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THE QUEEN CITY ASCENDS THE THRONE

BOSS Magazine with Jennifer Reynolds 1 October 2018

The latest Global Financial Centres Index, which analyzes the health and competitiveness of the world’s financial hubs, ranks Toronto seventh, eclipsing Zurich, Boston, and Beijing on the world stage. With the second highest density of tech startups on the planet, the blisteringly-hot Toronto-Waterloo Innovation Corridor is rapidly becoming Canada’s technology supercluster: a chiller—and more killer—cousin to Silicon Valley.

And Jennifer Reynolds is bringing them together to change the world of fintech.

As CEO of Toronto Finance International (TFI), Reynolds is charged with moving the region out of its deceptively sleepy seventh ranking and into the highest echelon of global financial and fintech services. A public-private partnership between Canada’s three levels of government, its financial services sector, and academia, TFI is designed to foster the fecundity needed to grow Canada’s position as a world financial leader.

Reynolds, who took the helm at TFI last fall, leads a membership that includes banks, brokerages, investment fund managers and insurance companies, as well as collaborators from accounting, law, and education.

“Our mission is to promote the Toronto financial center globally, and then domestically to focus on initiatives which grow the sector and increase competitiveness,” she told BOSS. Domestically, the top three areas of TFI’s focus are talent, fintech innovation, and sustainable finance.

“The financial sector in Canada is one of our biggest industries; it’s a big proportion of GDP, just over seven percent in Canada, and the second largest employer in Toronto, including both direct and indirect financial services jobs. So it’s very important that we get the right talent into this industry,” she said.

Balancing high demand and plentiful job opportunities in The Corridor, as the Toronto-Waterloo area is known, requires a level of prescience that requires nerves of steel. The furious pace of technological change will require new skill sets that can withstand the pace of innovation.

“Talent is a key issue, for sure. As we start bringing in the right talent, if we have gaps from the standpoint of our universities or in academia, then what do we need to bring in from other countries? We really are looking to create a very open and diverse workforce here,” Reynolds exhorted.

“The second key initiative we have is around fintech and innovation,” she continued. “We want to make sure we are creating a really robust, successful fintech system within our financial center. We are lucky here in Toronto because we are the second largest financial center in North America, after New York, and Toronto and the surrounding region is also the third largest technology cluster in North America.

“Having those two things right beside each other is obviously a big advantage because technology is so important to the financial sector. We’re really trying to leverage what’s happening there, and making sure that we have those two pieces, the fintech community and technology community, working closely with our financial services community.”

Sustainable finance, defined as any form of financial service integrating environmental, social, and governance criteria into the business or investment decisions for the lasting benefit of both clients and society at large,” rounds out TFI’s trifecta.

“If we are going to transition to a lower carbon economy, what are the types of things that financial centers need to support that transition?” Reynolds asks. Sustainability may encompass different ways of financing green projects, or providing a level of risk mitigation on green projects through appropriate disclosure, for instance. 

From Competition to Collaboration: Financial Services’ New Age

As Reynolds sees it, for fintechs and incumbent financial services providers, partnership is the way forward. That’s a boon for the Corridor, where over 140 fintech startups have made their homebase. “At the end of the day, a smaller fintech company can be far more nimble and innovative and can come at things in a much more unique fashion. They also need some of the knowledge and customers that the big incumbents have, as well as the capital that the big incumbents have, and also the expertise the incumbents have around navigating the regulatory system,” she said.

“The traditional financial institutions want to get at that innovation ecosystem. They are happy to partner, and they expect to partner with fintechs. Likewise, fintechs are looking for the opportunities that incumbents are providing to them,” she added, noting that “big banks are becoming, to some degree, technology companies. It’s just a natural partnership.”

Funding is pouring into the fintech sector, with the US, UK, and China the biggest players currently funneling VC dollars into the ecosystem. Canada is nipping at their heels. “In Canada we were 7th globally in terms of the amount of dollars that went in to fintech Investments. That will continue to grow I think, we certainly have seen a big surge, particularly in the last couple of years and I think we will continue to see that going forward.”

Fintech adoption is reshaping the financial services sector in sweeping ways. “We’re seeing it everywhere. That’s the interesting thing,” Reynolds enthused. “You’re certainly seeing it in payments, in all different types of lending options that are coming up today that didn’t exist 5 or 10 years ago. We’re seeing it on the wealth management side with robo advisors and seeing how those are impacting the traditional model in the wealth industry. I think that’s where we’re going to see significant changes, too.

“If you look forward and think about things like open banking, that will change things dramatically. You’re seeing some places like the UK and Europe move toward that type of a system. So I think that’s going to have some big change around the world as others move in that direction as well. I don’t think anyone is free of facing great changes in all parts of the sector.”

This fall, TFI will launch an accelerator devoted, in part, to helping fintechs navigate the financial services regulatory regime.

“In addition to that, it’s meant to be a hub to bring all the resources that we have in the Toronto financial center to bear for fintechs all in one place,” Reynolds noted. It will offer startups much-needed guidance on government and private funding sources and which financial institutions are looking to invest in nascent companies, for starters.

“To have all of that information together in one place is pretty unique. You don’t see a lot of that happening, so I think it will be a great resource for them. And then just to be a hub for networking and mentorship as well for fintechs, whether that’s mentorship from big institutions or mentorship from other fintechs as well, or VCs and investors who might be able to help provide the resources and advice that fintechs will need.

“It also has a mandate to make sure that our fintechs are getting exposure, not just to the Canadian market, but exposure to International markets as well. How can we give them opportunities to gain customers throughout the world and in Toronto? It’s multifaceted, but at the end of the day it really is about providing a huge resource for fintechs to make sure that we are doing everything we can to help them grow.”