Canadian banks are building a digital identity tool

Several major Canadian banks are building a solution to the digital identity dilemma: Legally accepted physical IDs and passports supposedly show that we are who we say we are in the physical world, but don’t do the same in the digital world.

Bank of Montreal, CIBC, Royal Bank of Canada, Scotiabank, TD Bank and credit union network Desjardins are working with SecureKey, an authentication provider in which they collectively invested $27 million in October, and Hyperledger’s blockchain fabric, built with IBM, to create a way for consumers to verify their personally identifiable information for services like new bank accounts, driver’s licenses or other utilities.

When signing up for a new service or utility, customers will receive an alert through a mobile app they’ll soon be able to download. The alert will notify them that the utility provider — a cell phone network, for example — needs to verify certain information like the customer’s name, address, date of birth and social security number and will access it through their bank. The customer would approve by biometrical authenticating on his or her phone and the bank would transfer that data to allow the customer to open the account.

“What’s different about this is it’s very, very private,” said Chuck Hounsell, a senior vice president in payments at TD Bank . “We’re leveraging banks’ trusted relationship and authentication process. It’s not just the bank providing credentials, it’s enabling a system where credentials that can help you get things done in your life are going to be enabled for the benefit of the customer and just speed up commerce in general.”

IBM announced the project Monday, saying it is still in test phase and will become available later in 2017.

Digital identity poses a big problem because what the government and highly regulated financial institutions like banks can legally accept as identification isn’t really in keeping with how people actually identify or what their digital footprints say about them – billing addresses may not match an old address on a government issued ID card, someone’s current salary and spending patterns may clash with his or her credit score. Identity is different every person, and every digital interaction becomes a data point that says more about who someone is than a piece of paper with a headshot.

In financial services, however, there are Know Your Customer and anti money laundering rules that dictate what a bank can accept as identification.

“Financial transactions are not permitted to have multiple identities — that’s normally seen as fraud,” said Steven Murdoch, innovation security architect at data security company VASCO. “In other modes of life other identities are perfectly applicable, that’s why LinkedIn and Facebook exist: people have a work identity and a personal identity.”

The self-identifying process would always be free to the consumer, said SecureKey CEO Greg Wolfond. Each of the organizations on the network has a number of different data sharing contracts with various companies, and none would ever request more of the customer than what they need – if you’re trying to rent an apartment, for example, you should only have to authorize your name, address, credit score and background check.

“We’re creating a frictionless, you-are-you experience that also doesn’t let the parties where the data resides know where you’re sharing it,” Wolfond said. “You can prove who you are to a clinic but not let the provider of the data know who you are.”

Oh, Canada: What you need to know about Canadian fintech

Canadians have been having a lot of fun with the upcoming US elections. Brian Calvert, a Canadian actor and comedian, has announced Canada’s “canadacy” for president (he did the same thing back in 2012), while this video from rebel media entertains – and summarily quashes – the idea that US citizens will be fleeing to Canada in droves if Donald Trump is elected.

It does seem unlikely that Americans will pick up en masse and move to Canada, if only because Canada hasn’t actually invited them. However, for finance and fintech professionals contemplating the big move up North come November, here’s what you need to know about Canada’s emerging fintech scene. Just in case.

Canadian marketplace lending

Marketplace lending in Canada is still in its infancy, with only several major players. The leader of the pack is Borrowell, which has processed over $500 million in loan applications from thousands of Canadians since its launch in March 2015. A $6.4M investment round in Feb 2016 brings total funds raised by the company to $11.8M.

Trailing far behind in loan stats is Lendful, which since its launch in September 2015, has processed only $20M in loans. Nevertheless, Lendful received a powerful boost in February 2016, when Canada’s Alterna Bank invested $15M in the startup. Both Borrowell and Lendful offer up to $35,000 in personal loans, with similar rates. A third marketplace lender, GroupLend, transitioned from marketplace to online lending and now goes by the name “Grow”.

Canadian SMBs have their own niche marketplace lenders: Toronto-based FundThrough, launched in 2014, reached a milestone $30M in loans to SMBs in March 2016.  However, as of March 1st 2016, the second marketplace lender for SMBs in Canada, Lending Loop, has had to deny all new loan requests while it sorts out whether its model complies with Canadian lending regulations.

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Lending Loop announces that it’s scaling down operations

Mobile banking in Canada

The Canadian Bankers Association thinks that online and mobile banking is where Canada is at, citing persuasive statistics: 55% of adult Canadians, now use the internet as their main means of banking, and 31% reported using mobile banking over the past year. This is pretty much in line with mobile banking trends in the US, where 51% of adults bank online, and 32% use mobile banking. All of the banks in Canada’s “Big Five” – Royal Bank of Canada, TD Bank, Bank of Nova Scotia, Bank of Montreal, and the Canadian Imperial Bank of Commerce – have mobile banking options.

Canadian payments industry

Mobile payments in Canada are gaining traction, with 75% of retailers in Canada offering contactless payments and 10% user adoption rates that are increasing by 1% a month. If anyone is winning mobile payments in Canada, its Apple Pay – most of the big banks in Canada either support the platform or are in the process of developing support.

Virtual currencies in Canada

Canada was an early groupie of virtual currencies. In fact, the Royal Canadian Mint launched its own virtual currency, MintChip, back in 2011. Although MintChip has since been sold to a start-up, the government is still following the sector closely after having introduced regulations for virtual currencies back in 2014. Canadians don’t seem worried about stricter bitcoin laws: the number of bitcoin transactions in the country doubled in 2015.

Canadian insurtech

Top Canadian insurance companies (Manulife Financial, Power Financial, Sun Life Financial) have yet to make the big leap to insurance technology. Maybe a conference facilitated by Insurance-Canada will convince them that it’s time.


Canada is home to at least 5 major roboadvisors. While Bank of Montreal has developed its own in-house roboadvisor, the other significant players are all independents. However, more Canadian banks should be developing their own roboadvisors, as young Canadian investors increasingly opt for the low-cost online investment managers.

Photo credit: Brandon Giesbrecht via Visual hunt / CC BY