COMMUNITY

Atlantic Fintech

Is the next Silicon Valley hiding in a corner of Canada known for its rustic charm, great seafood, and natural beauty—and not much else? We think so.

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f someone were to ask you what you knew about Canada’s Atlantic region, you might think of Anne of Green Gables, gigantic lobsters, maple syrup, and those world-famous Malpeque oysters. But chances are you’d have no idea that this lovely gem of the northeast is a burgeoning hotbed of financial technology that stands ready to compete with the likes of San Francisco, Berlin, Singapore, and London for investment capital.

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It’s true. And Atlantic Fintech is the growth community ensuring not only that the region’s pioneering financial-technology companies are supported and working together wisely but also that the world knows about the wealth of opportunities here.

“Atlantic Canada is a hidden gem. People don’t recognize the strength of the technology sector and the companies here,” says Barbara Ells, COO of start-up connector Venn Innovation and an Atlantic Fintech partner. “It’s an amazing fintech hub that leverages the strong expertise developed here over the years.”

Hiding in plain sight—or perhaps a bit too polite?

Atlantic Canada—comprising the four provinces of New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island—is home to more than 150 “fintechs,” or financial-technology companies, which employ thousands of brilliant people from all over the world at both start-ups and established players alike. But, of course, Canadians don’t like to brag. So it wasn’t until 2021—when NASDAQ acquired Canadian fraud-detection firm Verafin for CAN$3.72 billion (US$2.75 billion)—that a fresh spotlight hit Atlantic Canada, making manifest its standing as a lively and fertile home for innovative financial-services solutions that can compete on the global stage. Senator Colin Deacon, of Nova Scotia, says the growth possibilities of the sector in the region were sown at least a decade before.

“In 2014, the Nova Scotia Commission on Building Our New Economy published a report called ‘Now or Never,’” says Deacon. “The report recommended changing government policy to increase economic growth and attract immigrants to start reversing our decline. Many Atlantic provinces had not seen any population growth in generations. We had great universities, but we were not keeping our graduates, who were huge success stories globally but were not building their companies at home. ‘Now or Never’ urged us to lean into enabling export-oriented businesses based in Atlantic Canada, especially exporters of intellectual property. There are no trade barriers for great ideas.”

The origin story: From beauty and bounty to building and banking

Like many overnight success stories, there was nothing overnight about it. The region’s star-making qualities evolved over centuries. Its economy was of course originally built upon the hunting, farming, and trading of local Indigenous peoples relishing a lovely land. In time, the economy came to include shipbuilding, fisheries, forestry, and maritime transportation, with iron, steel, manufacturing, and offshore oil and gas exploration eventually dominating. Over the centuries, a key lesson emerged again and again: Progress came, yes, from serving the local economy, but the biggest and most sustainable gains came from fostering an intrepid and increasingly global perspective within communities, one that focused on creating collaborative solutions that served growing needs overseas.

So it’s no surprise that the region had become a major financial center by the turn of the 20th century, garnering a reputation for developing solutions that could be marketed to commercial concerns far beyond Canada’s borders, including emerging industries such as Latin American utilities. Long before Lucy Maud Montgomery’s classic Anne of Green Gables was published, in 1908, Atlantic Canada was already a banking hub—home to Bank of New Brunswick (1820), Bank of Nova Scotia (1832), and Royal Bank of Canada (1864).

During the 20th century, the region became a competitively priced location for financial-services operational expertise in payment processing and other back-office needs. Call centers followed, with major investors including banks and telecommunication, healthcare, and insurance companies. Since the 1990s, the financial economy has embraced new technology, buoyed by such innovations as the Genesis tech-start-up incubator, opened in 1997 at Memorial University, in St. John’s.

Fast-forwarding into the future

In 2003, three graduate students at Memorial—Jamie King, Brendan Brothers, and Raymond Pretty—were studying artificial intelligence and decision-making systems when they joined the Genesis incubator. Originally planning to develop software for the mining industry, they struck upon the idea of helping banks prevent fraud and money laundering. The company they built became the superstar Verafin.

Since then, Genesis firms have raised more than $700 million in private capital, creating thousands of jobs in areas such as AI, cybersecurity, blockchain, process automation, and data analytics. Beyond the great work at Memorial, the region’s 16 universities have all embraced the challenge of producing an innovative, tech-ready workforce for the 21st century, even adapting their curricula for future needs. Dalhousie University, for example, now offers a specialized Certificate in FinTech and Financial Innovation.

But this kind of horizon outlook is actually nothing new around here. Verafin director David Kelly credits much of his success to growing up in Atlantic Canada, and in Newfoundland in particular, where he received free university tuition at Memorial under a 1960s program aimed at creating a better-educated workforce. Kelly says he learned to embrace change as a result of “the confidence and basic skills I learned in Newfoundland.”

Something … profound is happening—an explosion in innovation led by a new generation of entrepreneurs, combined with our existing economic base and enviable lifestyle, to supercharge opportunity. We believe in the future of Atlantic Canada. The wind is in our sails.

Today’s horizon outlook

As we near the end of the 21st century’s first quarter, Atlantic Fintech’s Alicia Roisman Ismach wants to find and nurture the next generation of potential Verafin-scale success stories. “We’re an organization that hopes to raise up the fintech sector from the four provinces of Atlantic Canada, helping them find their way out in the world, especially in the U.S.,” she says. “We’re working to give them more visibility and to generate more awareness for our companies—and for the region—easing their journey to market and sustainable growth.”

Indeed, economic data suggest very bright prospects for Canada’s fintech sector. The United States and United Kingdom are major banking hubs, but as a percentage of its economy, Canada’s banking industry is bigger: 7.9% of the overall economy vs. 5.8% in the U.S.—and an average of 5.6% in other developed economies. Which of course means that Canada offers incredible promise as a fintech center. Financial-strategy research giant McKinsey & Company notes that, while Canada’s fintech industry is already well established, it is likely to soon see explosive growth. Why? Fintech’s percentage of Canadian bank revenues is currently 3%, compared with 8% in the U.S., forecasting the potential for as much as a 300% expansion in the future.

“The Canadian fintech sector appears set for growth,” McKinsey researchers wrote in an April 2024 paper called “Springtime for Canada’s fintech industry?” The report noted that the regulatory outlook is positive, since the Canadian government is gradually embracing open banking, and that there is “an abundance of talent to help develop new products,” adding, “The right product offerings are likely to attract Canada’s many digitally savvy consumers who are open to innovation. Improved financial conditions will likely see more funding for fintechs.”

Atlantic Fintech cofounders Barbara Ellis and Alicia Roisman Ismach.

Mindful of the opportunity, a growing number of Canadian banks have established units aimed at funding fintech and other tech start-ups and helping them grow their businesses, following the Silicon Valley playbook. At the same time, Canada’s big five banks are increasingly seeking to partner with local start-ups to develop new technology, buoying prospects for fintechs specializing in everything from wealth management to money transfers.

The Canadian government supports Atlantic Fintech via the Atlantic Canada Opportunities Agency (ACOA), which in 2016 established its Atlantic Growth Strategy to encourage local businesses. A recent Public Policy Forum report sees the effort as working well. “Something … profound is happening—an explosion in innovation led by a new generation of entrepreneurs, combined with our existing economic base and enviable lifestyle, to supercharge opportunity,” the report states. “We believe in the future of Atlantic Canada. The wind is in our sails.”

Creating community here, now, and for what’s next

Atlantic Fintech’s mission and passion is to create a durable and enduring community built on mutual support and geared for growth. After all, in the beginning, it was that well known but too often overlooked local community that changed everything for Verafin.

“We went far and wide, traveled the world, everywhere looking for our first customer,” said Verafin cofounder Brendan Brothers in Atlantic Business Magazine, “until somebody on our board of advisors was like, ‘Well, have you ever tried asking Newfoundland and Labrador Credit Union?’” And—you guessed it—Newfoundland and Labrador Credit Union became Verafin’s very first customer.

Who will be the next member of this community to land in the global spotlight? Read about five of the most exciting Atlantic Fintech companies below.