Andrew Graham helped bring Canada’s financial sector into the digital age, but warns it’s now falling behind.
As the co-founder and CEO of Borrowell, Graham helped give Canadians their first online loan product, access to credit data at no cost, and recently enabled them to use rent payments toward their credit scores.
At the same time, Graham warns that Canada’s regulatory system is designed to optimize stability, often at the expense of innovation. As peer nations move forward with new services like open banking, he warns ongoing delays and regulatory burdens have put Canada behind.
“We have a big opportunity in this country to have more competition and more choice and lower costs,” he says. “We’ve got a strong technology sector, we’ve got a strong financial services sector, we should be a home for globally competitive fintech companies; what we really need is the political will.”
The Ottawa-born entrepreneur earned an economics degree from the University of Edinburgh in 2001, which included a year studying in the French Alps, followed by a summer as a reporter for the Economist in London and a stint in communications with the global non-profit CARE.
Graham eventually returned home to Ottawa to work as a political staffer but left again soon after to attend Harvard Business School in 2006.
Around that time Graham met fellow Canadian Harvard graduate Eva Wong and, after commiserating about their mutual struggles finding work back in their home country, the pair co-founded a non-profit called Toronto Homecoming in 2008 to help bridge the gap.
“I had just gone through that challenge of living abroad and trying to find a role in Toronto, and it took a lot of work, a lot of flights back to the city meeting with people,” he says. “We sort of met and connected over this similar experience, where we had each been living abroad and had to navigate the world of searching for a job in Toronto.”
Graham eventually did land a job in Toronto with Nortel in 2008 and, two years later, followed his then CFO to George Weston Ltd., which led to a role at PC Financial.
In 2014 he left to co-found Borrowell, one of the country’s first fintechs, alongside Wong. In the decade since, Borrowell has become one of Canada’s most widely used digital financial services, with more than three million users and one million app downloads.
Graham recently spoke with the Star from his office in downtown Toronto about the evolution of the fintech sector, the state of the country’s balance sheet, the significance of adding rent to credit history, and why there’s so much more the industry could offer Canadians under less restrictive regulatory conditions.
What inspired you to start a fintech?
I was working in the financial services industry and seeing some of the challenges that consumers face. If you’re well off, you can hire financial advisers to help you optimize your finances, whereas if you’re just a normal person it can be much harder to navigate. What’s always been exciting to me is that technology can help everybody get personalized financial information at low cost.
I co-founded a not-for-profit in my spare time called Toronto Homecoming, and that entrepreneurial experience was a lot of fun and really gratifying. I liked building things and thought the financial services industry needed changing, so I decided to leave my corporate role and founded Borrowell.
How did Canadians access credit data at that time?
Very few Canadians had any access to their credit data. The only way to get it was to buy it through a credit monitoring service. You could go in person to Equifax or TransUnion kiosks, and you could request a paper copy, but it was certainly not widely available. As a result, very few people had any sense of what their credit score was or why it was what it was.
As you mentioned, Canadians faced many challenges related to personal finance. Why did you want to solve credit specifically?
I was really fascinated by credit cards, because they’re not just payment vehicles, they can also be a way to borrow money. But for many people it ends up being a very expensive way to borrow money. If you went to a lender, you could get a loan at 10 per cent or a home line of credit at five per cent, but on a credit card you’d be paying multiples of that. I just thought that was strange. So solving that remains at the heart of what we do; helping people find the right portfolio of financial products for their needs.
How has that offering evolved over the last decade?
The first product that we had was a low-cost loan that you could apply for entirely online. It was 2015. We were the first to do that. Soon after we became the first company in Canada to offer credit scores for free and that was an important turning point. That’s when things really took off.
You’re no longer alone in providing that service, so what makes Borrowell unique?
We’re the only Canadian company that is offering free credit score and reporting as a primary part of what we do. We have a couple of foreign competitors, and I think being headquartered here and being run by Canadians allows us to have a great understanding of this market. We’ve built deep relationships over the years with banks, with fintech companies — I’m now chair of the board of Fintechs Canada — so that gives us a really unique perspective.
What are some of the economic patterns you’ve seen amongst users recently?
One of the most interesting times for us was COVID. When the lockdowns first started lenders became hesitant to advance more credit, but as government programs came into effect the average indebtedness of our members went down because there was more money available. COVID gave us three years of relatively low indebtedness, missed payments and bankruptcies, but now we’ve gone back to where we might have been beforehand.
Are you concerned with the direction Canadians’ finances are heading?
It’s more concerning than where we were a couple of years ago, but I wouldn’t say alarm bells are ringing. The biggest driver of missed payments or consumer bankruptcies is unemployment. When people start losing jobs, that’s when really bad things happen in the world of credit. There’s been some softening of the job market, but we as a country have weathered the last few years pretty well from a job’s perspective.
Are Canadian households becoming more financially stable now that interest rates are declining?
Interest rates are still significantly higher than where they were during the COVID period, that’s what’s most important. We haven’t really seen the effects of interest rates declining, and the reason is because they’re still higher than they were a few years ago, and there’s still a large volume of mortgages in Canada coming up for renewal at a higher rate.
Speaking of housing costs, how were you able to allow renters to use their payments toward their credit score?
That’s one of the advances I’m most proud of. Traditionally, if you pay a mortgage, those on-time payments get counted in your credit history, whereas your next-door neighbour who’s renting — who could be paying the same amount in rent as you’re paying in mortgage every month — those payments wouldn’t count for them.
We’ve got a long and positive relationship with Equifax — it’s Equifax data that we’re ultimately sharing with consumers — and they agreed with us that this is a problem. The challenge was getting the data into the system, because there’s only a handful of mortgage lenders in this country, but many thousands of landlords.
We worked with Equifax to establish standards for data quality, so we help the consumer show their rental payments. We work with them to verify it and then we hand the data off to Equifax to include in the consumer’s credit history. When we first launched the service, it was only forward looking. Now we can go back up to 24 months.
It’s been a major win-win. Lenders get a better sense of credit risk and consumers get more access to credit; especially new Canadians, who often struggle to establish a Canadian credit score and often start in this country as renters.
Financial data is more readily available in other countries. Is our regulatory system slowing the industry down?
There’s a belief that innovation comes at the expense of the stability that we take very seriously in the financial sector and I think that’s just not right. You can have a financial sector that’s both stable and secure while also having vigorous competition and choice. Virtually all the regulators that monitor the financial services industry have a mandate that focuses on stability, and there’s no mention of competition or choice or driving down cost, and I think that’s a missed opportunity. I think regulators could do both.
What would open banking mean for Borrowell?
With rent reporting, for example, the biggest challenge our consumers have is they have to show they paid their rent every month by connecting their bank account. Because we don’t have open banking, that’s a clunky process that often breaks. It’s like if Netflix asked you to re-enter your payment details every month. That’s the world we’re living in today.
How do you see the business expending in the future?
I’m excited to continue helping Canadians assemble the right portfolio of financial products for wherever they are in their lives. New technologies like AI allow us to do that in a more powerful way, and there’s never been more opportunities to make the complicated world of financial services more accessible.
This interview has been edited and condensed.
