With developments in technologies like artificial intelligence, machine learning, blockchain and biometrics, the FinTech industry has grown exponentially. Global investment in FinTech companies has reached $8.2 billion with some of the biggest FinTech opportunities lying in mobile, automation and digitization, open API’s, exploring new business models and data analytics. In fact, 50% of all customers globally are using at least one Fintech firm and 54% of bankers are increasingly partnering with these companies.
In 2017, over $780 billion went through mobile payments and 50% of users view mobile commerce as a primary FinTech opportunity. As we explore this data, it is clear that the FinTech industry will continue to positively develop and change as technology progresses.
This post dives into the different trends, features and technology that are transforming the FinTech industry for the better. We will also take a closer look at one of Montreal’s successful FinTech startups, Mylo, as well as mention a few other Canadian apps in the industry.
FinTech Industry Trends
Blockchain is a platform on which Bitcoin and other cryptocurrencies are built. It is a real-time public digital ledger that can quickly and permanently record payments and transactions. According to IBM, 65% of banks will be using Blockchain technology by 2019. Blockchain is heavily encrypted, making it impenetrable for hackers and a viable option for safeguarding transactions in a world of many cyber attacks.
This technology allows for easily transferring cross-border funds, data security, access to loan and credit applications allowing instant connection to funds, complete authentication transparency, smart contracts that can automate financial operations and reduced wire and transfer fees when using Bitcoin.
AI, Automation, Chatbots and Robo-Advisors
Using AI and automation is a way to reduce human errors and assist customers virtually with managing and budgeting expenses. Artificial intelligence powers digital voice assistants like chatbots and robo-advisors which can automate customer interactions by addressing their queries. It was even predicted that by 2018, robo-advisors would have the greatest impact on the financial services industry.
Artificial Intelligence will drive 95% of all customer interactions by 2025 and 46% of large FinTech companies are already powered by AI. With more of the simple processes being automated, employees have the time to focus on doing more valuable work and tasks. McKinsey even sees a second wave of automation and AI emerging in the next few years, in which machines will do up to 10-25% of work across bank functions.
Thanks to voice technology, there is this whole new level of customer experience. Clients can start conversations about bank services like calculating mortgage loans, planning future savings, searching for nearby branches or ATMs and receiving recent finance market updates. Conversational messaging interfaces with chatbots also offer similar services like reviewing current balances, giving warnings when clients go over-budget and informing them of their purchase history. These chatbots offer easy, natural, personal and contextual human-like conversations with customers.
Biometric technology offers clients not only enhanced security measures but also rapid authentication and verification to make logging into accounts that much quicker and easier. In the FinTech industry, security and reducing fraud and risk are a top priority to fight against cybercrime. Instead of remembering pins or passcodes and answering the standard authentication questions, security methods like facial and voice recognition, iris scans and fingerprints are used to heighten the protection of one’s financials and privacy.
As the FinTech industry continues to evolve, certain procedures are simplified to cater to customer needs and save time and effort on different tasks. More and more, clients are defaulting to mobile payments instead of using cash, especially with the emergence of various P2P (peer-to-peer) mobile money transfer apps like Venmo, Square Cash and PayPal.
There are now more convenient mobile-friendly features like QR codes and mobile wallets and easy-access self-service payment options and banking tools like digital and cardless payments and mobile deposits. For example, banking apps offering a feature where clients can deposit a check by taking a picture or even cardless ATMs where clients enter a numeric code and their pin number or use beacons and a smartphone camera to scan a code to gain access to their funds.
Recently, digital banks have started to emerge. These are digital only banks without any physical branches. This is a way to manage money on-the-go using smartphones and mobile apps for financial transactions.
For example, Revolut is a digital bank that handles “your everyday account for global fee-free spending, free international money transfers, and instant payment notifications.” And, N26 is another up-and-coming digital bank which doesn’t charge its clients for foreign transactions, allows users to set payment limits, lock their cards, send money to friends and receive instant notifications on transactions.
Augmented reality – Banks around the world like the National Bank of Oman, are using AR to help clients find nearby bank branches and ATMs. The convenience of this service helps to gain customer loyalty. The technology superimposes directions on the streetscape through the camera on a smartphone
Gamification – Some FinTech apps might turn the chore of managing finances and make it into a game. They could provide users with simple financial goals to follow like “Don’t buy junk food this week”, making it a challenge for the app users to follow which also encourages customer engagement.
Mylo: A Canadian FinTech App Startup
With over a quarter of a million downloads and nearly 100,000 investors, the FinTech app Mylo is a successful mobile-friendly automated saving and investing solution based in Montreal. In an interview with Dave Haber, Chief Marketing Officer at Mylo Financial Technologies, he explained that the founder and CEO, Philip Barrar, had a very specific social mission in mind and his goal was to make saving and investing easy and accessible for all Canadians.
It was through the process of customer discovery that Barrar learned that half of the Canadian millennials have less than $1,000 in savings regardless of how much income they earn. According to Haber, Barrar discovered 4 main reasons why Canadians weren’t saving and investing: they didn’t think they had enough money, they didn’t think they had enough knowledge about finances and investing to be successful, they didn’t know how to go about starting the process, and finally, whenever they tried to change their behaviour in terms of how they spent or saved their money, they struggled to make an impact.
Luckily, Mylo is a simple and straightforward solution to these problems. It is an app that automatically rounds up your purchases to the nearest dollar and takes that spare change and invests it in a fully managed and diversified portfolio ETF (Exchange Traded Fund). When users sign up for a Mylo account, part of the process involves connecting to their bank. This allows Mylo to see transactions with your credit or debit card and then empowers the app to do the roundups on your behalf, making weekly transfers from your checking account into your Mylo account. Haber said, “So these Canadian millennials can now save and invest money without having to think about it, without changing their spending behaviours, without knowing anything about finance and they can get started with literal spare change.”
Mylo takes pride in their ability to securely and consistently connect several different bank accounts to the user’s Mylo account. According to Haber, most users are affiliated with multiple financial institutions and so Mylo allows the flexibility of rounding up savings with any number of banks. Having a secure bank connection is a very important piece of their technology, Haber said, “In terms of connecting a bank to an app, a lot of people would say ‘I don’t know how I feel about that’. Well, Mylo has worked with not only some of the top privacy experts in Canada but also some of the top security experts to ensure that everything from our policies to our technology infrastructure to how we hire and employ developers is best of breed.”
Other exciting features Mylo has to offer include making multiple financial goals like adding savings to taking a trip to the Bahamas or making a down payment on a house or saving up for an emergency fund. A financial goal can be created for anything with the Mylo app. One of these goals can even be a part of “roundup to give”. This is a functionality in the app that allows users to donate spare change to any of Canada’s 86,000 registered charities.
According to Haber, when you refer friends on the Mylo platform, you each earn $5 and throughout the month of November, they are having a promotion where if you refer 10 friends, you will earn a $1,000 bonus. They are also launching in December Mylo Advantage, which is a premium service allowing users to save and invest their money in registered accounts like RRSPs and TFSAs. Premium subscribers will get exclusive perks and cashback rewards as well as the opportunity to invest in socially responsible companies and funds relating to the environment, sustainable development, gender equality, human rights etc…
Employees at Mylo are of the highest skill and integrity. Haber said that no one gets hired without going through extremely vigorous background checks. The company also goes through regular security audits, with one of their most recent being executed by a financial institution. Mylo passes the same level of security audits as banks.
During the process of building Mylo, one of their main challenges was knowing how to work with existing regulations and regulatory bodies to develop “a whole new method for Canadians to invest their money”, according to Haber. Before writing their first line of code, the people at Mylo spent a lot of time working with regulators to ensure that the processes they put in place to make a mobile-friendly experience were compliant with their requirements for both KYC (Know Your Customer) requirements as well as AML (Anti Money Laundering) requirements. These ensure the verification of the identities of Mylo users and that there is no potential illegal activity going on.
One of the other challenges revolved around linking users’ bank data to the Mylo app, Haber said, “Technically it is a very difficult challenge. Each bank has their own way of storing and providing data. We want to ensure that we can do this in a way that is of high integrity and security but also in a way that instils trust in our users.”
As the interview concluded, Haber noted that they have been fortunate and grateful to see Mylo resonating so well with Canadians, “The founding mission of this company is something that is a key part of our culture which is really about the social mission of helping Canadians save and invest their money and to grow their wealth.”
If you are interested in joining Mylo, you can use the promo code – mylo10 – which gives users $10 free deposited into their account.
The Mylo Standard account is $1/month with no hidden fees.
The Mylo Advantage premium account is $3/month and will be available in December.
Other Canadian FinTech Apps Worth Mentioning
After reading about the Mylo app, here are a few other Canadian FinTech apps you should check out:
Mogo: Managing your Finances
According to the team: “Rule your finances with Mogo — get free credit score monitoring, buy and sell bitcoin easily, and more. The Mogo App is the most convenient way to access our range of products for your financial needs. Mogo is on a mission to help you take control of your financial health with solutions that are easy to use, transparent, and unconventionally fun. We focus on bringing innovation to a world dominated by big banks, hidden fees, and old ways of dealing with money. By leveraging technology and design we are transforming the way Canadians manage their finances.”
FreshBooks: Cloud Accounting and Invoicing
According to the team: “FreshBooks is accounting software that makes running your small business easy, fast and secure — all in the cloud. FreshBooks is ridiculously easy to use on any mobile device: iPhone, iPad and iPod touch. Built by FreshBooks, the app is designed with simplicity in mind and trusted by millions of small business owners and self-employed professionals. The all-new FreshBooks App allows small business owners to work anywhere on-the-go by: invoicing, recording expenses, tracking time and getting paid quickly.”
QicSEND: Instant Money Transfers
According to the team: “QicSEND® is a secure payment system that enables users to send money instantly from Canada to more than 30 countries, offering significant time and cost savings compared to traditional money transfer operators.”
Coinsquare: Bitcoin and Ethereum Trading
According to the team: “Coinsquare is Canada’s leading and most secure digital asset trading platform for trading Bitcoin, Ethereum, Litecoin, Dash and more. Our platform makes it easy for both first timers and seasoned traders to get trading digital currencies in minutes. Coinsquare sets a new bar for trading and managing digital currencies on mobile.”
Financeit: Easy Payment Plans for Customers
According to the team: “Offer your customers an easy and affordable payment plan for their next big purchase at your business. Financeit lets your customers pay for their home improvement, vehicle or retail purchase in small monthly or bi-weekly payments. You get paid the full purchase amount sooner and they go home happy. Plus, Financeit is FREE to use!”
For more on FinTech startups check out a previous post on the most Impactful Toronto FinTech Companies
With these interesting trends and features added to the FinTech industry, it will be interesting to see what the new year will bring and what will be added to this ever-growing sector. If you have built a FinTech app that you would like to share, let us know! As an app development agency, we are always excited to hear and read about innovative and original ideas!