What Is Fintech & Why Is It Growing?

Short for financial technology, fintech is a fast-growing sector encompassing any company that leverages technology to improve or automate financial products and services. The industry is disrupting many areas of traditional finance with innovative applications such as mobile banking, online lending, digital payments, robo-investing, and cryptocurrency platforms.??

But fintech isn’t new.?

From the Fedwire system that enabled the first electronic fund transfer in 1918 to the introduction of credit cards in the 1950s, fintech has been around for a while and continues to get bigger every year.?

According to a report by Market Data Forecast, the global fintech market is expected to be worth approximately $324 billion by 2026. In Canada, dozens of new fintech companies are launched every year, with hubs like Vancouver, Calgary, Montreal, and Southern Ontario poised to grow.

So why is this industry expanding so rapidly in Canada and around the world? There are three main factors driving fintech growth.

1. The desire for convenience

Fintech adoption is on the rise because the industry’s products and services make our lives easier. The pandemic only accelerated the desire for online convenience. For example, contactless payments in Canada surged by 32% as shoppers didn’t want to touch pin pads or screens.?

Now more Canadians are doing away with traditional bank accounts and turning to apps and online-only providers to help them borrow, budget, and invest. A survey conducted by Ernst & Young found that Canadian consumers cited more attractive rates and fees (42%) and ease of setting up an account (19%) as top reasons for preferring fintech services.?

2. Serving the unbanked

The “unbanked” are those who have limited or no access to mainstream financial services. Internationally—according to the World Bank Group’s Global Findex Database—around 1.7 billion adults don’t even have a bank account. And it’s not just an issue in the developing world. In Canada, up to 20% of the population is either unbanked or underbanked.

Government agencies and traditional banking institutions want to include more people in the world economy and are turning to fintech to help them serve this underserved group. Many fintech companies are also focusing on financial inclusion by expanding access to financial services with things like low-cost money transfers, online loans, digital wallets, and micro-investments.?

3. An erosion of trust in traditional banking institutions

The chaos of the 2008 financial crisis has led to a lack of trust in traditional banks, paving the way for fintech companies to reshape consumer finance. Canadians still remember foreclosed homes and savings lost during the Great Recession and have chosen to put their money in challenger banks, online lenders and brokers, and blockchain applications offering better value and simpler user experiences.

Driven by consumer needs, these three factors of convenience, financial inclusion, and a lingering distrust in banks give fintech a unique opportunity to solve some of Canada’s most pressing issues and set the industry up for continued growth for years to come.

About Spring Financial

Founded in 2014 and headquartered in Vancouver, Spring Financial is dedicated to giving all Canadians access to fair-priced financial products. And we’re growing fast with lots of remote and in-house positions to fill. Check out our careers page and send us an application in as little as 60 seconds!