Tech-enabled change will drive Alberta’s economy through the recovery and beyond
By ATB Financial 25 March 2021 6 min read
“The big recurring theme is that technological change is reducing barriers and making things like starting and running a company cheaper,” says Martin Toner, Director, Institutional Research, Growth and Innovation at ATB Financial. “ Technology is being applied to traditional industries to create value throughout the economy, which is creating winners and losers but also new markets and business.”
With economic uncertainty continuing in Alberta, ATB and MNP have partnered to create a comprehensive content series aimed at deepening insights around the challenges and opportunities of post-pandemic recovery first discussed at The Alberta Economic Recovery Summit. The series will share local perspectives on how to address challenges across key sectors, including agriculture, aviation and logistics, energy and cleantech, financial services, petrochemicals and technology and data. This piece looks at how critical technology is to accelerating the recovery throughout the economy.
Industry leaders looking to successfully navigate the post-pandemic recovery must recognize—and embrace—the transformative opportunities technology offers both within their own companies and their industries. To ensure technology thrives in Alberta, continued investment in the ecosystem is needed.
Technology is a driving force of change
Why is technology so critical? It enables layers of disruption throughout industries while at the same time creates added value for companies and allows for net new economic growth to the economy.
"Cloud computing, e-commerce and fintech platforms are lowering costs for start-ups, especially technology-driven or delivered businesses. The result is business creation is proliferating."
Director, Institutional Research, Growth and Innovation at ATB Financial
Ottawa-based Shopify is an example of a company built on disruptive technology that enables other companies to more easily and cost-effectively create even more transformative experiences. Shopify’s services are possible because of cloud technology. Those services, in turn, make it easier and cheaper for a business like localshops.ca to exist, which itself provides other Calgary companies with an easy way to sell online. Shopify’s cloud-powered tools also disrupt traditional industries by allowing for direct-to-consumer sales, like in the case of 150-year-old Heinz, which bypasses traditional retailers using the e-commerce platform.
“It is fair to say that a large number of Shopify’s more than one million merchants started on the platform and might not exist without Shopify’s turnkey ecommerce platform,” says Toner.
Aside from creating massive disruption, technology is creating net new economic growth rather than redistributing it. Financial services is one area where this is clear, he says.
“Fintech is another set of enabling tech that is bringing services to new customers. People who have been underserved by traditional financial services, like those who are unbanked or underbanked and often in the bottom quartile of the income scale, are accessing services because of cloud-enabled, Software-as-a-Service (SaaS) model companies,” explains Toner.
“Companies like Square and Lightspeed are helping these drastically underserved consumers and businesses whose options were previously limited. They are not stealing these customers from competitors. They are giving options to people who used to not have any. And this story is continuing to unfold. We’ll see more and more services being offered and it should be a net benefit to the economy.”
Fintech start ups are also challenging many traditional delivery models for financial services, including credit and debt, customer acquisition, merchant acquisition, transaction processing, credit analysis, and others, says Toner.
Embrace the transformative power of tech
For Alberta companies looking at post-pandemic recovery, it’s clear technology cannot be ignored. The disruptive nature of technology will continue and those who embrace it will have a greater chance of long-term success. Toner says one place to start is by adopting cloud-based solutions.
“There is a ‘if you can’t beat ‘em, join ‘em’ aspect to this. Mid-market companies should be looking to find new solutions in cloud-enabled software companies, which offer cost saving opportunities and require less maintenance spending,” he says. That potential cost savings frees up dollars, which can be reinvested into a company’s research and development to better serve its customers or develop its own tech-enabled disruptive offering.
Beyond the cloud, industry leaders should stay on top of the disruptive trends and companies in their sectors and think about how to take advantage of innovations. This can be done by utilizing solutions within their business or building new value-added offerings on top of or in partnership with such companies.
Another path of potential opportunity Toner sees is in delivering new services to customer segments emerging because of disruptive tech. For example, data from the most recent census found that Canadians working in the gig economy increased by 5.5% between 2005 and 2016 thanks in part to tech-enabled tools.
“These micro-entrepreneurs require many of the products and services—like banking and insurance—as traditional services just in much smaller increments,” he says.
The main challenge for companies eager to tap into technology for the recovery is often the experience level of employees and leadership within the company, says Toner. “Do they have the people, the time and the money to take advantage of some of these trends? Change requires all of those things. And it can be hard when you have to make payroll or are trying to generate a certain return in a time period,” he says.
“The solution is to be willing to seek out advice. Be willing to take some risks, invest time and money in order to see returns down the line,” he says.
Invest in Alberta’s entrepreneurs
The most direct way to accelerate Alberta’s recovery with technology is to supply entrepreneurs who can take advantage of these technology trends with more capital.
“Give money to the venture capital firms that focus on the companies in Alberta,” he says, adding that these investments improve and diversify the output of our innovation economy. “In 2019, $227mm in VC was raised in Alberta, representing a 40% increase. The growth in the number deals in 2020 shows greater progress with 40 in the first nine months of that year versus 34 in 2019,” he says.
While this is a promising development, more investment will keep the momentum going. Toner says roadblocks to investing in entrepreneurship include a lack of familiarity with the space, a lack of knowledge about where to put capital, and a really long hangover from 2000.
Another way to support Alberta’s technology and innovation industries is to support primary research and development using public sources of capital. Primary research is a key competitive advantage over the long term, says Toner.
“Venture capital is not the first dollar [for technology and innovation]. Investing in universities doing tech research and medical research creates work that entrepreneurs pick up on and further develop,” he says.
One often overlooked way to support Alberta’s entrepreneurs is to invest in telecommunications infrastructure, says Toner. Improving internet access and speed throughout the province will allow a greater diversity of people to tap into digital technology and become entrepreneurs.
Champion Alberta’s tech scene
Alberta has a thriving tech scene, however, that’s not well known in Canada or around the world. Given how critical technology is to Alberta’s route to recovery, Toner says there is a need to drive much greater awareness of the stories within our borders.
“We need to champion the stories coming out of the province—and there are a lot of them,” he says. Examples of successful companies abound including Benevity, Attabotics, Jobber, Granify, Symend, Smart Technologies, Absorb Software and Zedi to name a few. Beyond specific companies, there’s a growing artificial intelligence and machine learning hub in Alberta with efforts such as the Alberta Machine Intelligence Institute, and Edmonton.AI.
After championing our tech industry, Toner says we must encourage our successful tech talent to invest in developing the next generation of talent and entrepreneurs.
“It's very common to see entrepreneurs or employees come out of these success stories and go start something else,” he says. Whether through formal or informal channels, these efforts pay off by creating a virtuous cycle of entrepreneurs, talent and capital that can continue to accelerate Alberta’s technology industry—and its future growth.