1 00:00:11,520 --> 00:00:23,970 Tal Schwartz: Okay, so, guys, we're living in some pretty crazy times. And, you know, if we're having this panel, you know, maybe back in January, it would be a 2 00:00:23,970 --> 00:00:31,650 lot different, you know, we'd probably be here, you know, down in New York in person, but also the questions would be the kind of conversation we're 3 00:00:31,650 --> 00:00:40,590 having, it would also be pretty different. So maybe before we get into COVID, let's just take a step back and talk about some of the broad differences between 4 00:00:40,590 --> 00:00:54,810 landing in Canada in the US, Cato, can you give us a sense of the the size and relationship of bank credit versus FinTech credit in Canada? And maybe how that 5 00:00:55,530 --> 00:00:57,390 stands in contrast to the US? 6 00:00:57,930 --> 00:01:07,980 Cato Pastoll: Yeah, absolutely. I mean, as many know, Canada is about 1/10 of the size of the US when it comes to, you know, population. But one of the very 7 00:01:07,980 --> 00:01:15,990 unique things about the Canadian market, especially in financial services, is that we have a highly concentrated banking sector, and we pretty much have 8 00:01:15,990 --> 00:01:24,750 five banks that control the majority of the market share. So in some ways that that's created a well functioning financial system, but in other ways, it's 9 00:01:24,750 --> 00:01:36,030 created large gaps in the ecosystem as well. And and why, you know, players are platforms, like ours have gained a lot of success over the last few years is 10 00:01:36,030 --> 00:01:45,330 that, you know, there are certainly gaps, especially when you think about small business credit, with regard to accessing financing. And because there's not a lot 11 00:01:45,330 --> 00:01:53,610 of competition, that kind of leaves a lot of room for small businesses to access credit. So despite the fact that it is a smaller market, the fact that it is kind 12 00:01:53,610 --> 00:02:02,190 of more concentrated among a few players means that it's less competitive. And ultimately, that means that there's kind of more opportunity for for fintechs, like 13 00:02:02,190 --> 00:02:10,440 the three of us to kind of play a role in the market, and play a very important role in the market. Because, like I said, that there's kind of not a lot of places 14 00:02:10,440 --> 00:02:19,890 to get credit for businesses. So you know, I think that that's a that's an important nuance, when kind of setting the backdrop for for today's discussion, around 15 00:02:19,890 --> 00:02:28,440 COVID is just how viable of a role that we played historically, and probably, you know, going forward, you know, as we think to you know, what happens later 16 00:02:28,440 --> 00:02:37,440 in the year, or even next year, the role of recovery that that fintechs will need to play in Canada, I think, is probably one of the most prominent in the 17 00:02:37,440 --> 00:02:38,370 world. So, yeah. 18 00:02:40,320 --> 00:02:50,070 Tal Schwartz: We're definitely gonna be talking a lot about recovery in this discussion. So maybe, I mean, that's pretty nice segue. Guys, but when when COVID 19 00:02:50,070 --> 00:03:02,790 hit, you know, obviously, the entire country basically came to a standstill, social distancing, forced businesses to shutter. You'd also put record levels of 20 00:03:02,790 --> 00:03:18,120 Canadians on government assistance programs. In your opinion, what were the major impacts of COVID on your existing book of loans? And can you walk us through 21 00:03:18,450 --> 00:03:26,100 some of the the, the preventative steps or emergency steps that you guys took to mitigate its effects? 22 00:03:31,160 --> 00:03:39,020 Harley Greenspoon: Yeah, so this is Harley, I'm happy to sort of take a first first stab at that one. I think, you know, the very first thing that we did, when 23 00:03:39,020 --> 00:03:49,820 faced with COVID was to stratify the portfolio. We all we all realize, as in the US, COVID has impacted different businesses differently, ranging from you 24 00:03:49,820 --> 00:03:59,270 know, certain businesses that were severely negatively impacted. Those businesses that rely upon large concentrations of people or those businesses that were 25 00:03:59,360 --> 00:04:08,510 subject to government. Ordered shutdowns are obviously like ours or, you know, a classic example to at the other end of the spectrum businesses that may have even 26 00:04:08,510 --> 00:04:17,360 benefited have it had no one likes to use that expression, but a positive impact on their revenues. And so, industries, there are industries that have seen 27 00:04:17,360 --> 00:04:25,340 an increased demand for their services, and driven by consumer behavior in industries, like grocery stores as an example. So I think I think it's important to 28 00:04:25,340 --> 00:04:34,250 understand that not all industries were affected equally. And so we would stratify and group them sort of accordingly. The next thing we did, which I think is 29 00:04:34,250 --> 00:04:44,120 pretty common across the industry is is give payment, stress relief. The businesses that were most severely impacted, you know, obviously didn't have the ability 30 00:04:44,120 --> 00:04:52,700 to make regularly scheduled payments. And so beginning in March, we began to offer some payment stress relief to those businesses. It came in the form of either 31 00:04:52,700 --> 00:05:01,640 payment, holidays or sort of reduced payments. And then, you know, over time, as businesses reopen, we continue to communicate we continue to revisit each of 32 00:05:01,640 --> 00:05:11,390 those payment relationships and try and restore them as wherever possible to a paying relationship. And so we've we track this daily, this has become sort of the 33 00:05:11,390 --> 00:05:21,770 the key metric, I think for all of us. We we hit a low point in mid April, and we've seen sort of a steady improvement since April, although there's been some 34 00:05:21,770 --> 00:05:23,750 leveling off sort of in recent days. 35 00:05:26,630 --> 00:05:37,040 Tal Schwartz: Does anyone else want to add to that? Is that is that sort of standard across? That is the same kind of experience that everyone had you instituting 36 00:05:37,040 --> 00:05:42,680 these kinds of deferrals stratifying your book based on what would be and what wouldn't be most effective. 37 00:05:43,590 --> 00:05:50,940 Arina Eremina: So pretty much we're approaching a similarly we have to ensure that those customers who needed help will get it, and they needed the help very 38 00:05:50,940 --> 00:06:02,010 fast. So placing appropriate policies in place as fast as possible in the middle of March was, in order to be able to handle the wave of calls, and also proximity 39 00:06:02,010 --> 00:06:11,100 reaching out to see if anybody needs help, and pretty much provide the things that was so badly needed in that time. But definitely having solutions and non 40 00:06:11,100 --> 00:06:14,550 product solutions was something that we had to do and very, very fast. 41 00:06:17,690 --> 00:06:29,750 Tal Schwartz: So, I mean, now we're seeing parts of the country are beginning to reopen again. You know, Harley, you mentioned, you know, restaurants and bars, 42 00:06:29,750 --> 00:06:38,690 these guys been hit hardest and, you know, across the country, are now beginning to, you know, be able to be allowed to open to certain degrees. We have patios on 43 00:06:38,690 --> 00:06:52,760 the West Coast are now open, you can go get a drink. What are you guys seeing in the data? As the country begins to open up? Arina, is is demand for credit 44 00:06:52,760 --> 00:06:53,360 changing? 45 00:06:54,140 --> 00:07:01,940 Arina Eremina: Yes, absolutely. So it's even before businesses could open officially, there are some measures that you have to put in place in order to be 46 00:07:01,940 --> 00:07:14,540 able to reopen, especially those businesses who value their brand. For today, they want to put everything possible to be able to meet those regulations too. And 47 00:07:14,990 --> 00:07:24,590 those measures are not cheap. But putting them Plexiglas in between because sheers, consumers are changing their spacing between the tables in 48 00:07:24,590 --> 00:07:35,660 restaurants, and etc. So all of this additional measures really hit them, this is an additional expense in the time where they don't have the same revenue. And 49 00:07:35,660 --> 00:07:43,730 moreover, they can't expect the same revenue for quite some time, because let's face it, consumers have changed their behavior patterns, it's going to take 50 00:07:43,730 --> 00:07:55,940 time to pick up the same pace as it was from before, because consumers are careful in their discretionary spend. So businesses needed support right now more than 51 00:07:55,940 --> 00:08:04,880 ever, and having access to credit and also offer additional solutions support from productive, the full level of uncertainty, it's not clear when the full year 52 00:08:04,880 --> 00:08:17,150 open is going to happen, to tighten up risk appetite happen almost immediately, which left a huge gap. And therefore demand is there. Also what we see in this 53 00:08:17,600 --> 00:08:26,120 demand coming from startups, so those businesses who are going to be closing their own, those people are going to be closing their own business, reopening new, 54 00:08:26,420 --> 00:08:37,490 also potential people who want to diversify their income and try themselves and then use more business and economy space. Demand is definitely increase. 55 00:08:40,270 --> 00:08:50,260 Tal Schwartz: And then within the businesses that you do see demand picking up again, and you know, applications coming in from your credit. Are those 56 00:08:50,290 --> 00:08:57,100 businesses overall healthy enough to be to be taking on new credit? Harley, can you take this on? 57 00:08:57,780 --> 00:09:03,060 Harley Greenspoon: Yeah, sure. I mean, I think it's a function of two things. It's a function. And these are sort of the, you know, concepts that we've already 58 00:09:03,060 --> 00:09:11,100 started to discuss a little bit like, what segment what grouping is that business, in what stage of the recovery or reopening are we at So, you know, again, to 59 00:09:11,100 --> 00:09:19,560 take an extreme example of a severely negatively impacted business like a bar, or you mentioned bar talent, maybe in Vancouver, they're looking people are 60 00:09:19,560 --> 00:09:27,810 venturing out more I know, like in the eastern provinces, like Quebec, that got hit harder. We're not really seeing that yet. And so, you know, they may not 61 00:09:27,810 --> 00:09:35,580 be there may be some businesses, that for the foreseeable future just may not be healthy enough to take on additional credit. But you do have others where 62 00:09:35,580 --> 00:09:43,080 it's totally reasonable to think that demand is going to bounce back. Dentist office as an example, people will return to dentist office and there's no reason to 63 00:09:43,080 --> 00:09:50,160 believe that volumes are going to be anything less than they were before the crisis. No, I think what's really interesting though, is sort of the business types in 64 00:09:50,160 --> 00:09:58,680 between where that's where it's a lot more nuanced. So a restaurant that's allowed to reopen but you know, was told, as they're being told in Quebec, you can only 65 00:09:58,680 --> 00:10:08,400 have 50% capacity. You know, because of, you know, physical isolation constraints or not to mention consumer demand, but you know what's going to happen 66 00:10:08,400 --> 00:10:16,920 there. If a business like a restaurant, it can only operate at 50% capacity, but they're unable to alter some of their fixed costs, like rent, you know, that's 67 00:10:16,920 --> 00:10:23,820 going to have an effect on their margins. And there's, there's some question, I think in terms of whether those businesses will or will not be viable. So I think 68 00:10:23,820 --> 00:10:31,350 what, what lend most of the lenders are going to do is they're going to pay close attention, they're going to monitor. They're going to begin lending slowly into 69 00:10:31,350 --> 00:10:39,090 into some of those those call it nuanced industries, and monitor performance. And I think it's going to be a very, we're gonna see a very iterative approach for 70 00:10:39,090 --> 00:10:43,620 those businesses that are open, but but not at sort of pre COVID levels. 71 00:10:44,650 --> 00:10:52,540 Tal Schwartz: Got it. Okay. So I mean, this, this kind of begs the question, and it's, I mean, it's a, it's a difficult question to, to get an answer to, I'm going 72 00:10:52,540 --> 00:11:01,660 to ask anyway. What do you guys expect originations to pick up again? And any like, what are the things that you guys are really zero? If you could just pick like 73 00:11:01,660 --> 00:11:11,500 one or two things that you're really zeroing in on? That, for you is a strong indicator that originations might begin to start picking up again? 74 00:11:12,350 --> 00:11:21,620 Cato Pastoll: Sure, you know, I think that overall, you know, when it comes to kind of all individual originations, we're gonna start to see kind of a sector 75 00:11:21,620 --> 00:11:28,820 by sector come back, I think there's gonna be some insult to this, you know, earlier about, you know, certain sectors that were more hard hit than others. As 76 00:11:28,850 --> 00:11:36,590 you know, as we go into recovery, we're going to see a very similar thing where, you know, there might be some, for example, like restaurants that even though 77 00:11:36,590 --> 00:11:44,780 they are opening back up, that doesn't necessarily mean that we'll see a proper recovery in the short term. Right. So, uh, you know, in my view, I think that, you 78 00:11:44,780 --> 00:11:52,520 know, as soon as that the kind of the next few months, we'll start to see some form of recovery, particularly in certain businesses that are, you know, allowed to 79 00:11:52,580 --> 00:12:00,740 reopen as physical distancing restrictions kind of start to get lifted, that will certainly help, you know, the economy to some extent, but, but in my 80 00:12:00,740 --> 00:12:08,870 opinion, I think like, overall, it's probably going to take, you know, 18 to 24 months to get back the level of economic activity that we were at kind of pre 81 00:12:08,870 --> 00:12:19,370 crisis. You know, I think that's my, my estimation and assumption, kind of based on the research we've done and data I've seen, but, um, you know, to be candid, I 82 00:12:19,370 --> 00:12:23,600 don't think anyone really knows the answer to like how deep these impacts are going to go. 83 00:12:24,890 --> 00:12:33,620 Tal Schwartz: Yeah, no, God, granted, but it was like that. I'm not gonna hold you to that answer. Okay, let's, uh, let's switch. Now, let's talk a little bit 84 00:12:33,620 --> 00:12:42,650 about the government assistance programs that have been happening in Canada. So you know what, when the crisis hit, the federal government was incredibly quick to 85 00:12:42,650 --> 00:12:55,670 start rolling out really, truly massive aid programs. So just just to mention, a couple of the programs. There's a 10% wage subsidy, which very quickly turned 86 00:12:55,670 --> 00:13:11,630 into 75% wage subsidy, a $2,000 a month, unemployment insurance on steroids kind of program, a 40 grandArina emergency business loan program, a quarter of which is 87 00:13:11,630 --> 00:13:21,410 forgivable, and more recently, a commercial rent subsidy as well. So just running through this list, you know that this sounds like a really aggressive aid 88 00:13:21,410 --> 00:13:34,100 package. In your opinion, though, has this been a an effective stimulus? Arina, can you start us off? 89 00:13:34,300 --> 00:13:43,420 Arina Eremina: Yes, absolutely. That definitely government tried and had a very good intentions. And of course, it was difficult to deploy it as fast as 90 00:13:43,480 --> 00:13:53,230 potentially some people wanted to expect it. But at the same time, great job was done there. So in the beginning, of course, it was taking slower sometimes to 91 00:13:53,230 --> 00:14:02,800 pick up. Over time, it was becoming more and more effective as modifications to those programs were taking place. But of course, we started seeing some 92 00:14:02,800 --> 00:14:13,570 first deposits in the actual accounts of our customers sometime in April. So it took several weeks for the programs to start taking effect, the first wave was a 93 00:14:13,570 --> 00:14:22,810 little bit more conservative, and therefore some portion of our customer base, for example, didn't qualify because they were simply too small to qualify 94 00:14:22,810 --> 00:14:32,920 for Kiva loans. In those instances where owner was the only employee of the company and therefore was unfortunately was not meeting the criteria, however, 95 00:14:32,920 --> 00:14:41,920 criteria gotten lost over time. And in the second wave, this is where we saw the massive impact where customers were able to breathe a little bit easier and actually 96 00:14:43,180 --> 00:14:54,700 start paying their expenses. definitely like Lendlord. It's an interesting program. However, it's a lot more than just applies. In some instances. It's getting some 97 00:14:54,700 --> 00:15:04,570 help to actual small businesses versus in some cases long. Live but it's taking time for People blocked off and also understand how this was gonna get something 98 00:15:04,570 --> 00:15:15,970 new. And given the speed, however he was rolled out, I would say we saw some positive impacts. We want more support. And the question is how we're going to 99 00:15:15,970 --> 00:15:24,490 continue to some of the subsidies are sufficient to provide the replacement for two or three months worth of lost revenue for small businesses, but larger 100 00:15:24,490 --> 00:15:34,090 businesses become difficult. And therefore it is time now to start the opening. So that as those programs run down, there is a replacement from income revenue, 101 00:15:34,360 --> 00:15:35,200 businesses. 102 00:15:36,200 --> 00:15:48,230 Tal Schwartz: Got it. So you mentioned a few interesting things there. You know, the uptake in all of these programs hasn't really been consistent. The 103 00:15:48,230 --> 00:15:57,830 rental subsidy has been a bit of a mess. Landlords haven't really adopted it. And then you also mentioned that the the criteria for these programs has been 104 00:15:57,830 --> 00:16:09,950 changing. And at the beginning, it was much more strict. And over time, it's become much more relaxed. Are there any other criticisms that you guys have of 105 00:16:09,950 --> 00:16:24,050 these programs? The benefits, I think, are quite obvious. But beyond just the general uptake? And the qualifying criteria, is there anything else that you 106 00:16:24,050 --> 00:16:26,540 guys would add? 107 00:16:27,320 --> 00:16:35,150 Cato Pastoll: Yeah, I mean, I think I think is already been pointed out, like, I think the government kind of took a shoot before you aim type of approach to rolling 108 00:16:35,150 --> 00:16:42,410 the programs out. And that's why there's been, like, so many different types of types of changes to that to the eligibility criteria, I think that there is still an 109 00:16:42,410 --> 00:16:49,730 issue there. With a lot of eligibility criteria, you know, there's things like you need to have a business bank account, and a lot of know, especially smaller 110 00:16:49,730 --> 00:16:57,110 businesses, you know, operate their business be better possible bank accounts. So there's a lot of missteps, I'd say that the two kind of big ones that that I'd say 111 00:16:57,110 --> 00:17:08,300 that we're gonna really start running into, especially as we kind of look forward into the future, are the amount of funding available through the programs, you 112 00:17:08,300 --> 00:17:17,240 know, especially like the $40,000 program, but that may have helped now, but I think it's unlikely that the businesses, you know, July 1 things are back to normal 113 00:17:17,240 --> 00:17:24,470 and revenues back at 100%. Like we've already spoken about, it's going to be a path to getting there. So I think expansion is certainly going to be either new 114 00:17:24,470 --> 00:17:33,950 programs or expansion of these programs are totally going to be required to make sure the small businesses survive, and can come back and start to operate and 115 00:17:33,950 --> 00:17:42,410 grow their businesses, again, kind of closely tied to that. The other big criticism is that there are arbitrary cut offs for these programs. So for example, 116 00:17:42,410 --> 00:17:53,210 the wage subsidy, there's a cut off that you have to have lost 30% of your revenue. Now, I'm not arguing whether or not 30% is the right or wrong number, but I 117 00:17:53,210 --> 00:18:04,610 think a lot of the the criticism is that 30% using that example, means that if you've done 29% of you lost 29% of revenue, zero dollars, if you've lost 31%, you get 118 00:18:04,610 --> 00:18:15,680 the whole thing. And so there's a lot of criticism there because, you know, it's not proportionate, and it may be disincentivizes, proper behavior incentivize bad 119 00:18:15,680 --> 00:18:24,500 behavior, even. And we've seen that even with the, you know, not relevant to business, but you mentioned the, you know, the the unemployment program for individuals. 120 00:18:24,860 --> 00:18:31,760 You know, there's a lot of talk right now about people not wanting to go back to work, because they'll lose out on that unemployment benefit. Right. And so there 121 00:18:31,760 --> 00:18:38,540 are there are structural issues that I think need to be addressed. And specifically on business, I think it's about those cut offs. Like it doesn't make sense if we 122 00:18:38,540 --> 00:18:44,600 want businesses to stop growing their revenue to penalize them for getting back to business. And I think that's a big thing that will need to be addressed over 123 00:18:44,600 --> 00:18:45,770 the over the coming months. 124 00:18:47,010 --> 00:18:55,380 Tal Schwartz: So I mean, now that we we all have a pretty good grounding of what the Canadian aid packages that can we spend a minute maybe comparing this to 125 00:18:55,380 --> 00:19:06,690 what's been going on in the US, specifically with the PPP? And, you know, are there any lessons from that rollout that, you know, that we could have learned 126 00:19:06,690 --> 00:19:12,990 from? I mean, maybe specific. Yep, go ahead. 127 00:19:15,030 --> 00:19:24,480 Harley Greenspoon: Yeah, I mean, I think the biggest thing, and I know, my co-panelists feel the same way. It's having fintechs included, I think is really, you 128 00:19:24,480 --> 00:19:33,120 know, is the biggest thing, I think the fintechs and us a really good job at deploying large amounts of capital using their platforms. And it's it's unfortunate that 129 00:19:33,120 --> 00:19:43,380 Canada, that's probably the one biggest criticism that I think I have, and I think I assume, I don't assume I know that my co-panelists feel the same way. You know, 130 00:19:43,380 --> 00:19:51,090 this is what we were built for. And sort of, it's not for lack of trying, but so far we haven't really been able to to help in the process. And I think that would 131 00:19:51,090 --> 00:19:58,800 be something that hopefully, you know, Canada would learn from the US where I think the fintechs have done an excellent job of really helping to move capital 132 00:19:58,800 --> 00:19:59,160 quickly. 133 00:20:01,400 --> 00:20:12,590 Tal Schwartz: And I mean, I think that's a great point. I mean, I just for everyone, for everyone's on the same page, we have the Canadian Lenders Association and you 134 00:20:12,590 --> 00:20:23,600 know, everyone that, you know, that's on this call, have, you know, we've been advocating for exactly that for for FinTech participation right from the beginning. 135 00:20:23,600 --> 00:20:33,920 And we've been, we've put out multiple letters and, you know, been engaging with various stakeholders in government. And I think, seeing, you know, the success 136 00:20:33,920 --> 00:20:47,780 of FinTech in the US should serve as an example for, you know, Canada. In potentially in later phases of this recovery. But okay, let's move on to the next 137 00:20:48,710 --> 00:21:03,440 question. The 2008 financial crisis is often kind of pointed to as the emergence or like acceleration of FinTech lending, you know, there was a big credit 138 00:21:03,440 --> 00:21:14,750 crunch, tons of merchants and consumers, were no longer able to access bank credit, which left a lot of room for FinTech providers to kind of fill this this role. 139 00:21:16,430 --> 00:21:28,340 You know, 10 years later, we're also in a financial crisis. Do you see similar opportunities here for for FinTech lending broadly? Is this going to accelerate 140 00:21:28,340 --> 00:21:34,820 the industry in any way similar to the way that the last financial crisis accelerated the industry? 141 00:21:38,080 --> 00:21:50,080 Arina Eremina: I can take this one on. Definitely. So one of the patterns is that unlike in the previous crisis, we have additional fuel in which is the entire 142 00:21:50,080 --> 00:22:01,300 corporate expedience. So many people have to be more comfortable the one line better solution. So those people who are usually would have been referring the 143 00:22:01,300 --> 00:22:12,250 personnel, brick and mortar experience to financial institutions right now had to switch to them or buy another online type of experiences in financial and 144 00:22:12,280 --> 00:22:21,040 other sectors as well. So this is what's going to help fintechs definitely, given that that familiarity was brought into the market or pushed into the market. And 145 00:22:21,040 --> 00:22:32,080 also, we will have an opportunity, given the increasing demand and [inaudible] from traditional institutions, gap is there and it's clearly there. How we're going to 146 00:22:32,080 --> 00:22:41,860 feel any different question for acquire new type of leadership. Also, understanding the credit is on the one side of FinTech solutions and coming up with it 147 00:22:41,890 --> 00:22:52,660 holistically, but then sure, having more services bundled together and guiding our customers through this time. Leadership will have to understand this need, 148 00:22:52,720 --> 00:23:00,460 and also be able to find them sort of a similar journey and building those holistic solutions are definitely opportunities there. 149 00:23:02,350 --> 00:23:11,830 Cato Pastoll: Yeah, I mean, I totally agree, just add in that there is going to be a massive opportunity, you know, given you know, but both the kind of digitization 150 00:23:11,860 --> 00:23:19,570 rapidization, that we see, and as well as just kind of the lack of competition that there's going to be, you know, I'd imagine that, as you saw in '08, you know, 151 00:23:19,570 --> 00:23:28,000 they'll be financial institutions probably pulling out of the, you know, the space, and therefore, that will open up even more opportunity for, you know, for 152 00:23:28,000 --> 00:23:37,060 online lenders like us, I would say that the only kind of caveat I'd give is kind of along the lines of an earlier point that I made, which is that I think that 153 00:23:37,090 --> 00:23:47,530 unlike '08, you know, that that crisis was a, you know, a mortgage fueled financial crisis. This in some ways might actually be a small business field crisis, it's 154 00:23:47,530 --> 00:23:56,020 obviously not the only thing but but that actually might be, you know, one of the key areas that needs financial support and assistance, which is no different 155 00:23:56,020 --> 00:24:05,500 than '08. I think, given that difference, I think that they might be a longer recovery and a longer time to kind of get back into market and get back to the type 156 00:24:05,500 --> 00:24:13,360 of lending volumes that we saw before. Just because of that kind of key difference, like I said, which is, you know, given the nature of the pandemic, which is 157 00:24:13,360 --> 00:24:22,330 totally an organic and natural, it's shut a lot of small businesses down, which is definitely not what you saw in '08. They will kind of, they want the cause they 158 00:24:22,330 --> 00:24:29,620 were effect but here in a weird way, they're actually the cause at least of a lot of economic pain that we're going to be experiencing. 159 00:24:31,780 --> 00:24:42,490 Tal Schwartz: So, really, I mean, you brought up that this is obviously accelerating fintech adoption broadly. I think this crisis is the show is one thing 160 00:24:42,490 --> 00:24:57,340 that you know you know, we're we're adopting technology dynamically at a much faster rate. I mean, I think this zoom is like a case in point. But with this with this 161 00:24:57,340 --> 00:25:12,340 acceleration, do you think this is also going to impact the relationship between banks, Canadian banks working with with fintechs? And do you think that this might 162 00:25:12,760 --> 00:25:15,070 accelerate or stress that relationship? 163 00:25:16,680 --> 00:25:26,370 Arina Eremina: Yeah, so this is definitely an additional possibility for partnership, because we need the online available solution right now is not. It's 164 00:25:26,370 --> 00:25:36,570 not an option anymore, right? Where before it was more competition, and we choose and talk about well as consumers to brick and mortar, right, it's no longer 165 00:25:36,570 --> 00:25:46,560 discussion anymore. But now it's a necessity and mandated necessity, where we simply won't be able to process the same volume of customers as we could before 166 00:25:46,560 --> 00:25:57,210 the regular face to face experiences. So there will be a new digitization and our old question is how prepared our traditional institutions are? We don't know. 167 00:25:57,300 --> 00:26:05,790 They've been working on it for quite some time. So let's see, do they still need us partners, maybe they have something ready, we don't know. But hopefully, it 168 00:26:05,790 --> 00:26:14,190 will open the door for working together much closer than in the past, because we're here to help. At the end of the day, it's about the mission and mission is 169 00:26:14,190 --> 00:26:15,810 to support small businesses. 170 00:26:17,520 --> 00:26:36,540 Tal Schwartz: Well said. FinTech lending in Canada is largely an unregulated industry. Do you view this as potentially a, like a roadblock or an advantage in just 171 00:26:36,540 --> 00:26:38,580 the growth of the industry generally? 172 00:26:39,680 --> 00:26:46,670 Harley Greenspoon: Yeah. So I mean, in terms of regulation, I think, look, there's a perception that if somebody isn't regulated, that they're not that there's 173 00:26:46,670 --> 00:26:54,380 a higher risk, but they're not following best practices. And that's not always the case. I mean, I think there's a lot of the leading FinTech lenders are 174 00:26:54,380 --> 00:27:03,950 doing those things. They're following the best practices that are in place for f5, or other regulated entities, whether it's KYC, AML, info security 175 00:27:03,950 --> 00:27:11,450 policies, internal controls, whatever it is, a lot of us are already doing that, whether it's because we've had to raise bank financing in the past, and they've 176 00:27:11,450 --> 00:27:20,840 demanded that, whether because because we're associated with publicly traded entities, or have institutional investors, a lot of us are doing these things. So I 177 00:27:21,440 --> 00:27:29,630 think and that's been part of the conversation with government, as we've tried to be become closer as part of some of the COVID lending programs. You know, the 178 00:27:29,630 --> 00:27:39,380 other thing that I mentioned is, you know, give a shout out to you Tal and the CLA, you know, CLA, which you represent was really formed to encourage, you know, 179 00:27:39,410 --> 00:27:49,160 fintechs, to follow the industry best practices, to ensure, you know, transparent and responsible lending. So I think it's, you know, it's incumbent on all of us 180 00:27:49,160 --> 00:27:58,760 to, to do all these things, to follow best practices. To show that whether regulated or not, we have the right processes in place. And then, you know, because 181 00:27:58,760 --> 00:28:10,040 this is a sort of a broker, conference, obviously, those things need to sort of work hand in hand, with providing a smooth experience to any resellers. To 182 00:28:10,040 --> 00:28:17,120 merchants, we got to we, you know, we got to use the latest digital tools, whether it's online bank feeds, or whatever, just to make it, you know, a great 183 00:28:17,120 --> 00:28:26,570 merchant experience. So, you know, you can't sacrifice, you know, user experience for it for compliance, you really have to have them both. So look, I think that 184 00:28:26,600 --> 00:28:35,390 the more that we can demonstrate to government and other stakeholders that, you know, we do adhere to those standards, I think the more likely we're going to 185 00:28:35,420 --> 00:28:43,190 be invited to participate in government programs. You know, the other thing, I think that will be a game changer, and I know, my co-panelists will probably want 186 00:28:43,190 --> 00:28:53,210 to add something on this is open banking, right? If open banking does come in the coming year, which we all hope it will, you know, in order to be included, as 187 00:28:53,210 --> 00:29:03,800 part of that, we will need to demonstrate that we are, you know, that we are basically we meet those standards of security and accountability. So, I think, you know, 188 00:29:03,800 --> 00:29:12,050 open banking truly would be a win win win, both for the merchants, for the funders for for for brokers and resellers. So, I think that's sort of one area that I'm 189 00:29:12,050 --> 00:29:20,390 hopeful that, you know, will be a game changer for the next year, and I think is closely linked to the concept of regulation, and being able to demonstrate that, you 190 00:29:20,390 --> 00:29:24,230 know, you have the security protocols to be to actually consume some of that data. 191 00:29:26,480 --> 00:29:36,410 Tal Schwartz: Oh, well, well said. Yeah. And I mean, that the open banking topic is, you know, tied inextricably to the regulation of our industry. And I 192 00:29:36,410 --> 00:29:47,870 think anyone that's advocating for the advancement or the maturity of an industry should also be advocating for a clear and consistent regulatory guidelines as 193 00:29:47,870 --> 00:30:00,740 well, because it just makes it more competitive, easier to to to operate in. And that goes for everyone in the ecosystem all along the lending chain. So So switching 194 00:30:00,740 --> 00:30:17,480 gears again, a little bit, we touched on this a bit, but I think I mean, in particular, because this is again, a broker audience. Has COVID made any of you 195 00:30:17,930 --> 00:30:29,900 rethink any of the credit products that you guys offer? We definitely talked about, you know, the sectors that you guys service and how you're focusing on stratifying 196 00:30:30,140 --> 00:30:39,680 the way that you look at your book, but maybe just specifically around credit products, and we've seen Canada, the emergence, you know, more recently, like 197 00:30:39,680 --> 00:30:53,660 revenue based financing, and sort of a derivative of MCAs. So maybe in a post COVID environment, are there any kind of lessons that you that you're taking away, 198 00:30:53,810 --> 00:30:58,430 specifically around the kinds of products that you guys plan on offering in the future? 199 00:30:59,030 --> 00:31:08,540 Cato Pastoll: Yeah, I can maybe start this this one? I think I absolutely. You know, I think obviously, evolution is kind of natural, and we're all looking to 200 00:31:08,870 --> 00:31:15,830 grow and evolve our businesses to kind of better service our customers, I think, Arina kind of mentioned as well about, like, you know, as we go digital, 201 00:31:15,980 --> 00:31:23,600 wanting to be kind of more of a centralized offering, and offer more product and services to customers. So I would say that that's, I think, probably for all of us 202 00:31:23,600 --> 00:31:32,930 kind of a thought that we have, in our minds anyway. But I think what this is, you know, what this is really doing right now is making us really focus and 203 00:31:32,930 --> 00:31:39,830 concentrate on, you know, especially sectors that are, you know, at least that I can speak the language, you know, sectors that are doing well right now, and we'll 204 00:31:39,830 --> 00:31:47,780 probably be in a good position over the next 6 to 12 months. Because that's really where we can, you know, see help businesses the most and seize the most 205 00:31:47,780 --> 00:31:56,330 opportunity as a platform, right. So I think, you know, you have to adapt to the current market environment, and you have to make sure that your products and your 206 00:31:56,330 --> 00:32:05,240 customer base are aligned to you know, at least in the short term success, I think, probably long term, it won't change too much. But I think in the short term, 207 00:32:05,600 --> 00:32:10,850 for sure, there are some changes that are being considered, I'm sure, by many different platforms. 208 00:32:12,790 --> 00:32:20,950 Tal Schwartz: So do you think in the long term, we might arrive back at the same kind of place that we were like, previous to this crisis, but in the short 209 00:32:20,950 --> 00:32:26,470 term, there's a lot of like, fine tuning of specific products and, and sectors that you serve? 210 00:32:26,810 --> 00:32:32,780 Cato Pastoll: Yeah, I mean, my big picture belief, and I've kind of always, always stated this is that like that, you know, the long time I see there being a 211 00:32:32,780 --> 00:32:42,110 convergence or kind of intermediation, re-intermediation of FinTech or financial services, I mean, it's natural to want to provide multiple products 212 00:32:42,110 --> 00:32:51,170 and services to, you know, as you scale to customer related to drive up value. And that's obviously where banks have been very successful is you know, that they 213 00:32:51,170 --> 00:32:57,500 get you because you start with your checking account, but then they make a lot of money off of you because you buy all their other products and services to while 214 00:32:57,500 --> 00:33:05,750 you're there. So I think something like that, in the long term is natural and in the FinTech space. And I would say that, that that is the long term. And I don't 215 00:33:05,750 --> 00:33:13,250 think that that this is going to change that long term strategy or or I think what's what's naturally going to happen in the long term, but I think short term, you'll 216 00:33:13,250 --> 00:33:20,360 probably see a lot of focuses on maybe particular areas, sectors, niches, to make sure that your business can kind of thrive in the short term. 217 00:33:21,740 --> 00:33:33,440 Tal Schwartz: So does that mean in your in your big picture scenario, that there's, I mean, if there, I do think that that fintechs are going to sort of evolve into 218 00:33:33,440 --> 00:33:44,420 some sort of like a consolidation of services similar to a bank, or is the evolution that fintechs that offer different credit, or financial services can partner 219 00:33:44,420 --> 00:33:52,910 with each other? Yeah, create like a sort of a, like an ecosystem that rivals the consolidation of the bank. 220 00:33:54,100 --> 00:34:03,280 Arina Eremina: So it's not necessarily will be the same products as what they offer another type of plan, but rather creating value where the gap is. So it's about 221 00:34:03,280 --> 00:34:12,100 creating potential, some digital solutions and platform type of solutions that have nothing to do with financial services per se, or only adjacent to it. It's 222 00:34:12,100 --> 00:34:23,080 about finding those niches to pop in and trying to bring digitization. And this is what this is actually part of given the whole corporate situation. So this is 223 00:34:23,080 --> 00:34:33,190 about making it more affordable, easier to access and easy to use. Small business owners are busy with running the business, making it simpler for them. 224 00:34:33,340 --> 00:34:43,090 Finding some potential advisor solutions that are going to be innovative. Something that nobody else provides to them, right? Person taking it all in one place. Easy 225 00:34:43,300 --> 00:34:44,230 and accessible. 226 00:34:46,820 --> 00:34:58,640 Tal Schwartz: Got it. I want to ask one more question. I think we're kind of running low on time. You know, we we touched on this a little bit at the beginning, you 227 00:34:58,640 --> 00:35:11,360 know Harley when you were talking about sort of like your your COVID action plan and the steps that you took. But, you know, just as a casual reader of the 228 00:35:11,360 --> 00:35:23,180 news, you know, you had all these pundits at the beginning of COVID saying, this huge wave of bankruptcies that's coming, you know, watch out. So, 229 00:35:23,180 --> 00:35:34,370 you know, now that another we're a few months into this situation, is it hasn't materialized at all and, you know, if not, where are they? And is that just is that 230 00:35:34,370 --> 00:35:40,340 is that potentially just attributable to some of these, like deferral options that you brought up earlier? 231 00:35:43,130 --> 00:35:45,230 Harley Greenspoon: Is that to me or Arina? And I'm not sure. 232 00:35:45,710 --> 00:35:47,990 Tal Schwartz: It's to anyone. 233 00:35:48,080 --> 00:36:00,650 Arina Eremina: Yeah, I can take it. Or I can star. So the bankruptcies have been interesting. So expenses have been deferred. Even our solutions, a lot 234 00:36:00,650 --> 00:36:11,810 solutions, so for sure [inaudible]. At the same time, let's remember that small businesses have difficulty accessing financial and legal services, given the 235 00:36:11,810 --> 00:36:22,760 closure and during the distancing. So therefore, they couldn't initiate bankruptcy as easier as before in the past. At the same time, it also depends on which sector 236 00:36:22,760 --> 00:36:29,510 we're looking at. Let's not forget the small businesses. So even though they're small, not huge corporations, they still have brand value that they 237 00:36:29,510 --> 00:36:45,260 care about. So a lot of them will keep fighting while they can. And definitely, there's not going to be a [inaudible] if anything, it's going to take time. So 238 00:36:45,290 --> 00:36:54,140 businesses will be given up as they go if they have to. But what we see is customers who actually plan to adopt trying to make it happen, as opposed to saying, okay, 239 00:36:54,140 --> 00:37:05,090 who cares? Well, that would be some other potential startup. So who started their business right before COVID? But they still have such a strong model that 240 00:37:05,090 --> 00:37:05,810 they created. 241 00:37:08,780 --> 00:37:15,080 Harley Greenspoon: I agree with the Arina's comments, I think, you know, this has been described as a little bit the calm before the storm, in the sense that we all 242 00:37:15,080 --> 00:37:22,760 know that there's going to be a bunch of bankruptcies due to some of the reasons that Arina mentioned, whether it's the courts being closed, whether they're 243 00:37:22,760 --> 00:37:30,470 being sort of no creditors, not really pushing businesses into bankruptcy, whether it's government stimulus that's keep propping businesses up, we know 244 00:37:30,470 --> 00:37:39,500 that there's some of that. And I think that's really one of the major questions for, you know, portfolio back back books really is what did what do the 245 00:37:39,500 --> 00:37:46,790 bankruptcies look like? How many of those business will remain open? There's been a lot of surveys done, I think the CLA has been involved in some. So there's 246 00:37:46,790 --> 00:37:53,630 been a lot of research, you know, and I think we know that there's going to be a spike in Canada, no different from the US, you know, where that number 247 00:37:53,630 --> 00:38:06,020 lands? I think no one's quite sure yet. But I think, you know, I think we continue to press forward with new originations and you know, what we're, you know, we 248 00:38:06,020 --> 00:38:14,570 remain remain open for business and I think, you know, it'll be it'll be a bumpy it'll be a bumpy year, there will be a shakeout for sure, but I do believe there 249 00:38:14,570 --> 00:38:16,400 will be good opportunity on the other side. 250 00:38:17,670 --> 00:38:25,140 Moderator: Okay, great. Um, we just have a few seconds left. Tal, thank you for leading this if you have any losing statement. 251 00:38:26,460 --> 00:38:37,950 Tal Schwartz: Yeah. Well, I mean, I just want to thank you all so much. Big thank you to my panelists. All three of you run incredibly exciting businesses that 252 00:38:37,950 --> 00:38:48,240 re really core to the Canadian economy and core to his, the navigable recovery that we're all going to be going through shortly. So thank you so much to you, and 253 00:38:48,240 --> 00:38:55,320 hank you deBanked for hosting this this really cool, avatar driven event.