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Big bank CEOs see fintech threat ‘diminishing’ despite pandemic

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Shopify provides loans and processes payments, qualifying the Ottawa-based e-commerce giant as one of the growing number of tech firms that have in recent years been encroaching on the financial-services turf the banks have traditionally owned.

McKay’s comments, however, suggest that at least some of Canada’s biggest banks are feeling pretty sure they can stare down technology-driven challengers, even as the coronavirus pandemic has prompted more consumers and businesses to go digital.

McKay particularly took aim at “monoline” financial-technology companies that he said may use price discounts to try to attract and acquire customers, hoping somewhere in the future those customers can be sold on another product or service.

“Those competitors are diminishing in their threat level,” McKay said during the Scotiabank Financials Summit this week. “And you’re seeing a number get into trouble in Europe, where investors aren’t willing to continue to fund losses against that business model.”

You’re seeing a number (of competitors) get into trouble in Europe, where investors aren’t willing to continue to fund losses

RBC CEO Dave McKay

Bank of Montreal CEO Darryl White had a similar take on monoline fintechs, which may have a good product but can’t fund themselves as cheaply as a big bank can.

That kind of company “is really a diminished challenge for us today relative to what it was a while ago,” White said during the Scotiabank conference.

“Because we’ve got a low cost of capital, we’ve got lots of customers and we’re able to develop some of those products ourselves, or we’re able to develop it with some of our fintech partners,” the BMO CEO added.

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