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B.C. fintechs eye growth as banking habits change

Financial technology companies among the fastest growing in the province
Canada Drives CEO Cody Green | Photo: Rob Kruyt

There’s one simple rule David Gens tries not to forget when leading a financial technology (fintech) company.

“Acknowledge the ‘fin’ in the word ‘fintech,’” said the CEO of Vancouver-based Merchant Advance Capital, which specializes in offering small businesses loans and lines of credit over the internet.

“Particularly when you’re in the business of providing credit, there’s of course a natural limit to the good credit that can be created in an economy.”

Over the last five years, Merchant Advance Capital’s revenue has grown 1,219% to $10 million annually.

Gens acknowledged that kind of growth in the fintech space isn’t going to last forever as the market matures.

“There’s still a lot of growth ahead but we [fintech companies] shouldn’t kid ourselves either,” he said. “But there are counterbalancing forces where you’re seeing more large, trusted institutions partnering with fintech, and that’s kind of creating a new growth spurt, allowing fintechs to reach customers they otherwise wouldn’t have reached.”

Canada also has a ways to go before the rate at which consumers adopt financial technology slows compared with other markets.

According to EY’s Fintech Adoption Index 2017, 18% of Canadian survey respondents have used two or more fintech services in the last six months. The global average is 33%.

It’s still an improvement over previous survey results released in 2015 that showed 8% of Canadians had used two or more fintech services in the previous six months.

Meanwhile, the rate of respondents who said they weren’t aware fintechs existed dropped from 49% to 22% between 2015 and 2017.

Compared with their global counterparts, Canadian fintechs may have more room to grow within their own domestic markets.

At the same time, Vancouver-based Canada Drives has been expanding aggressively beyond the domestic market over the past year.

The fintech company, which runs an online platform to help secure financing for vehicles, launched services this year in Australia and the U.K.

Co-CEO Cody Green said he expects the company will enter the U.S. market before the end of 2017.

“We were able to get traction [in the U.K. and Australia] very quickly just by following the same blueprint we have in Canada, so we didn’t have to reinvent the wheel in any sense,” said Green, who came up with the idea for easier ways to secure financing while working at a car dealership in Saskatchewan in 2010. “We knew the frustrations of the consumer.”

Over the past five years, Canada Drives’ revenue has grown 2,584% to $41.3 million.

Green said one of the turning points for growth was when he and co-founder Mike Galpin relocated the company to Vancouver. He cited access to a deeper tech talent pool as one of the reasons why the company has sustained so much recent growth.

“In 2014 we had probably about 10 staff,” he said. “Over the last three years and change, we’ve grown to over 300 staff. We were very fortunate that we landed on something that consumers really wanted.”

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