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Tiff Macklem is dean of the Rotman School of Management, University of Toronto, and former senior deputy governor of the Bank of Canada. Eric Lamarre and Miklos Dietz are managing partner and director of McKinsey & Co.'s Canadian practice.

The financial technology sector comprises more than 12,000 companies globally, each aiming to digitize some aspect of the financial-services industry. Fintech companies are increasingly concentrating in a few key geographic hubs, and competition is fierce to attract these fast-growing startups.

This sector's economic growth potential is huge. Global financing for fintech companies has increased tenfold since 2011, reaching $20-billion (U.S.) in 2015. The top 18 fintech companies have a combined valuation of more than $50-billion and are responsible for creating thousands of high-quality jobs. It's little wonder that technology clusters around the world are eager to compete in this sector.

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A number of critical advantages lead us to believe that Toronto (and Canada more broadly) has the potential to become the leading global fintech hub.

First, the Greater Toronto Area is already a major player in the financial-services space. There are more financial institutions with a market cap over $50-billion in the GTA than there are in New York or London, which is critical for the nearly 50 per cent of fintech companies that focus on business-to-business sales. Toronto is an important and highly concentrated customer base.

Second, the GTA's numerous banking and insurance executives are important partners for fintech companies. On the one hand, established banks (and their service providers) offer much-needed expertise on regulation, risk management, compliance and other key areas. On the other hand, banks and insurance companies hire thousands of engineers and coders to digitize their operations, providing critical training in business and commercialization. These rich commercial and talent exchanges could be a key source of cluster strength.

Third, Canada's financial-services landscape (banking, insurance and institutional investing) is relatively concentrated. This matters for customer adoption: Canadian companies can more easily adopt new standards in payments, cybersecurity or electronic authentication. Alignment on standards reduces an important source of uncertainty for fintech developers and helps Canadian startups scale quickly. Canada's quick adoption of tap-and-pay technology is one small example.

Fourth, Canada has a core structural advantage in its three vibrant technology hubs: Toronto-Waterloo, Vancouver, and Montreal. These clusters are highly attractive to foreign talent. According to a study by The Economist, Canada is home to three of the world's top 10 most liveable cities. Our advantage goes beyond our world-class education system. Millennials are also attracted to our rich culture, security, diversity and cultural tolerance.

With all of these advantages, where do we stand? Are we capitalizing on this opportunity?

More than 100 fintech companies in Canada are penetrating sectors like retail payments and e-commerce (Shopify and Wagepoint), consumer lending (Borrowell), investment management (Wealthsimple) and even market analytics (Market IQ). Collectively, these companies have attracted more than $1-billion in funding since 2010. These early successes could start the flywheel of mentorship and coaching that is so critical to cluster growth.

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But the world isn't standing still, and our competition is unusually broad. In addition to Silicon Valley (already a powerhouse in technology), dozens of other clusters are competing for fintech talent and capital. London, New York and Singapore have similar strengths in the financial-services sector, but many Western European cities (such as Stockholm and Amsterdam) have also entered the fray. Perhaps the most underestimated competitors are those in emerging markets. Hong Kong, Shanghai and Istanbul have the advantage of young and tech-savvy customers with tremendous openness for integrated ecosystems.

We have a set of very attractive conditions to create a successful fintech cluster in Canada. We can capitalize on this global opportunity or watch fintechs gravitate to our competitors. What should we do? The key ingredients of a leading fintech cluster are world-class innovation talent, management expertise to guide visionary founders, capital that is prepared to move quickly in scale and demanding customers who are sophisticated in their understanding of technology and see business procurement as a source of innovation.

There are many potential ways to develop these ingredients. We could scale up university programs in key areas like data analytics, digital marketing, customer experience design, software engineering and IT architecture. We could use these programs to collect data for fintechs to use when developing and testing products. We could combine these programs with internships and work visas to help attract the best talent from around the world.

We could build fintech accelerators that combine mentorship from successful fintech entrepreneurs with support from angel and venture-capital investors. We could create specialized fintech VC funds co-sponsored by institutional investors and provincial governments and run by professional venture capitalists.

We could accelerate connectivity between fintech startups and sophisticated customers at large bank and life-insurance headquarters. We could sponsor large-scale fintech hackathons or launch global fintech competitions. We could actively recruit high-potential fintech startups from around the world. We are already doing some of these things, but we can and should do more.

It is time for government, the financial-services industry, universities and the rest of us excited by technology and financial services to come together and make this happen. Canada has a real shot at becoming the leading global fintech hub.

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