Global guide to the SMB market for fintechs and financial service providers Canada
Read on to learn about:
• The size and composition of the small business market in Canada
• The fintech ecosystem and regulatory environment
• The top financial platforms in the region
Size & make up of the market
The SMB sector is large and important to the economy, accounting for 89% of employment. It is relatively diverse, as might be expected in such an economically diverse country.
The fintech ecosystem
Fintech is supported and, to a certain extent, orchestrated by 'traditional' financial institutions embracing fintech. At the end of 2022, Canada had more than 1,200 fintech companies and Toronto was the largest single hub.
Most popular financial software
Many globally popular SMB financial software tools were founded in Canada, including Shopify and FreshBooks. Market dynamics echo the USA, with Intuit QuickBooks the clear leader in accounting software.
International trade
30% of Canadian SMBs are active exporters (below the OECD average of 39%). Canada relies on exporting, predominantly to the US, China, and the UK. SMBs contribute 41% of export value.
2.3M Canadian SMBs have specialist bookkeeping or ERP software
of Canadian SMBs use spreadsheets in place of accounting software
fully outsource bookkeeping to accountants
SMB tech readiness and the fintech ecosystem
Tech readiness and regulatory environment
SMBs in Canada lag behind their developed nation counterparts in digitization, such as eCommerce and cloud computing.
Digital payment methods in Canada have been slow to advance and be adopted. Canada's Real Time Rail (RTR) payment system roll out (the equivalent of the UK's Faster Payments launched in 2008) has recently been delayed to 2023. E-invoicing is not mandatory in Canada and use of cheques is still widespread in B2B payments.
Canada is now progressing with legislating on Open Banking. Phase 1 (read-only data access) is expected to launch in 2023.
Fintech ecosystem
Canada is ranked #12 out of 83 in Findexable's global index of the strength of fintech ecosystems.
The influence of fintech is significant across the financial sector and particularly in wealth management, lending, payments, robo-advisory, blockchain, and crowdfunding.
