investment in the Toronto region “has grown dramatically” during the past five years, from $24M and eight deals in 2013 to $221M and 25 deals in 2018.
However, despite this growth, the region still has a smaller share of global fintech investment, in terms of the number and size of deals, than other major financial centres.
"We have one of the highest investment growth rates globally, with a compound annual growth rate of 118 per cent since 2010," said Jennifer Reynolds, president and CEO of Toronto Finance International. "While this is a much smaller absolute investment base than that of global hubs like London, New York and San Francisco, we have the opportunity to leverage North America's second-largest financial centre, combined with its third-largest tech cluster, and use this momentum to become a global fintech leader."
To foster innovation and strengthen its position globally, the region should focus on three areas, advises the report. The first is “openness”. This means creating an environment “that encourages innovation and drives collaboration among ecosystem partners.”
Proximity between fintech participants is the second area to be developed. This means, encouraging “closer and more frequent engagement between participants in the fintech ecosystem to share and collaborate on ideas that result in technological improvements.”
Raising global awareness
The third area to develop is global awareness by elevating the Toronto region's global reputation as an international fintech hub to attract and retain start-ups, talent and investments.
"The Toronto-Kitchener-Waterloo corridor is already making a name for itself with its high concentration of incubators and accelerators, which is attractive for fintech investors, and we're home to the top-ranked university incubator in the world — DMZ at Ryerson University," said Vikas Shreedhar, a managing director in Accenture's Financial Services practice in Canada. "There is room to improve this position with closer university-industry collaboration on research and development and by promoting a strong culture of innovation that truly sets us apart on the global stage."
To learn more, consult the report here.