The Future of Financial Intermediaries in Canada: How Technology and Digitization are Changing the Game

By: Danny Boulanger | April 26th, 2023

The financial intermediaries market in Canada has been evolving for many years. The emergence of financial technologies and the increasing demand from consumers for personalized financial services have transformed the industry, pushing financial intermediaries to reinvent themselves and offer innovative solutions.

Regarding the opening up of the distribution of financial services, such as group insurance, life insurance, and retirement funds, the Canadian government has implemented several initiatives to drive competition and facilitate access to financial services. In 2021, the Financial Consumer Agency of Canada (FCAC) proposed legislative changes to facilitate the creation of new financial service companies and to allow consumers to more easily transfer their financial products from one provider to another.

Moreover, the COVID-19 pandemic has accelerated the trend towards digitization and direct distribution of financial services, with more and more consumers seeking online and remote solutions. Financial service companies have therefore increased their investments in technology to improve their distribution channels and meet this growing demand.

In the next five years, we may witness an increase in direct distribution of financial services, with a reduction in the role of traditional financial intermediaries. However, financial intermediaries will continue to play an important role in the industry by offering personalized solutions and providing advice to consumers.

Ultimately, the financial intermediaries market in Canada will continue to evolve to meet consumer needs and market trends. The distribution of financial services will increasingly focus on digitization and personalization, with companies seeking to offer innovative solutions to stand out from the competition.

The Segic technology platform, through which group benefits, voluntary benefits, and individual benefits may be offered, will likely have an impact on traditional financial intermediaries by introducing a new way of selling group benefits and insurance products.

Indeed, by offering a Benefits Marketplace, Segic offers financial intermediaries the opportunity to sell benefits to employees as added value in a group plan in B2C mode, in addition to their traditional B2B approach. This enables them to expand their market and reach a larger number of consumers, while continuing to provide personalized solutions to their business clients.

However, traditional financial intermediaries can also benefit from the Segic platform by using technology to improve their B2B approach. The platform can help streamline sales processes, automate administrative tasks and provide data management tools, allowing financial intermediaries to better serve their clients.

Ultimately, the Segic platform can have a positive impact on financial intermediaries by offering them a new way of selling group benefits and individual benefits to employees, while improving their B2B approach.

Here are some statistics on individual insurance in Canada:

  1. According to a 2020 study conducted by LIMRA, an insurance research organization, the COVID-19 pandemic has led to an increase in demand for life and health insurance in Canada. Indeed, 42% of Canadians surveyed said they were more likely to buy life insurance because of the pandemic, while 36% said they were more likely to buy health or disability insurance.

  2. According to a 2019 study by the Financial Services Commission of Ontario (FSCO), Canadians spend an average of $1,100 per year on life and health insurance. This study also revealed that the majority of Canadians have life insurance (61%) and health or disability insurance (52%).

  3. According to a 2018 study by the Conference Board of Canada, the Canadian personal insurance market reached $84.2 billion in 2017. Personal insurance includes life, health or disability, accident, and travel insurance.

  4. According to a 2017 study by the Canadian Federation of Independent Business (CFIB), 68% of small businesses in Canada have life insurance, and 51% have health insurance. Most businesses with life insurance consider it an important tool to protect their business and family in case of the death of an owner or executive.

  5. According to a 2016 study by Scotiabank, only 27% of Canadians have health or disability insurance through their employer. This means that the majority of Canadians must obtain these types of insurance individually.

These statistics indicate a strong demand for life and health insurance in Canada, as well as a high prevalence of these types of insurance among Canadians. This can be attributed in part to the COVID-19 pandemic, which has increased awareness of health and financial risks. Financial intermediaries therefore have an important role to play in meeting this demand by offering personalized and online insurance solutions.

  1. According to a survey conducted by the Public Policy Forum, 57% of Canadians believe that traditional financial institutions have too much power and that it is time to open the market to more competition.

  2. According to the same survey, 66% of Canadians are in favour of creating new business models for financial services, such as online banks and crowdfunding platforms.

  3. According to a report by the C.D. Howe Institute, unlocking of financial services could drive competition and reduce costs for Canadian consumers. The report suggests that current regulatory obstacles limit the ability of new market players to compete with large financial institutions.

  4. The Financial Consumer Agency of Canada (FCAC) has reported that the fintech market in Canada has experienced rapid growth in recent years, with over 500 companies in operation. These companies have raised over CAD 2 billion in venture capital between 2017 and 2019, according to the FCAC.

These statistics suggest that Canadian consumers are open to more competition in the financial services market, and that regulatory obstacles could be eased to allow new market players to enter the sector more easily.