Winter 2016 • volume 4 • issue 4 | www.canadianequipmentfinance.com
Risk Management +New Technology Protecting the future of your business How to prepare for a data breach FinTechs: Friend, foe or the future? PM40050803
KEEP UP TO DATE AND INFORMED BY VISITING OUR WEBSITE DAILY. Canadian Equipment Finance magazine posts news, insights, updates and breaking stories as they happen. Stay Informed. Keep Ahead.
Visit us online at www.canadianequipmentfinance.com Canadian Equipment Finance is a Lloydmedia, Inc publication.
Lloydmedia also publishes Payments Business magazine, Canadian Treasurer magazine, Financial Operations magazine, Direct Marketing magazine and Contact Management magazine.
contents Winter 2016 Volume 4 Number 4 Publisher and Editor-in-Chief Steve Lloyd steve@canadianequipmentfinance.com Managing Editor Sarah O’Connor sarah@canadianequipmentfinance.com Creative Direction / Production Jennifer O’Neill jennifer@canadianequipmentfinance.com Photographer Gary Tannyan Advertising Sales Mark Henry mark@canadianequipmentfinance.com For subscription, circulation and change of address information, contact
subscriptions@canadianequipmentfinance.com
Publications Mail Agreement No. 40050803 Return undeliverable Canadian addresses to:
Circulation Department 302-137 Main Street North Markham ON L3P 1Y2 t: 905.201.6600 • f: 905.201.6601 info@canadianequipmentfinance.com www.canadianequipmentfinance.com Subscriptions available for $40.00 year or $60.00 two years. ©2016 Lloydmedia Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Printed in Canada. Reprint permission requests to use materials published in Canadian Equipment Finance should be directed to the publisher.
Also Publishers of Payments Business www.paymentsbusiness.ca
NEWS »4 Risk Management
Canadian Treasurer www.canadiantreasurer.com
Make cyber security part of your focus, before it becomes your only focus »8
Contact Management www.contactmanagement.ca
The new normal
Direct Marketing www.dmn.ca
Reduce risks, streamline processes and eliminate costs with location analytics »12
Financial operations www.financialoperations.ca
How to prepare for a data breach »10
New Technology Lifting the fog around cloud computing »14 FinTechs: Friend, foe or the future? »16 The pulse of FinTech in Canada»18
your Business
How to fuel business growth with working capital »22
Made possible with the support of the Ontario Media Development Corporation Ontario Interactive Digital Media Tax Credit
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
3
News
Shifting political plates shake global asset and auto finance market LONDON -- So far, in 2016 the auto and asset finance industry has coped well with uncertainty. While forecasts have been trimmed during the year, they have not been cut so savagely as to threaten the sector’s recovery, but continued uncertainty seems likely to have an increasingly damaging effect on the outlook for the industry. At present, the election of Donald Trump in the U.S.; the UK’s decision to go for Brexit; continued concerns about the state of the economy in the EU and the upsurge during the year in terrorist attacks have created further uncertainty, which will continue to lower growth in the overall economy at least into quarter one of 2017, and this will be reflected in growth rates in the global asset and auto finance industry. These are the findings of the
latest global asset and auto finance survey published twice yearly by White Clarke Group which is available to download on their website. The report shows that finance companies are responding to changing customer attitudes towards usage rather than ownership with new offerings, such as mobility options in the auto finance sector. The industry is well placed to capitalize on these trends providing it invests in the technology and new skills required to thrive in a new digitally dominated world. Many lenders in the asset finance industry have successfully made the transition to a “new normal”, where economic shocks and political uncertainty have become part of business life. Lessors have responded by
keeping a firm control on costs, streamlining and upgrading operations and pushing forward with innovations. They have done much to get their own house in order, and rising volumes of new business in many key markets has shown that the new approach seems to be working. Strong growth has been recorded in parts of Eastern Europe, where a new consumer class is starting to lease vehicles and new business
ventures are looking for longterm funding. Despite setbacks in countries such as Brazil, the South American leasing market recorded 17 per cent growth in 2015. But as 2016 draws to a close, the issue now is how to ensure that external pressures, including tight new regulations and changes to accounting rules, do not undermine that progress.
To send press announcements, please direct them to Sarah O’Connor, Managing Editor, at sarah@canadianequipmentfinance.com
Fleet Complete, HUB International form strategic partnership TORONTO -- Fleet Complete, a global IoT company, specializing in connecting businesses with their fleet vehicles, mobile assets and in-field workers, and Hub International Limited (Hub), a leading global insurance brokerage, have announced that they are partnering to introduce a unique transportation risk management service for commercial fleet operators. The Fleet Complete solution provides HUB commercial transportation fleet clients in the United States access to a unique dashboard with insight into driver behavior—a significant factor affecting insurance costs and claims involving vehicle crashes. “We have been helping businesses run more efficient fleet operations for over 16 years,” said Tony Lourakis, CEO of Fleet Complete, “Partnering with Hub International, an expert in building comprehensive insurance and risk
4
solutions for the transportation industry, makes a lot of sense for the value we can bring to our customers.” The dashboard will provide fleet operators a view of their drivers’ onroad conduct and habits, including harsh braking, rapid acceleration, and excessive speeding—key safety risk indicators that impact insurance premiums and claims. The data is seamlessly shared with HUB to evaluate risk and liabilities. The system includes communication, vehicle diagnostics, and electronic logging capabilities as well as traditional vehicle tracking and safe driving data communications. “HUB clients can now seamlessly share their data with our safety and insurance professionals so that we can work closely and quickly to identify fleet safety trends and at-risk drivers,” said Steven Bojan, vice president – transportation practice leader, HUB Risk Services.
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
Based in Toronto, Fleet Complete is a global IoT provider of mission critical fleet, asset and mobile workforce management solutions. For over 16 years, Fleet Complete has been providing dispatching, fleet tracking and mobile resource management solutions to more than 8,000 businesses worldwide. The company maintains key distribution partnerships with AT&T in the U.S., TELUS in Canada and Telstra in Australia, remaining one of the fastestgrowing companies in North America that has won numerous awards for innovation and growth since its inception in 2000 (as Complete Innovations Inc.). Headquartered in Chicago, IL, Hub International Limited is a leading global insurance brokerage that provides property and casualty, life and health, employee benefits, investment and risk management products and services from offices located throughout North America.
News
ICBA to court: Reject NCUA motion to dismiss commercial lending lawsuit Washington, D.C. -- The Independent Community Bankers of America (ICBA) reasserted its challenge to the National Credit Union Administration’s unlawful commercial lending rule with a vigorous response to the agency’s motion to dismiss the case and evade judicial review. In its response, ICBA called on the federal court reviewing the NCUA’s dubious final rule to reject the agency’s motion to dismiss the case. “ICBA reaffirms its pledge to vigorously challenge the NCUA’s commercial lending rule following the agency’s motion to dismiss ICBA’s lawsuit,” ICBA President and CEO Camden R.
Fine said. “Community banks, consumers and the financial system at large are threatened by the NCUA’s rule allowing tax-exempt credit unions to exceed congressional limits on commercial lending activity. Contrary to NCUA’s claim that ICBA lacks standing to bring the suit, ICBA is in the best position to do so on behalf of its members.” In moving to dismiss ICBA’s complaint, the NCUA has mischaracterized the case, which is both timely and ripe for resolution, ICBA said. This brief demonstrates ICBA’s standing in the case by outlining the tangible financial harm to community banks and local
communities caused by the NCUA’s flawed rule. In fact, as the brief shows, the rule has already negatively affected the value of ICBA members and other community banks. ICBA filed as exhibits to its brief declarations from several community bankers and its executive vice president and senior regulatory counsel, Christopher Cole, describing how widespread the injury is to ICBA members. ICBA’s lawsuit challenges the agency’s unlawful rule issued earlier this year allowing credit unions to exclude nonmember commercial loans or participations from their calculations of the member
business loan cap. If allowed to stand, the NCUA’s final rule would allow tax-exempt credit unions to exceed limitations on commercial lending activity established by Congress while relaxing regulatory oversight— putting consumers and the financial system at risk. The lawsuit, Independent Community Bankers of America v. National Credit Union Administration, was filed in the U.S. District Court of the Eastern District of Virginia in September. The ICBA response, the declaration of Christopher Cole with exhibits and the original legal compliant are available at icba.org.
LEAS
e
T EAM
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
5
News
CHP Consulting rebrands as Alfa Launches new website: alfasystems.com CHP Consulting, the makers of Alfa Systems, the number one software choice for asset finance companies worldwide, has announced it is to rebrand. The company will now be known as Alfa, with an exciting new website alfasystems.com launched to accompany the new name. Andrew Denton, CEO of Alfa, explains: “This change will present a more progressive image, unify the dual brands of Alfa Systems and CHP Consulting, and give us a brand that better describes what we do. We are one company, with one product, and one brand—and we want that to be clear in our market presence. We’re excited about the opportunities it will give us going forward.” The rebrand was officially announced on Thursday 24th November 2016 at the Leasing Life Conference and Awards in Paris.
Visit our website at www.canadianequipmentfinance.com
6
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
.com
Axis Capital, Inc. unveils rebrand as AMUR Equipment Finance GRAND ISLAND, Neb. -- Axis Capital, Inc. (Axis), one of North America’s leading commercial equipment finance companies, has unveiled a new company name, logo and website—rebranding as Amur Equipment Finance (AmurEF). As part of the company’s 20th anniversary celebration, the corporate rebranding initiative reflects Amur Equipment Finance’s vision for the future and affirms the core values which customers have grown to appreciate and trust. “Reflecting the characteristics of the distinctive Amur leopard in our new logo, the Amur Equipment Finance brand now showcases our best qualities as a business,” said AmurEF’s Marketing Director Jacklynn Manning. “Our new brand represents the curiosity to learn about our customer’s specific needs, the agility to grow and change as their requirements change, and most importantly, the tenacity to do what it takes to serve our customers.” Manning continued, “The rebrand to Amur Equipment Finance coincides with a period of strong growth in our business… it epitomizes all that we stand for, all that we can achieve together while reinforcing our overarching mission.” The rebrand to Amur Equipment Finance includes a newly designed, robust website that provides a customer-centric experience. Full product offerings are now available to site visitors, including vendor and origination program information along with customer video testimonials and success stories. Specialized tools, such as a Section 179 Calculator, are available to assist customers with understanding and accessing the full range of AmurEF’s equipment finance products. Malia K. Du Mont, AmurEF’s co-president and COO, stated “Our new name appropriately reveals our long-standing membership in the global Amur family of companies.” She added, “It’s an affiliation that provides us and ultimately our customers with world-class financial expertise and products.” AmurEF employs over 90 professionals across the United States, with key management, credit processing, underwriting, servicing, and finance functions located in its headquarters in Grand Island, Nebraska. AmurEF also has sales offices in Massachusetts, California, Texas, and Pennsylvania, with additional satellite offices located across the country. AmurEF directly serves business owners and channel vendor partners that service an array of equipment-intensive industries including: transportation, construction, commercial and industrial equipment, food service, packaging, and printing. The company offers customized finance programs, including some with instant credit decisions and same-day funding for its business customers and vendor partners. With a dedicated support team on staff, AmurEF handles equipment financing needs ranging from as little as $10,000 to over $2 million. AmurEF has maintained a Better Business Bureau rating of A+ for 20 years.
News
Steven Hudson, CEO of Element Financial, named EY Entrepreneur Of The Year in Ontario TORONTO -- Steven Hudson, chief executive officer of Element Financial Corporation, a North American leader in fleet management and equipment finance, is this year’s Entrepreneur Of The Year Ontario winner. “Steven’s originality and innovation shines through in all he does,” says Paula Smith, EY partner and Entrepreneur Of The Year Ontario co-director. “His entrepreneurial vision helped him navigate his business through tough economic times—by completing daring strategic acquisitions and introducing cutting-edge technology capabilities in the fleet management business.” In 2011, when the economy was still reeling from the 2008 financial crisis, Steven saw an opportunity. While it was possible for big corporations to borrow money, smaller equipment and vehicle dealers had a hard time finding the financing for their needs. To fill the gap, Element Financial was born. Since 2011, it’s grown its assets from $20 million to $25 billion today. With more than three million vehicles under management in nearly 50 countries around the world, Element is a leader in fleet management. Steven shook up this industry with a focus on high-quality data that can help improve efficiency and save costs. In 2014, he made two strategic acquisitions and invested the cost savings into leading fleet management technologies, including telematics, to offer new services to customers and set new industry standards. Earlier this month, Element Financial Corporation separated into two standalone, market-leading companies—Element Fleet Management Corp. and ECN Capital Corp. The restructuring will maximize the performance of both sides of the original business, for the benefit of all shareholders. Steven has since taken on the role of CEO, ECN Capital, which will operate the company’s commercial, vendor, rail and aviation finance businesses. Steven is a devoted philanthropist to boot. In 2012, he started a corporate program that commits 1.5 per cent of the company’s pre-tax profit to community-focused charitable causes. As an example, Element has been a strong supporter of St. Michael’s Hospital in Toronto and the Children’s Aid Foundation. “Economic challenges inspired Steven to ask better questions and offer much-needed services,” says Elena Doucette, EY partner and Entrepreneur Of The Year Ontario codirector. “As a leader, he inspires loyalty in those around him, consistently demonstrates his ability to innovate and makes a point of giving back to the community. We’re pleased to honour Steven with this award.”
Quality Leasing selects LeaseTeam OMAHA, Neb. -- LeaseTeam, the trusted leader in lease and loan management solutions for the equipment finance industry, is pleased to announce that Quality Leasing Co., Inc. (Indianapolis, IN) has selected ASPIRE as its end-to-end lease and loan management solution. “Because of their well-known and respected industry reputation, LeaseTeam and ASPIRE were a natural choice for Quality Leasing,” said G. Paul Fogle, general manager at Quality Leasing. “ASPIRE will help streamline our processes, our marketing efforts, and our performance tracking; improving our overall efficiency. Most importantly, ASPIRE will contribute by shortening the application to close time frame, allowing us to provide a better customer experience—which is our number one priority.” “We are excited to be working with such an experienced team at Quality Leasing,” said Jeff Van Slyke, president at LeaseTeam. “It is always a pleasure to work with a company whose customer’s mean as much to them as ours do to us. Partnering with innovative companies provides an opportunity for growth for both parties.”
Canadian Equipment Finance November-December issue JDR Solutions ad ¼ square (3.625” x 4.75”)
WORKLOAD TOO GREAT? IT’S TIME TO GO SHOPPING. You originate AND service leases. That’s a lot to do. If you think you can’t buy a break, think again. We’re your one-stop shop for portfolio management, Software as a Service, custom Web portals and professional services. Top-notch expertise that won’t leave you with sticker shock. The help you need is in stock. Contact us today.
jdrsolutions.com
855-863-7676 #ServiceSupportSuccess
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
7
Risk Management
Make cyber security part of your focus, before it becomes your only focus
By Roxana Safranek
ustomer expectations are at an all-time high and, as a result, providing a good customer experience has become a necessity to remain competitive in the marketplace. As businesses fight to stay competitive and introduce technology to be more mobile, device independent and operationally efficient their risk exposure for a security breach grows exponentially. To compound the problem, increased adoption of web and cloud-based applications adds a whole other level of exposure. There is a trade-off between innovative technology and risk levels, and no company is immune to those risks. There also isn’t a one-size-fitsall solution. Individual companies will have individual needs, risks and could be targeted by very different groups. The reality of this makes it a very complicated challenge to address.
C
8
So what can companies do to better position themselves from security threats? The first step is to understand where they are most vulnerable by identifying the most likely sources of a security breach.
Employees Internal threats can be one of the biggest vulnerabilities a company may face. A disgruntled employee, especially a higher-level or IT employee, who has security access and administrative rights to networks and data centres can inflict a tremendous amount of damage to a company. The best way to minimize this threat is to implement an internal audit process that identifies and records any privileged account credentials and terminates any accounts of employees who are no longer with the company or in need of their credentials. Once that process is implemented, the next step should be to monitor the activity of the employees with privileged credentials.
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
An infrastructure should be put in place to track and log this activity and alerts should be set up to notify the appropriate people of any suspicious or malicious activity. Implementing this process could help avoid a potential breach, but at the very least it should minimize the damage. Careless employees can be as dangerous as a disgruntled one. Employees who are not adequately trained on security risks pose a big problem. If employees aren’t required to have a strong password, are allowed to visit unauthorized websites, click suspicious email links or open attachments from unknown sources they pose a tremendous security risk for a company.
New technologies As companies invest in technologies, like mobile or social, their security exposure grows. Mobile, in particular, creates a big challenge for businesses because it creates a scenario where data is accessed outside of the enterprise.
Risk Management Social media also creates a big exposure. Both of these technologies blur the line between personal and business and, as a result, employees don’t always realize when sharing or receiving corporate information on a personal device that they may be inadvertently sharing sensitive information.
Outside hacks Businesses everywhere are being targeted by hackers. Size, type, location or revenue don’t factor in to who they choose to target. What they are looking for is an easy target. So what are the things that make a company an easy target? The most common threat comes from malware, which usually infiltrates the system when an employee clicks on an email link that is part of a scam or visits an untrustworthy website. The emails hackers use to trick employees into clicking a link or visiting a site (known as phishing emails) are very convincing and look authentic. Although this risk also falls under the employee risk category and needs to be addressed through education, it’s equally important to implement an anti-virus and security protection software for all devices and endpoints. This software will provide another layer of protection if an employee does click on a fraudulent link. Another vulnerability that makes businesses an easy target is having outdated systems, including operating systems and browsers. It’s very important to remain current with your operating system patches, and to be aware of any software or applications you are running that may fall into the unsupported category. Typically software providers publicize a date for any software they are going to stop supporting. This communication can be a good or a bad thing. It’s a good thing if customers pay attention and take the necessary steps to protect themselves. It can be a very bad thing if customers ignore the announcement. You can bet hackers are tracking these potential vulnerabilities and are looking for ways to exploit them as soon as they can.
Third-party vendors In today’s business climate it’s rare when
you come across a business that doesn’t contract with a third-party vendor on some level. Third-party vendors offer a multitude of upside and possibilities, but they also come with an enormous risk exposure. A security breech can result in the company losing or compromising vital business data, financial and regulatory penalties, a damaged reputation and ultimately a loss in business. To further add to the problem, managing the risk for an entity that is not directly part of your organization can be very difficult. To reduce this risk, you need to start by vetting your third-party vendors. No matter how long you’ve done business with a third-party vendor, or how much you trust them, it’s important to access their security standards and practices on an on-going basis. Make sure their standards, at a minimal, align with those of your organization, and that they regularly perform internal security audits and implement the latest software patches. You also need to ensure the vendor is performing regular data backups and that they have a redundancy plan in place to avoid interruptions or loss of data in the event of a hardware failure.
How to manage the risks Now that you have a better understanding of where security breaches are likely to originate from and how to mitigate those risks, the next question is what’s the best way to manage cyber risks from an enterprise level? The problem with this is there is no easy answer and because malware and hackers are constantly evolving, there isn’t a way to guarantee you will never experience a security breach. However, there are important steps you can put in place to minimize the risk. 1. First and foremost there has to be support from the executive management team. Without active sponsorship from the top, it’s almost impossible to put in place the security measures needed to adequately protect the company from a cyberbreach, and an even lesser chance that the risk management needs would be supported and improved on
an ongoing basis. 2. Once you have secured executive sponsorship, the next step should be to educate your employee base. Employees need to be informed on what and where the risks are and then trained on how to spot potential scams or phishing schemes. As part of this process, you will need to develop access control policies, ensuring that employees only have the privileges necessary to successfully do their jobs. The employees who have access to critical data also need to be trained on how to securely handle the data, and how to identify and respond to a cybersecurity incident. 3. The next important step is to ensure all of your network devices and firmware are regularly updated and that all patches and service packs are applied. 4. Lastly, invest in the technology and resources needed to protect and monitor your network. This includes investing in the hardware, software, and the right personnel to vigilantly monitor your systems, processes, and activities for potential risks or breaches. Do not make the mistake of confusing compliance with security. Just being compliant with privacy and security policies is not adequately protecting your company against a security breach. It’s also important to control, monitor, track, and record all system events and access to protected areas. This should include hosting critical assets in a secure environment. You might have heard the phrase, “failing to plan is planning to fail.” This phrase couldn’t be truer than when it’s referring to cyber security. Addressing cyber security risks shouldn’t be an occasional event kicked off by the latest security breach in the media; it has to be a component of your overall business plan that is always being evaluated. Roxana Safranek, director of marketing for LeaseTeam, has over 22 years of marketing and business development experience with 18 of those years being in the software industry. Roxana is responsible for marketing, communication and business development for LeaseTeam. LeaseTeam provides solutions that flexibly manage the entire lifecycle of equipment finance leases and loan, for an array of business types, portfolio and ticket sizes and financial products. (www.leaseteam.com).
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
9
Risk Management
The new normal How to prepare for a data breach By Ryan Wilson
hree words that most strike fear into the hearts of any IT worker and, increasingly, into the hearts of anyone in the c-suite of any organization: “We’ve been hacked.” Today the chance of a breach or hack is greater than ever—creating a unique challenge for any company, in nearly every industry. In the last year alone the increasing majority of Canadian organizations have seen an increase in the severity, sophistication and frequency of attacks on their business. Properly planning for an inevitable data breach is a critical consideration for many organizations when looking at business priorities. The numerous emerging threats and widespread outcomes of a breach can be overwhelming even before an incident happens—but nowhere near as overwhelming as dealing with the negative impact on reputation, customer retention, sales, share price and countless other business priorities that can be affected. Take, for example, the situation Yahoo! is currently facing. Shortly after Verizon agreed to purchase the long-time internet giant for U.S. $4.8 billion, news came to light that the organization had suffered one of the single largest data breaches of all time—losing customer records of more than a half-billion people, including names, email addresses and passwords. Beyond the considerable damage to its brand reputation, Yahoo! now stands to lose as much as $1 billion of that original $4.8 billion as Verizon considers its options to deal with the potential fall-out of its newest acquisition target. So what can companies do to effectively defend—and in the worst case scenario, manage—a potential breach/hack?
T
Prepare. Prepare. Prepare. It can be difficult to dedicate time to an issue that hasn’t already happened, but one of the biggest factors in successfully defending or managing a data breach is 10
being properly prepared. Dedicating the time to the creation of a thorough and detailed plan for a breach scenario can be the difference between effectively managing a breach or being caught offguard and unprepared. The reality is that IT departments face a grim reality each day, in terms of potential data breaches: to breach an organization, a hacker or bad actor only needs to get it right once. To protect a company, an IT department at an organization has to get it right each and every day. If and when a breach does happen, its impact extends far beyond IT and in to most other areas of the business. Additionally, the new Digital Privacy Act which was brought in to action in June of 2015 includes breach notification regulations coming into effect in 2017 that require companies to maintain a crisis communications plan in case of a data breach.
looking for confirmation and quotes about the breach? Communications needs to know yesterday. All of this is to say that while IT security may reside under the IT department on a normal day, data breaches make for anything but normal days and the sooner that all areas of the business potentially impacted by the breach are engaged in the response, the better. One best practice for all organizations to consider is to identity a data breach ‘go’ team. This team acts as the first contacts in each area of the business to be notified of any breach situation, in order to respond accordingly. By ensuring that there is someone identified in each area of the business that could be potentially impacted ahead of time, an organization is in a position to ensure that immediate attention is being paid from every department that will be affected.
Bring everyone to the table early
For years it was considered that customer financial information, things like bank account and credit card numbers, were the top target for hackers when attempting to steal information from an organization. But since 2014, a new and potentially even more damaging type of threat has emerged: organizational doxing. This type of breach has little to do with stealing financial data, and everything to do with acquiring and leaking sensitive and embarrassing information to harm an organization. Think about the hacks of Sony, Ashley Madison, Mossack Fonseca (Panama Papers) and the Democratic National Committee—in each instance customer financial records were, if included, a minimal target of the breaches. The goal was to acquire sensitive information like executive emails and corporate secrets to publicly embarrass each organization, as opposed to directly profit financially. But, while the hackers themselves won’t
While security responsibilities ultimately reside with an organization’s IT department, a data breach creates a ‘perfect storm’ across an organization— with nearly all departments impacted. The possible range of outcomes from a breach are numerous and will require attention from multiple departments, meaning that a large number of people need to be engaged immediately. For instance, if a breach were to occur and result in the loss of customer and employee data, not only would IT need to be involved, but numerous others. Were employee SIN numbers or payroll information stolen? HR needs to be involved immediately. Customer credit card information stolen? Customer care and finance need to be involved a.s.a.p. Potential class action lawsuits and regulatory fines stemming from claims of mismanaged data? You better believe legal needs to know pronto. Are the media
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
Consider all of the angles
Risk Management specifically profit, there will remain a very real cost to the affected organization, in terms of poor brand reputation, potential negative impacts to share price and possible fines and lawsuits brought on by regulators and affected parties. As the type of information that hackers target starts to shift, so too should the security priorities within an organization. Ensuring that securing all systems—both operational and financial—is a focus can help to reduce the ability of suffering a breach.
Whether your security operations are partially or completely managed by a partner, it’s important to remember that there’s no one single way to approach security—each organization has different needs. Because of this, it’s important to work with a partner that can customize a solution and approach to IT security to your specific operation not just from a technological standpoint, but from a
strategic one. Today, the reality is that when it comes to data breaches, the question isn’t so much “if” as it is “when.” The companies that stand to be most able to weather the inevitable storm will be the ones that plan thoroughly and invest early in both their security posture and response plans. Ryan Wilson is the chief technology officer, security at Scalar, Canada’s leading IT solutions provider, focused on security, infrastructure and cloud.
Budget accordingly The rule in security is that 15 per cent of an overall annual IT budget should be allocated towards security, yet many companies’ actual spend tends to be considerably less than that. While it can be difficult for some companies to justify added expenditures for a preventative measure that does not drive day-to-day revenue, the reality is that the typical company loses roughly $7 million annually to dealing with cyber attacks. Organizations need to look at IT security not as an overhead expense, but as a strategic investment in the operation— one that can save the organization millions of dollars each year.
Work with trusted experts No matter how advanced a company’s IT department is, odds are that the requirements of ensuring an entire operation is running smoothly day-in and day-out means that there is little time for in-house professionals to keep up with the myriad of training requirements and new threats needed to truly be ‘ahead of the game’ in IT security. In fact, our recent study with Ponemon Institute showed that insufficient numbers of in-house personnel, along with a lack of in-house expertise, were two of the primary challenges faced by Canadian organizations. That’s why working with trusted external partners can make all of the difference during a breach incidence. Many organizations—especially those that don’t have the resources to employ thousands in their IT departments (see: most)—need to rely on qualified experts and partners to ensure they are able to improve their security posture. canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
11
Risk Management
Reduce risks, streamline processes and eliminate costs with location analytics By Robert Szyngiel
or financial organizations engaging in transactions involving assets with physical locations, using the power of location analytics can provide significant business advantages. By integrating geospatial location and highly accurate addressing information in business decision processes and systems, new location intelligence technology is allowing businesses today to better analyze and visualize data in efficient and cost-effective ways In mortgage decision processes, for example, location analytics take into account accurate physical information about the property, including the address and property type as well as the surrounding neighborhood and environment, enabling that information to influence automated and manual decision making. The more detailed and exacting the location information, the more consumable and actionable the information becomes, leading to faster and better business decisions. Moreover, adding visualization to location-based data can be extremely valuable for identifying risks, trends and opportunities that aren’t obvious when dealing with data in tabular or raw formats such as identifying adjacent addresses in a flood plain versus a table highlighting addresses and postal codes. In fact, 2013 research by Aberdeen group found that managers in organizations using visual data discovery tools are 28 per cent more likely to find timely information than those who only used
F
12
managed reporting and dashboards. Additionally, the research found that 48 per cent of business intelligence users in organizations employing visual data discovery tools were able to find the information they needed without the help of IT staff all or most of the time.
Improving risk understanding with improved accuracy One important potential benefit of location analytics is reduced risk. Location analytics solutions typically use address scrubbing to try to eliminate confusion that can arise when a location can be identified in a number of different ways, as when the street a property is on can be referred to by different names (such as Highway 48 or Main Street). However, new location analytics solutions are going beyond address
among disparate parties in a propertybased lending system by giving them a common denominator in the form of a unique address ID to refer to a property. There is no possibility of an address mismatch, enhancing the decisionmaking process. In addition to improving accuracy, historical information can be tied to a unique geo-coded ID to enable betterinformed decision making. The ID helps to mitigate many risk factors, including: ◉◉ Accumulation risk (e.g. the percentage of multi-dwelling buildings that a company has insured); ◉◉ Environmental perils (was the property ever exposed to hazardous wastes?); and ◉◉ Catastrophic loss (is the property at risk for a natural disaster, such as a wildfire?).
Managers in organizations using visual data discovery tools are 28 per cent more likely to find timely information. scrubbing or validation and employing geo-coding to identify precise locations through geographic coordinates (latitude/longitude) with rooftop-level precision. The location is then assigned a unique identifier that eliminates the risks of misidentifying the property. This approach, for example, enhances the effectiveness of collaboration
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
Streamlining decision making and reducing expenses When standard address information is used, due diligence requires consulting multiple data sources to ensure that property information is not inconsistent, outdated or incompatible with other databases. Even within a single organization, disparate databases and
Risk Management administrative policies create silos that slow down communications and introduce the potential for human error, miscommunication and oversights. These potential barriers to quick decision making are dramatically reduced when location analytics is used to provide geo-coded unique IDs for properties under examination. In a home mortgage environment, for example, that speed trickles down to the home buyer, who receives their mortgage approval faster, resulting in an enhanced customer experience and loyalty. When data-driven location insights reduce a financial institution’s risk and increase efficiency, the end result is significant cost savings for that financial organization and its customers. Location analytics help streamline processes and reduce complexities that add time, expense and frustration in completing financial transactions involving property.
based transactions have. It can enhance collaboration among partners, such as mortgage lending, from loan origination through managing the portfolio of business and attendant risks. With the sheer number of sources of data that banks and other financial institutions must rely on in today’s environment, using location analytics to
reduce risk, streamline decision making and eliminate costs will continue to gain the attention of more and more organizations looking for an edge over the competition. Robert Szyngiel is the director of product management at DMTI Spatial. Szyngiel has 15 years of experience in the architecture, design and development of enterprise datasets for Canada. For more information, visit www.dmtispatial.com.
Dealing witth insurrance shouldn’t seem like eating broccoli.
What to look for in a location analytics solution There are a number of solutions on the market that offer intelligence about specific properties. However, true location analytics consists of two unique elements: ◉◉ A business ecosystem in which all vendors participate. This allows for streamlined and automated communications, which greatly helps improve service level agreements while reducing the need for manual intervention. It also allows for the most comprehensive assembly of data about physical assets, providing improved levels of risk analysis and mitigation, sales and marketing intelligence and financial decision making. ◉◉ A property identification method that is unique and driven by precise geospatial data. This resolves issues that may arise when different parties involved in a transaction use different property identification methods and creates one consistent property ID that significantly improves accuracy.
The bottom line Location analytics hold the potential to unlock the full value of data that financial companies engaged in property-
We love broccoli.
‘
Specialty Servings: SLV Gap Insurance • Residual Value Insurance • Revenue-Generating Programs
Get a taste of working with Great American to handle your equipment insurance needs. We’ll make it easy for you to: • Protect assets • Expedite funding • Earn additional income • Maintain a healthy portfolio
www.GAIG.com/EquipmentInsurance
To learn more, contact us at 866-676-5677 or equipmentinsurance@gaig.com
Canadian Branch Head Office Scotia Plaza, Suite 2100, 40 King Street West Toronto, ON M5H 3C2
Policies are underwritten by Great American Insurance Company – Canadian Branch, a foreign registered insurer in all Canadian provinces and territories. ©2015 Great American Insurance Company.
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
13
Technology
Lifting the fog around cloud computing By Doug Williams
ooner or later you’ll be computing in the cloud. Chances are you’re already doing it when you pay bills and order merchandise online or log onto social media sites. Eventually you’ll be in the cloud during your workday, too. Cloud computing, for the uninitiated, is the system of storing and accessing data and applications on servers that are owned and maintained by third-party vendors, usually in warehouse-size facilities called data centres. Renting space on a data centre server provides cost savings, greater security and increased accessibility compared to storing data on servers you privately own and maintain. The corporate world is discovering these benefits and moving to cloud environments in droves. A major business magazine estimates that 78 per cent of small and midsize companies in the United States will conduct business in the cloud by 2020—double the number that were doing so in 2015. There’s no reason to believe the same won’t hold true for equipment lessors in Canada. Our company, Indianapolis-based JDR Solutions Inc., has been in the cloud in
S
14
one form or another for our entire 15 years of existence. Currently we store account data for the equipment lessors we serve at multiple U.S. data centres operated by Expedient. We also have relationships with several international cloud service providers. When we began our search for a cloud service vendor we had certain criteria that had to be met. We spent considerable time researching vendors. What we learned, summarized here, could help your company before you sign a service agreement. Early on in our cloud vendor search we discovered there is no one-sizefits-all service model. Services vary in price, infrastructure, vendor-client arrangements, service territory, support and even customer experience. There is a lot to think about, and it can be intimidating. So where do you start? First, you need to understand and compare the types of clouds: private, public and hybrid. In a private cloud environment a client’s data is kept on hardware dedicated solely to that client. Servers can be located at the provider’s facility or at the client’s location. Private cloud service often comes at a higher cost because of the exclusive arrangement between the vendor and client.
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
A public cloud arrangement is the most common and consists of a client sharing secured space with other clients on a cloud provider’s servers. The third cloud type, hybrid, combines aspects of both private and public in any of a number of variations, such as multiple clients sharing space on servers located at one client’s location and a client with data on both its servers and a vendor’s servers. Once you understand the basic cloud types, you’ll want to carefully research a cloud vendor’s infrastructure and operational standards. Some providers operate data centres all over the world, while others have facilities only in North America or within a specific country. Also, there are vendors in the business of only providing cloud service, while others offer cloud services as one part of a larger diversified company. Our vendor Expedient is an example of a cloud service-only vendor conducting business in a single nation, while Amazon Web Services, the cloud service division of e-commerce giant Amazon, is an example of a provider operating on a global scale. Then there’s the issue of data security. It must be noted that no cloud vendor is 100 per cent responsible for securing a client’s data. In any service
Technology agreement the vendor-client relationship is a partnership, where both parties are actively engaged in protecting the data a client has placed on a provider’s servers. A cloud client cannot just store data and forget it. Data security management is both hardware- and software-based. The former involves firewall rules, infrastructure and is device dependent. The latter pertains to intrusion detection and virus protection. Typically, a cloud provider provisions and manages the hardware and related resources for the client, while the client is responsible for the software-based resources. For a business client that means choosing the security software package that the cloud provider will install on the portion of its servers where the client’s data is stored. The client also determines who has access to the software, the policies for software use, lock-out procedures should an unauthorized user attempt to gain access, and other nonhardware security measures. Data replication, or the backing up of files, is a critical element of data security. The more replication sets, i.e. redundancy, that a cloud vendor provides, the better. Our company has a redundancy level of “6+2,” meaning that all data is replicated on six active, or “hot,” servers, and two offline, or “cold,” servers not connected to the same power source. As mentioned earlier, we have data replicated at Expedient facilities in different regions within the U.S. As a standard rule of thumb replicated data should be stored at data centres at least 300 miles (482.8 kilometres) apart, to lower the risk of complete data loss in the event disaster strikes and a data centre goes offline. Once you’ve done your research and are ready to select a cloud provider, ask to meet a vendor’s representative at one of its data centres and take a tour of the facility. Come ready to ask a lot of questions about the points discussed above, as well these issues: ◉◉ Data centre security: Are there security personnel on site and how are servers monitored? ◉◉ Climate control and sanitation: At what temperature and humidity are
server rooms maintained, and how and when is the facility cleaned? ◉◉ Power: Does the vendor have backup generators to keep servers operating in the event of an outage? ◉◉ Client support: Does the vendor provide support 24 hours, seven days a week or only at certain times? Is the support staff Microsoft engineer-certified and/or network administrators? If not, what training do they have? ◉◉ Response time: How quickly will a client obtain access to data or applications stored on a vendor’s server after a request is submitted? Known in the industry as input/output (I/O) latency, the best cloud providers guarantee low latency and 99.999 per cent uptime. ◉◉ Compliance standards: Does the cloud vendor comply with American Institute of Certified Public Accountants Security Organization Control (SOC) 1 and 2 requirements
for internal financial integrity and operations procedure controls, or similar standards? And if your company processes, stores or transmits credit card information, ask if the vendor also complies with Payment Card Industry security standards. Finally, carefully read the service agreement before signing. Confer with an attorney, if necessary. You’ll want to make sure you’re receiving exactly the service you desire at a fair price. JDR Solutions has produced a white paper that goes into greater detail about cloud computing services, titled, “Computing in the Cloud: Sky’s the Limit for Data Storage.” You can download the free paper from our website, at www. jdrsolutions.com/resources. Armed with sufficient information, cloud computing can be as clear as a cloudless day. Doug Williams is chief information officer, JDR Solutions Inc.
ERS OK D BR ANTE W
PROUDLY CANADIAN SINCE 1981 MEMBER OF THE CFLA
Specializing in New & Used Manufacturing & Construction Equipment
Advant Leasing is an independent family owned business that has participated in the Canadian Commercial and Industrial Lease Industry for over 35 years. We specialize in assisting all types of businesses to acquire the specialized commercial equipment required to be productive and grow their business.
NEW BROKERS WELCOME • Fast approvals • Flexible terms • Start-ups accepted
• Decisions made in house/no securitization • Customized financing solutions • Small business specialists
Get started today with Advant, helping you grow with the tools that you’ll need.
Please contact Jason Bonneville • jason@advantleasing.com 905-335-3301 ext 224 • www.advantleasing.com canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
15
Technology
FinTechs: Friend, foe or the future? By Michael Garrity
n recent years, there have been two main narratives on the FinTech industry. The first and most prominent is that FinTechs are “disruptors,” innovators shaking up the Canadian finance landscape. The second is that as these disruptors gain market traction, they are bound to be swallowed up by the established banks. I believe both of these narratives are short sighted. First off, the “us-versus-them” mentality isn’t in keeping with how the industry has evolved, and this is evidenced by recent developments involving FinTechs and Canada’s big banks. Many banks have already recognized that FinTechs shouldn’t be viewed strictly as rivals. They bring agility, ease-of-use and speed of service that can, in many cases, complement what the banks offer. They also might answer a need from businesses or consumers that might not align with the banks’ core competencies
I
16
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
Technology or business priorities. Secondly, the idea that FinTechs are just innovating to get acquired has also been challenged in the reality of the way that the market has evolved. One has to look no further than the FinTechs already on or focused on the public markets, such as LendingClub, Ondeck and Element Financial. Financeit’s own example of this trend occurred this past September, when we unveiled our firstever major acquisition and announced that we acquired TD Bank Group’s indirect home financing assets in partnership with Concentra Financial (a partnership of Canadian credit unions).
renovation spending will continue to increase over the next few years. Financeit has a nationwide footprint in the home improvement industry and has increased lending activity in the market by 200 per cent since 2015.
billion in FinTech investments, through to July 31. This represents more than 500 deals. There’s no doubt that FinTech companies have proven we’re here to stay, and investors have helped fuel this change.
There’s no doubt that FinTech companies have proven we’re here to stay, and investors have helped fuel this change.
Why now? If you’re not familiar with Financeit, we’re a point-of-sale financing platform for businesses looking to offer their customers competitive and innovative financing options, anytime, anywhere they do business. While financing solutions involving installment payment plans have traditionally been associated with bigbox stores, the simplified Financeit platform enables businesses of all sizes to take advantage of a fast, easy digital solution so they can offer customers an alternative to credit cards or traditional lines of credit. Financeit isn’t new on the alternative lending scene. We’ve been around since 2011 and we’ve processed more than $1.6 billion in loans in Canada and the United States. So why was now the time for a significant acquisition?
Bolstering our industry focus Over the past year, the home improvement industry has become a key area of focus for us. This shift comes at a time when many Canadians are opting to renovate their homes for varying reasons, including aging Canadians who may be choosing to invest in their current home rather than move to a new one, or those who might be making upgrades to prepare a home for sale or rental. A recent report from the Canada Mortgage and Housing Corporation (CMHC) revealed that Ontarians spent an average of $25 billion on renovations last year. The same report predicted that
Among the largest adopters of Financeit are businesses focused in the areas of roofing, HVAC, pools and spas, windows and doors, decks and plumbing. Through this recent acquisition, more than 800 of TD’s home improvement merchant dealers were assigned to Financeit, with Concentra purchasing approximately 45,000 TD loans. Given the high demand for renovations across the country, this addition of new merchant dealers means that even more businesses across Canada have the option of increasing their revenue by offering Financeit’s unique program to their customers. We’re excited to help drive sales for home improvement professionals from across the country.
Fueling growth through investment Like many FinTechs, we’ve been hyperfocused on an accelerated growth strategy. In order for FinTechs to compete on a large scale, we turn to investors who see the potential that our unique approach brings to the market. In our case, the recent acquisition was made possible because of a US $17 million investment round led by The Pritzker Organization, DNS Capital and existing investors. This capital raise followed a minority equity financing round in October 2015, led by Goldman Sachs. A recent report from Accenture found that the first half of 2016 saw U.S. $4.58
Looking ahead For Financeit, we’ve made an acquisition that perfectly complements our growth strategy by strengthening our position in the home improvement financing space. We’ll continue to place our focus on being an innovative financing partner for merchants in this industry and in our other core verticals. I anticipate that the Canadian FinTech industry will continue to evolve. FinTechs will benefit from new opportunities, as banks refocus their business or look for opportunities to strategically partner with FinTechs. Similarly, banks will benefit by collaborating with companies who offer cutting edge solutions for Canadian consumers and businesses. We are already seeing this happen regularly. CIBC recently partnered with both Thinking Capital for small business lending and with Borrowell for access to the company’s personal loan adjudication technology. Earlier this year, Scotiabank announced a partnership with U.S.based Kabbage, enabling Scotiabank’s customers in Canada and Mexico to apply for small business loans. Just as there are opportunities for collaboration, there is always room for competition. FinTechs and banks will continue to challenge one another to bring modern, flexible and effective financing options to Canadians. Michael Garrity is president and CEO, Financeit.
canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
17
Technology
The pulse of FinTech in Canada By Lian Zerafa
hese are transformative days for the world of financial technology. With echoes of the dotcom era, the FinTech market is filling quickly with innovative players intent on changing the industry or helping the industry change itself. Canada is emerging as an important player in the space, but it is not alone. This last year saw venture capital (VC) investments remain steady in FinTech companies in markets across the globe; most notably in Asia, where FinTech startups saw funding totals of $1.2 billion in Q3, up from $800 million in Q2. This total represented nearly half of global FinTech investments and has positioned the region as a leader in the FinTech space. Closer to home, FinTech investments in the U.S. and the UK have remained equally promising, albeit tempered in the latter half of 2016 by reservations over the latest U.S. election and UK Brexit vote. Nevertheless, these markets are expected to remain FinTech powerhouses as doubts subside and the competition for VC dollars intensifies with more smaller sized deals in play.
T
18
Canada is also making its mark. In KPMG and H2 Venture’s 2016 FinTech 100, two Canadian companies were listed among the top 50 established FinTechs from around the world and four were listed as emerging stars. This is an improvement over 2015’s results, which found Canadian companies listed only twice each among the top 50 and the upand-coming startups. It’s an impressive standing, to be sure—especially considering our relatively small market size, heavily regulated environment and the competition our startups face worldwide. For the record, Chinese FinTech ventures represented four of the top five companies, once more signaling a clear leader in the FinTech industry. Driving Canada’s momentum in this space are the “herbivores” of the FinTech community. These are the players who are not as much interested in carving off a piece of the market for themselves (aka the “carnivores”), but eager to have their technologies become part of a financial institution’s ecosystem. Granted, it’s the carnivores who typically dominate the headlines, but it’s the herbivores working in quieter partnerships with financial institutions that continue to fuel the FinTech sector’s momentum, perhaps
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
more so in Canada than elsewhere. We’ve already seen a number of collaborations between FinTech companies and the big banks. Highprofile examples include the partnerships between CIBC and Thinking Capital, RBC and League, or TD for Me and Flybits—partnerships that have succeeded in giving banks instant access to greater efficiencies and modern solutions, while exposing their FinTech collaborators to an established customer base. These partnerships are also proof that banks are not only noticing the FinTech industry, but actively supporting it and working with its innovators. This May, for example, TD Bank entered a collaboration with Plug and Play Tech Center, a California-based FinTech accelerator, to provide mentorship and development support to 23 FinTech startups. Elsewhere, a number of Canadian banks have created highly speculative investment funds for FinTech, patterned largely off the risk return profile of the dotcoms. The appetite for new and innovative financial technology is no doubt strong; and one need only look to the FinTech clusters forming in hotspots like the Greater Toronto Area, Waterloo,
Do you want to reach executives who make key decisions about financing and leasing for their companies?
Sign up NOW for a free subscription to Canadian Equipment Finance magazine. Visit our website at www.canadianequipmentfinance.com and learn more about the magazine Canadian Equipment Finance is a Lloydmedia, Inc publication. Lloydmedia also publishes Financial Operations magazine, Canadian Treasurer magazine, Payments Business magazine, Direct Marketing magazine and Contact Management magazine.
Technology Vancouver and Montreal to see that there is no lack of players. Yet as promising as Canada’s FinTech market may be, there are challenges ahead. Working within one of the more regulatory controlled regimes in the world means Canada’s startups face more restrictions than their international peers. For example, requirements laid out in Investment Industry Regulatory Organization of Canada (IIROC)’s CRM2 regulations set a regulatory bar that impedes our industry’s ability to enter the wealth management services space as opposed to players in the U.S. who are not beholden to the same rules in their market.
hindered by current legacy platforms that were never designed to handle real-time demands. Herein, countries are undertaking modernizations of their payment systems with help from innovators in the FinTech space. This includes Payments Canada, which recently began a modernization journey to rethink the fabric of payments in Canada to accommodate a mix of faster, more agile and real-time payment schemes that not only work together but with the world. For payment modernization to occur, we must all be on the same page. That’s why moving forward, it will be solutions like the emerging ISO 20022 standard that will help establish a common ground between the current and incoming wave of different payment models. For its part, Payments Canada announced it will be adopting ISO 20022 as part of its modernization; and while it will require significant re-platforming in the years ahead, those efforts will open up a wealth of new possibilities in terms of how differing transaction parties will be able to interact. On a related note, it would be unwise to underestimate blockchain technology. With the potential to bypass central monitoring and control mechanisms, blockchain has the potential of circumventing current financial systems and changing the relationship between the consumer and bank. For this reason, payment authorities are now working to create a supportive ecosystem which will allow for alternative payment technologies such as blockchain into the mainstream environment. No one has the answer yet, but it won’t be a one-sizefits-all solution. It will, however, allow for multiple payment schemes to coexist in a controlled way. With the FinTech industry growing and new innovations entering the market at faster speeds, the question moving forward will be how to balance the need to innovate against the very real risks of cybercrime and online vulnerabilities.
It's an instant, mobile, cashless world and FinTech companies are its architects. Even with these restrictions, Canada’s FinTech players are holding their own. This is despite an overall drop in VC funding across the globe owed to a mix of political shifts and the natural ebb and flow of the FinTech hype cycle. Certainly, while there was once a day when the pool of VC investments was big enough for every FinTech startup willing to take the plunge, the rising tide of market entrants is creating a new era of intense competition. That said, while the volume of available deals may be down, opportunities still exist for herbivores and carnivores alike.
Evolving the standards It’s an instant, mobile, cashless world and FinTech companies are its architects. Nowhere is this more apparent than in the realm of payments, where the likes of PayPal, Apple Pay, Stripe, Square and Amazon (which is itself large enough to be a bank) are reshaping established systems and consumer expectations. The result is a movement toward realtime payments and a strong desire to reduce existing friction which impedes participating parties’ ability to execute payments efficiently. That movement, however, is being 20
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
Do we wait until one FinTech solution causes an incident, or do we tighten down the industry now and risk suffocating the next big idea? These are the questions regulators are asking as solutions like blockchain present great potential, and corresponding risk, to deal with some of the crime elements from a payment ecosystem, but can also facilitate crime in cases, as in the case of using bitcoin to make illegal and untraceable purchases on the now dismantled Silk Road. It’s a doubleedged sword and one that will challenge stakeholders to balance the need for protection against that of innovation. Regulatory apprehensions notwithstanding, it’s a good forecast for the FinTech market. The appetite for innovation among banks, insurance, and wealth management players is high; as is the appetite to engage differently with customers directly and provide services and products that offer an alternative from the norm. It may be crowded, and there may be speed bumps, but if 2016 is any indication both Canada and the world are on track to bring the FinTech industry into the fore. Lian Zerafa is the national consulting financial services industry leader at KPMG in Canada. He is a senior advisory leader in banking and securities with three decades of experience helping over 30 global financial institutions navigate through complex technology, strategy and regulatory issues.
2016 FinTech milestones ◉◉ Global investment in FinTech reached US$17.8B billion in funding by Q3 2016 ◉◉ North American FinTech companies raised more but smaller late-stage deals: median late-stage FinTech deal size in North America dropped to $21.9M, the second lowest quarter in the five-quarter trend, and a 73 per cent drop compared to the same quarter last year ◉◉ FinTech funding fell below $1 billion in North America in Q3 ◉◉ Corporates participate in more than half of all deals to VC-backed FinTech startups in Q3 2016
vendor directory Providing practical and cost-effective legal services to the Equipment Finance Industry for 20+ years
National Appraisal Services FAST. ACCURATE. COST EFFECTIVE.
877.463.8241 www.verusvaluations.com
905.940.8700 • 1.866.508.8700 • wvllp.ca
Northstar takes pride in offering fast approvals, competitive rates, and flexible terms, coupled with friendly, personal service. Please contact Bruce Collingwood or Wayne Gray at 705-737-5595 or toll free 1-888-678-2701. www.nstarleasing.com
Since 1983, Northstar Leasing Corporation has been meeting the needs of our business clients and Broker network across Canada.
ÂĄÂŒÂ’Â“Â? ŽŠ£“š‘ ÂœÂĄÂ?ÂœÂĄÂŠÂ¤Â“ÂœÂš
ÂŞÂŞÂŞá€”ÂœÂĄÂŒÂ’Â“Â?Â—ÂŽÂŠÂŁÂ“ÂšÂ‘á€”ÂŒÂœÂ˜ á šá€–á‚€á ˝á ˝á€–á żá šá şá€–á ťá‚€á şá‚€
CMS PRINTING SERVICE. For all your printing needs. Call 416-755-7761 ext. 227 mdavid@completemailing.com
At the core of your business
• Equipment, Vehicle, Any Asset Leasing • Business First™ Solutions • Simple or Complicated Let’s talk about your leasing software needs. 888-747-RYZN (7996) | info@ryzn.com | www.ryzn.com
NEW LOWER PRICING!!!
Get your ad on this page for as little as $185 per issue for all of 2016
Vendor Directory Advertising call Mark Henry at 905-201-6600 x 223 or email mark@canadianequipmentfinance.com canadianequipmentfinance.com | Winter 2016 | CANADIAN EQUIPMENT FINANCE
21
Your business
How to fuel business growth with working capital By Paul Roman
ike a plant needs water, every business requires a great deal of working capital to grow; however, getting access to capital isn’t always easy nor is finding the time within an ever growing to-do list to prioritize it. To create the cash flow necessary to fuel growth and capitalize on the next big opportunity the market affords, forward-thinking businesses must be resourceful. They also must recognize that how they manage their capital today will define their competitive position tomorrow. With that said, here are three smart steps companies can take to manage their cash flow and fuel their growth:
L
Eliminate operational inefficiencies The first step is to take a close look at your specific business—what are your cash needs and what is your current cash position? Will certain vendors offer you extended terms, volume discounts or early pay discounts? How are you paying for your business expenses and is there a more efficient or advantageous way to do so? Take a holistic look and explore ways to streamline your processes, create efficiencies and maximize cash flow. Switching from paper cheques to electronic payments is one significant way to eliminate inefficiencies. With digital payment solutions, you can pay suppliers directly while getting a consolidated statement at the end of each month. In addition to reducing 22
inefficiencies associated with cheques, your employees will be freed from cumbersome, time-eating manual calculations. You’ll also reduce your risk of fraud and gain better payment tracking and control. Keep in mind, having greater visibility into your business expenses will really help if you’re looking to renegotiate terms with your bank or lender.
Restructure payables and receivables Next, you need to re-examine how your business is distributing payments to merchants and vendors. Prioritizing them by due dates and interest rates and structuring your payables accordingly can add flexibility to your cash flow. Also think about utilizing a program or service to help your accounts payable department make the process more efficient. Finally, make an effort to invoice quickly when pursuing receivables and consider offering incentives for faster payment. Be cautious, however. For companies with small margins, discounts for early payment may not make sense. Make sure your margin can cover it.
Create a mutually beneficial relationship with suppliers Taking advantage of available credit is an excellent way for your business to take greater control over your accounts payable, maintain liquidity and improve cash flow without negatively impacting your relationships with banks, lenders and suppliers. New working capital
CANADIAN EQUIPMENT FINANCE | Winter 2016 | canadianequipmentfinance.com
management solutions, such as American Express Buyer Initiated Payments, can act as a bridge, taking responsibility for financing your company’s payment terms with suppliers. Once you receive an invoice for the services/products, you can use the payment solution to settle up with your supplier immediately. Not only will the quick payment strengthen your relationship with your supply chain, you will then receive an additional 58 days (or more, depending on the date the supplier submits the charge) to settle the payment. Essentially, this gives your business access to an alternative funding source that allows you to cover your payables while improving operational cash flow. And suppliers get paid sooner, so it’s a win-win. By following these simple steps, you might be surprised by how much additional cash flow you can create for your business. Organizations that focus on improving working capital can almost immediately lower borrowings, boost customer service levels and supplier relationships, increase profitability and, most importantly, free up cash for new initiatives/projects. Make no mistake, working capital is a competitive advantage that all Canadian businesses should be looking to capitalize on, and there’s no easier way to start than by setting up electronic payments. Paul Roman is vice president and general manager, global commercial payments, American Express Canada.
Reach marketers & financial executives Our magazines are must-reads for key executives in core corporate competencies.
Can you help our readers: • Create a strong financial structure and healthy economic ecosystem to ensure capital and cash flow keep their engines running? • Determine who their customers should be, how they can reach them most effectively, and how they can turn data-driven marketing into profitable sales? • Build efficient and effective financial systems to enhance payments and billings between their companies and their customers and vendors? • Convert all the data and information they collect from every contact point into tangible benefits that increase revenue and reduce costs? • Equip their companies with the tools, technology, systems and hardware needed to manage their operations, to create new services or products, and deliver them to their market? • Manage their customers with smoothly functioning support departments that are properly staffed and equipped to solve problems, foster loyalty and retain customers? • Make any or every step in that chain better, faster, cheaper, and more profitable?
We can help you tap into the ecosystem at the points that will drive your campaigns. To advertise or get more information and media kits:
905-201-6600 | 1-800-668-1838 | 302-137 Main Street North, Markham ON L3P 1Y2 Visit our websites:
Direct Marketing magazine, www.dmn.ca Contact Management magazine, www.contactmanagement.ca Payments Business magazine, www.paymentsbusiness.ca
Canadian Treasurer magazine, www.canadiantreasurer.com Canadian Equipment Finance magazine, www.canadianequipmentfinance.com Financial Operations magazine, www.financialoperations.ca.
Spe cia lty • Co • Aut om • Re SLV G verag atic sid ap es
and ual V Insu In Volu alue ranc clud e: e nta ry P Insura rop nce erty Insu ran ce
Protecting your assets while building your business. It’s All About Balance.
For equipment leasing and finance businesses, it’s a tough job balancing between mitigating exposure and taking calculated risk. Tip the scale in your favor by choosing an insurance option to help customers easily fulfill their insurance requirement, expedite the funding process, and provide you additional revenue. And choose one of our solutions to assist you in maintaining a healthy portfolio. To learn more, contact us at 866-676-5677 or equipmentinsurance@gaig.com
www.GAIG.com/EquipmentInsurance Canadian Branch Head Office Scotia Plaza, Suite 2100, 40 King Street West Toronto, ON M5H 3C2
Policies are underwritten by Great American Insurance Company – Canadian Branch, a foreign registered insurer in all Canadian provinces and territories.