How to Hire a Fintech Software Development Company in Canada

The rise of the financial technology (fintech) industry has rapidly created many new and exciting financial services and products. This area provides many incredible opportunities for a business with great ideas and detailed plans. However, you’ll need to choose the right partners. This growing industry is constantly changing, so choosing the right fintech software development company is crucial.

This choice can be the difference between staying on the cutting and edge and producing a product that find great success and falling behind the competition. This is especially true in Canada’s fintech sector, as the Canadian banking industry is primed for disruption. With rapid growth, comes rapid changes. Working with a knowledgeable, capable fintech development company can give your company the advantage you need to succeed.

The Canadian Fintech Landscape

When you are working in Canadian fintech, it’s important to understand the landscape. Canada has a large and profitable banking industry. The industry is also very concentrated, with a large majority of banking revenue being generated by the country’s top five banks.

Over the last 10 years, fintech firms in Canada have raised over $18 billion. However, Canada does lag behind other nations when it comes to fintech revenues, which account for a lower percentage of banking revenues than in other markets.

This doesn’t mean that the industry isn’t growing. It is. Growth in the Canadian fintech landscape is attributed to four factors: the increasing adoption of smartphones, the shift to digital services due to the COVID-19 pandemic, recent regulatory changes, and technological advancements.

The rollout of open banking in Canada is a considerable development that could create more interest in fintechs and grow the industry. Open banking allows customers and businesses to easily share information between approved institutions. This aims to make it safer, more secure, and more straightforward for Canadians to access new financial tools. This should increase fintech development in the country.

While there is some concern among Canada’s fintech sector that this rollout has taken too long and that Canada now lags behind other nations in fintech development, it is generally seen as a positive change for the fintech industry.

Security:

When you are looking to hire a Canadian fintech software development company, security should be one of your biggest concerns. If there is a breach or if your software partner isn’t handling sensitive data properly, there could be significant consequences. Not only will customers be at risk, but you could be hit with serious penalties as well. Plus, the damage done to your brand and your reputation will be difficult to overcome. Overall, the average cost of a data breach in Canada was $5.13 billion USD in 2023.

• Data Encryption. Fintech companies handle significant personal and financial data. This includes customers’ transaction history, financial records, and much more. Cybercriminals increasingly attack fintechs for this reason.

  It is essential that anyone who works with sensitive data use end-to-end encryption to prevent leaks, tampering, and eavesdropping. Both personal and financial data should be encrypted using a strong and proven encryption algorithm.

• Advanced Authentication Methods. Secure authentication is also required, as this helps prevent unauthorized access. Utilizing some form of multifactor authentication (MFA) is a must.

  There are several ways to authenticate users. This includes using something they know (a password, PIN, etc.), something they have (hardware tokens or one-time codes), and something they are (such as biometric data).

  Multifactor authentication uses at least two of these methods. An example would be requiring a password along with facial recognition or a fingerprint.

• Fraud Prevention. When processing transactions, there should be ways to detect and prevent fraud. This can be done with artificial intelligence (AI). AI-driven fraud prevention looks at datasets in real time to identify and draw attention to unusual transactions.

  Users should be asked to verify their identity when attempting certain transactions to reduce the risk of fraud.

• Secure Development Practices. Fintech development requires specific development practices to be done right. If you are planning to hire a fintech software development company, you should make sure that they comply with industry standards and use secure coding practices.

  It’s also vital that the developer commits to secure storage and transmission of data. With data transmission, for example, it is strongly recommended that secure protocols like TLS/SSL be implemented.

Compliance:

Anyone working with sensitive financial information in Canada is required to comply with government and industry regulations. The fintech software development company that your businesses chooses to work with must understand this and comply with all regulatory requirements.

• Adherence to National and Provincial Regulations. There are several federal and provincial/territorial regulations in place for those working in technology and financial services. These regulations include privacy rules, security requirements, liability statements, and regulations aimed at protecting the national security and integrity of the financial system.

  For instance, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) regulates certain fintech services, focusing primarily on money laundering.

  The Canadian government has also proposed legislative amendments to the Financial Consumer Agency of Canada (FCAC) Act in connection with recent open banking changes. However, provinces and territories are also able to impose their own requirements.

  It is essential that any fintech development company you work with understands these regulations and complies with them. It’s also important to note that the regulations that apply to fintechs may not be the same as those aimed at traditional financial institutions, nor are the regulations the same in Canada as they are in other nations.

• Data Privacy and Protection. In Canada, fintechs find themselves held to many regulations that aren’t specific to the industry. These include the Personal Information Protection and Electronic Documents Act (PIPEDA) as well as consumer protection laws and general privacy and consumer protection laws.

  The country has also proposed the Consumer Privacy Protection Act (CPPA) to replace PIPEDA, though this has not yet come into effect.

• Audit and Reporting Capabilities. Any fintech company or organization offering financial services should conduct regular security audits to ensure that they are following all standards, regulations, and best practices that apply to them. You’ll need to make sure that any vendor or developer you are working with is able to provide you with audit results and reports to ensure compliance.

• Continuous Compliance Monitoring. Compliance isn’t something that you worry about once or that you pay attention to right before an audit. It is safer, more efficient, and more secure to work with a developer who supports continuous compliance monitoring. This goes beyond simple audits and ensures that compliance is up to date in real time.

Local Market Adaptation:

The Canadian fintech and financial services market is unique to the country. Before you hire a developer and begin work on a new fintech, it’s important to take some time to understand Canada’s fintech sector and financial services industry. This will help you recognize the market you are working in.

• Local Market Adaptation. The fintech ecosystem is growing in Canada, but not equally in all regions. For instance, growth is most found in larger urban areas such as the Greater Toronto Area as well as other major cities such as Montreal and Vancouver. This isn’t just true for the ecosystem, but also for a consumer adoption.

• Integration with Local Financial Institutions. The Canadian banking market is dominated by five big banks (Royal Bank of Canada, The Bank of Montreal, Canadian Imperial Bank of Commerce, Scotiabank, and Toronto-Dominion Bank). Therefore, any fintech that wants to work in Canada needs to properly integrate with these institutions. Recent open banking efforts are aimed at making this easier, but it’s still necessary to ensure that the fintech developer you work with can integrate effectively with these institutions.

• Understanding Consumer Behavior. According to Environics Research, about 25% of Canadian adults are what they would call “Enthusiastic Experimenters.” These people are more likely to embrace new technologies such as fintech applications. An additional 33% are “Adaptive Achievers” who are more cautious than the prior group, but still show enthusiasm for new technology.

  “Anxious Traditionalists” make up another 29%. This group is slow to adapt to new technology but will take the leap once it becomes mainstream. Members of this cohort tend to be slightly older and are more focused on security than convenience or cost-savings.

  The remaining 13% of people are classified as “Reserved Skeptics.” They need more reassurance before trusting new technologies.

  From these numbers, it shows that most Canadians (around 58%) are willing to try new technologies such as fintech applications while another 29% would be willing once the technology became commonplace. This shows that there is plenty of opportunity for fintechs to grow in Canada.

• Mobile and Digital Wallets. One area of Canada’s fintech sector that has seen significant adoption is the use of mobile and digital wallets. At least 51% of Canadians have made a mobile payment by tapping their phone against a terminal using a mobile wallet. By analyzing these apps, and how Canadians use them, fintechs can figure out which sort of technologies are more likely to be accepted by the population.

Steps to Find the Right Fintech Software Company in Canada

Picking a fintech software development company involves work and research, but it doesn’t have to be an impossible or overwhelming undertaking.

By following a step-by-step process, you can make the right choice for your organization.

Research and evaluate potential companies

• Look at several providers and developers. Don’t just agree to work with the company that makes the first sales call or the comes up first in search results. Research various developers of various instead. Not only will this help you compare their offerings, but it will help you get a good feel of the industry as well.

Assess the company's tech expertise

• How long has the developer been in business? What projects have their worked on in the past? What is their training? Their experience and level of expertise matters.

Check references and case studies

• Most developers should be able to provide you with references or case studies so you can see their earlier work. This will give you a good idea of what they are capable of and help you determine if they’re able to do the work you’re asking for.

Investigate pricing models

• Of course, any business decision your company makes must include budgetary considerations. Some developers will offer a license-based or fee-based pricing model, while others will align their price with your usage. Others will charge per-employee working on your project or per-month, while some will operate on a take-rate basis, where they collect a percentage off each transaction.

• What works best for your business will depend on where your company is positioned currently and how you will use the software.

• Not only is important to understand a developer’s pricing model, but you could compare the estimated cost with their competitors. The goal here isn’t necessarily to find the cheapest option, but to determine which developer offers the greatest value.

Know their communication methods

• Open communication with the fintech developer is important and every business communicates in its own way. Some will prefer in-person communication or virtual meetings, while others will operate primarily through text and email. They’ll also offer different technical support and troubleshooting options. As with all the other factors, it’s important to choose a developer that works best with your business preferences and position.

Never forget about the needs of your business. If you’re looking at several different developers working in Canada’s fintech sector, compare them based on what matters most to you. For instance, your top priority may be working with an experienced company, while another business may care more about price. Figure out which factors mean most to your business and use this information to guide you.

Making the Right Choice for Your Business

Canada’s fintech sector is on the upswing and prime to grow, especially due to recent open banking changes. If you are hoping to take advantage of the growth of fintech in Canada, you’ll want to make sure you make the right choice.

In addition to the factors mentioned above, you should consider a developer’s capacity before you agree to work with them. Your project will likely require a team of developers, engineers, and IT specialists

By reviewing several developers of varied sizes and who work differently, you can choose the option that is best for your business and start work on becoming the next successful fintech in Canada. Looking to develop a fintech solution? Contact us to discuss.