Sample Essay: Developments and Impacts of Fintech on Household Credit Allocation in Canada

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Developments and Impacts of Fintech on Household Credit Allocation in Canada

The Canadian economy has experienced tremendous growth in the Fintech sector in the recent year. Previously, Canada had been trailing behind other nations such as the United States, Singapore, and the UK. However, there have been recent developments by the government, banks, as well as other corporations in the adoption of Fintech in their operations. However, some Canadian laws have been deterring the advancement of fin tech, but there have been changes in the recent past to enhance these developments.

The term fintech can be defined as the intersection between technology and financial services. FinTech covers a broad range of areas, ranging from insurance, insurance, crowd funding, payment services, to e-wallets. In Canada, banks dominate the FinTech segment, majorly by developing their in-house technologies (Duhaime 16). While banks have played a great role in the development of fintech in Canada, they have not played their best. This is because of various legislations that prohibit their activities. Similarly, banks tend to be more risk-averse, compared fintech companies that are hungry for risk. However, it is worth noting that banks have been in the forefront in the procurement of fintech services. For instance, the Royal Bank of Canada has its in-house financial services team and procures services from fintech corporations, both in Canada and abroad (Duhaime, 22).

The development of financial services technology directly affects household credit allocation in Canada. Fintechs have made it possible for citizens to access credit faster. Fintechs make the process of getting credit faster, which has even challenged some methods used by certain banks. This has made it critical for banks to adopt more efficient credit granting platforms, so as to standardize their credit granting process (Canadan Banks 22). Such developments will substantially contribute to the household’s access to income. Further, advancements in fintech will ensure that consumers can be able to access credit, using the devices. One does not have to be at the banks to access credit. The simplification of the credit access processes means that consumers can access credit easily.

Developments in fintech have made it possible for households to marketplaces credit online through various lenders. The online credit market places usually require marketplaces formalities, and the approval process is substantially fast (Duhaine 28). It only takes the matching of a potential lender with a potential borrower. The online lending platforms are not banks; thus the laws regulating the, are minimal. These platforms ease the process with which households can access credit. The online loan marketplaces offer a faster access to credit, but with shorter maturity and without any physical infrastructure. Globally, more than $100 billion in loans have originated from the online loan market places (Duhaine 36). In Canada, the online lending has grown significantly in the last three years, because of US-based corporations expanding into Canada (Duhaine 38). Further, there are online lending platforms that have been developed in Canada such as Progressa, Amber Financial, and Grow. Therefore, these platforms have eased the process of credit acquisition by households.

Crowdfunding is another fintech platform that has facilitated ease of accessing credit by households. In most cases, crowdfunding is more suitable for small organizations, since the investors usually expect some form of equity from the organization. However, it is not in all cases that the contributors expect something in return. Crowdfunding connects investors with business or individuals who need funding. In Canada, the process of adoption of crowdfunding has been slow, because of complex legislation (Canada Banks 28). However, 2015 saw the entry and emergence of various online crowd-funding platforms such as Frontfundr. In the US for instance, more than $16.4 billion was raised through crowd funding (Duhaine 48).

Developments in fintech have also seen growth in the fastening of the speed at which people can access credit. Traditionally, one’s credit history, and outstanding loans have to be evaluated for a loan to be approved. However, because of developments in fintech, the clients’ credit history can be analyzed and synthesized fast, thus making the process of approval faster (Canada Banks 46). Further, there are fintech firms that are dedicated with availing this information, thus enhancing access to credit. Further, fintechs have developed various methods through which individuals can request for credit from banks. As an example, various banks have web applications or Smartphone applications through which customers can apply for credit. These methods have enhanced the speed with which one can obtain credit. Years back, one had to walk all the way to the bank to request for credit, which was time-consuming.

Although left behind by nations such as Singapore and USA in financial services technology, Canada has been steadily developing the fintech segment of its economy. The last there years have witnessed changes in legislation, which encourages the inception and development of fintech corporations. The establishment of these firms has significantly contributed to the ease with which households can access credit. Online loan marketplaces have enhanced the amount of time that it takes for one to obtain credit. Further, crowd funding significantly contributes to the speed at which individuals and small businesses can access credit. Finally, fintech firms have enhanced the speed with which banks can analyze a client’s credit history, thus significantly reducing the duration for one to access credit.

Works Cited

Duhaime, Christine. “FintTech in Canada.” Digital Finance Institute, 2016. http://www.digitalfinanceinstitute.org/wp-content/uploads/2016/09/Fintech-Report-2016-1.pdf

“Canadian Banks 2016 Embracing the FinTech movement.” PWC, 2016. http://www.pwc.com/ca/en/banking-capital-markets/publications/5056-01-canadian-banks-2016.pdf

Here are more samples of essays that we have written for our Canadian clients. Please note that these samples are not unique and you should not submit them the way they are since you risk being flagged for plagiarism by your instructor. 

Sample 1: Sample Essay:Homelessness in Canada and Media Coverage

Sample 2: Canada’s Position on Peace in the Middle East


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