2020 Wrap Up in Canadian Lending

2020 has been a year marked with incredible resilience, recovery and innovation. 

Though many industries played vital roles supporting Canada’s businesses and citizens through COVID, the lending industry deserves special recognition. This year lenders took extraordinary steps to support Canadian families and entrepreneurs. Many instituted relief programs, cut rates, and worked with all levels of government to ensure that those in need would still be able to access credit. 

“Since COVID began, we have had to adapt and pivot our business in more ways than we could have ever imagined. From leveraging digital technology for our customers, to working from home for our support center, to augmenting our credit and underwriting practices, change and COVID-19 have been synonymous. What hasn’t changed however, has been our unwavering commitment to our employees and our customers.” said Jason Mullins, CEO of goeasy.

 

A new fintech normal

COVID has also been a period of immense innovation in Canada. Forced to digitize, lenders and borrowers have embraced fintech, leading to an increase in financial inclusion and financial literacy across the country. 

What is even more remarkable is the number of new firms and products launched during this period:

  • Loop, a builder of credit and payment products for e-commerce sellers opened its doors.
  • Lendle, an interest free credit provider rolled out in Canada.
  • Moves Financial introduced credit products designed for gig workers.
  • Moselle, a trade finance platform stepped into the mix.
  • VendorLender launched to bring buy-now-pay-later to equipment dealers.

Seeing increased financial stress amongst its clients, Canadian lender Marble Financial quickly responded by launching new products to meet the growing gaps in financial inclusion and financial literacy. “Our product adaptations included our credit building software, a new personal finance platform, and an entire financial education program to improve customer credit health” said CEO Karim Nanji.

OnDeck Canada, one of the country’s leading small business lenders launched a PPE loan in August to help small businesses reopen after lockdown with confidence and in full safety. Every financing application that came in to OnDeck was adjudicated and offered a separate financing amount up to $5K on top of what they were already approved for so that they could stock up on whatever PPE equipment was necessary for their business (masks, cleaning supplies, plexi, hand sanitizer, etc).

2020 was also a breakout year for fintech lending growth in Canada:

  • SMB lenders OnDeck & Thinking Capital forged deep partnerships across the credit union industry.
  • PayBright was acquired by Affirm in a $340 million transaction.
  • Refresh Financial was acquired by Borrowell. 
  • SNAP Financial & Dealnet were both acquired by SimplyGroup.

We expect to see further investment, new market entrants and increases in sector volumes in the coming quarters. 

 

Outlooks on the horizon

Looking ahead to 2021 lenders are bullish on a strong economic recovery and continued investment into the burgeoning technology sector. But above all, the primary focus of lenders is guaranteeing the health and safety of their workforce. 

“Our main focus is ensuring that our employees continue to thrive. During the 1st wave of the pandemic we opted to shift to remote work immediately in order to best protect the health and safety of our team members. While it’s great that we were able make the transition to remote work so seamlessly, it’s important that we not neglect the effects of this and the pandemic on our mental health over a prolonged period of time” said Neil Wechsler, CEO of OnDeck Canada.

The COVID pandemic accelerated the adoption of digital tools in financial services by at least 3 to 5 years – and the shift to digital will continue long after a vaccine becomes available. We expect lending to continue to be Canada’s driving force in fintech innovation, financial inclusion and financial literacy in 2021 and beyond.

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