Interview with Andrew Graham, CEO of Borrowell
Borrowell (www.borrowell.com) is a Canadian fintech that launched in 2014, focused on helping consumers make great decisions about credit. Founder and CEO Andrew Graham, who had previously worked at Presidents’ Choice Financial, and his partners spotted a market opportunity to help clients refinance their outstanding debts at more manageable levels. Borrowell struck a deal with Equitable Bank in late 2014 to deliver their offering on line across Canada to Equitable Bank customers. Working with Equifax Canada (Canada’s leading credit rating agency) Borrowell has attracted 250,000 customers to their free credit scoring product. Most recently, the firm has launched a co-branded loan product with CIBC, one of Canada’s largest banks.
Can you describe the fintech landscape in Canada for us?
Some Canadian banks are behind the curve and risk falling further behind as their competitors gear up for a fully digital marketplace. The landscape has changed a lot in the last eighteen months, with many of the banks realizing the need to partner as part of their strategy and get new products that are currently at Proof of Concept into market. At the same time, partnering with established Financial Institutions is a must for fintechs to help them with customer access and other issues.
This is a very dynamic environment. If we go back two years, we were listening to figures like Jamie Dimon saying the banks risked have their lunches eaten. Now there is a much more collaborative environment. I think the financial institutions’ thinking around fintech has changed dramatically in some instances.
What is your view on innovation schemes and incubators?
We started life in the DMZ (Digital Media Zone) at Ryerson University. It was a great spot for us to start, giving us help with talent, fundraising and business plan development; on the other hand, there has been a proliferation of incubators in the past few years, and some certainly struggle to add value. When it comes to innovation schemes, there are programs out there like IRAP and SRED – I would like to see much more pro-innovation regulation and open banking. The Ontario Securities Commission (OSC) has taken some steps, like setting up a regulatory sandbox for fintechs. However, Toronto is a major global financial services hub and we should do better in fintech. Governments have a role to play with pro-innovation regulation.
What is the seed funding and venture capital situation like in Canada?
Seed funding is fairly readily available in Canada. However, there is a well-recognized challenge in finding follow-on growth funding. It’s also hard to get funding from US VCs for Canada-focused businesses which, given regulation in financial services space, is how many fintechs based here start. Still, the funding situation is improving, with a number of fintech-focused funds such as Portag3 Ventures (one of our investors) and Information Venture Partners launching in the past few years.
Looking to the future, what do you see happening next? What’s your view of blockchain, for instance?
I’m really excited about Blockchain, though there’s certainly been a hype cycle. Blockchain will make an impact in many parts of financial services, including settlement and clearing systems - however, I’d say that it’s still early, and direct commercial applications of Blockchain are still emerging. The next few years will be exciting ones.
Along with Blockchain, artificial intelligence will continue to grow in impact. We use AI in a number of aspects of our business and see big opportunities over the next twelve months.
Overall, I think you’re going to see very rapid growth in Canadian fintech in the next 18-24 months, although I think it’s too early to see much of the consolidation and M&A you are beginning to see in the US and Europe here in Canada. Our market is at too early a stage.
One area that needs attention in Canada is the regulatory environment. We got through the financial crisis with no bank failures. However, by most measures, our system is behind when it comes to innovation. We need regulation that promotes not only stability, but innovation too. Looking abroad, I think the changes the EU is proposing through PSD2 are a great example of balanced policy. It seems obvious that customers should have the right to share their data. This change is hugely relevant to Canada, as much of our current regulation just wasn’t devised for today’s technologies and customer expectations.
MagnaCarta plans to launch the first pan-Canadian fintech study in 2018. For more information about this study or how you can get involved, please contact James Wood: james@magnacartacomms.com
