Insurance Business How one giant Canadian insurer is dealing with fintech competition

How one giant Canadian insurer is dealing with fintech competition Holding company Power Corp. of Canada has made it known that it has set aside $250 million to purchase promising fintech start-ups.

The company hopes that these innovative upstarts can compete with Power’s other established businesses, integrate with the corporate culture, and help accelerate the modernization of the firm.

“We want you to attack our group, because we want you to do the job that other people are going to do to us,” said Power Corp. chairman and co-chief executive officer Paul Desmarais Jr. “We want to do it from the inside, and we want to give you a big budget.”

In an earlier statement last month, Desmarais Jr. said that fintech “is changing the financial services world.”

“It’s big, it’s coming, it’s there and we want to be part of that,” he stressed then.

Power Corp. last October launched its in-house venture fund Portag3, which would support start-ups involved in the development of innovative financial technology solutions.

Power’s strategy is said to be a hybrid model that lies between “companies that try to change on their own but face resistance internally, and others that subcontract work to start-ups.” Indeed, the company’s Power Financial Corp. unit recently invested $100 million in robo-adviser Wealthsimple Financial – a direct competitor to several of Power’s wealth-management companies.

“I don’t think many institutions would have had the foresight to let that company continue to operate on its own despite the capital investment that we’ve made,” Portag3 president Adam Felesky told Bloomberg on the matter.

The investment committee for the Portag3 fund meets twice a month, with executives from Power’s more established units chairing the board. According to Felesky, these meetings allow those executives to get a clear picture of what the hottest start-ups are up to, even if they do not end up investing.

“We convene every two weeks and we have an active dialogue about all the different companies we see around the world,” Felesky explained.

“$250 million, you’re going to say ‘with a group this big, what does that mean?’” Desmarais Jr. added. “But it’s huge because it’s impacting the culture of our companies like never before.”