Several of Quebec’s most influential financial institutions have teamed up to invest in a financial-technology startup aiming to bridge the gap between established banks and digital upstarts.
Montreal-based Flinks has raised a modest $1.75-million in new funding, but it is the pedigree of its main backers that stands out. Leading the way are National Bank of Canada, the country’s sixth-largest lender, and Luge Capital, a new Canadian venture-capital fund supported, in turn, by financial sector heavyweights including Caisse de dépôt et placement du Québec and Desjardins Group.
Founded only two years ago, Flinks’ core business is a platform that allows financial technology companies − “fintechs” − and other software providers to connect to financial institutions and tap their customer data securely. Flinks already has agreements with Canada’s six biggest banks, Desjardins and 13 other financial firms to access and share customer data. And it counts online roboadviser Wealthsimple and Alberta’s government-owned bank, ATB Financial, among its 150-plus clients.
“For Flinks, doing this round was really about getting the right partners around the table,” chief executive officer Yves-Gabriel Leboeuf said.
This is the first investment by Luge, which launched in June after raising $75-million from the Caisse and Desjardins, as well as Sun Life Financial Inc., the FTQ Solidarity Fund and La Capitale. Meanwhile, National Bank has now invested a total of $20-million in nine fintechs.
Four other firms also participated in the Flinks funding round: Innostart Capital, Panache, iNovia Capital and Conconi Growth Partners.
By serving as a trusted link to exchange client data, Flinks hopes to help smooth the way toward open banking − a movement to make it easier for customers to choose to share their financial information with fintechs, but also potentially to switch banks or lenders, which could spur new competition in financial services.
For now, the powerful group backing Flinks is dipping a cautious toe into open banking, which shows signs of catching on in Europe but has gained less traction in Canada. “This is definitely a move in that direction,” said Philippe Daoust, National Bank’s managing director, venture. “And our belief at National Bank is that such an opening is going to happen in Canada. It’s just a question of timing.”
With its funding, Flinks is developing a new product by applying artificial intelligence to anonymous client data drawn from financial institutions and analyzing a customer’s financial behaviour to gauge whether they’re creditworthy − a potential competitor to traditional credit scores.