A recent report from Deloitte, commissioned by the Ontario Centres of Excellence (OCE) and the Toronto Financial Services Alliance (TFSA), suggests that Southern Ontario is perfectly positioned to become a global hub for cybersecurity startups.
The current market for cybersecurity products is estimated at $106 billion. At the same time, the average Canadian data breach costs over $6 million, and analysts project the aggregate global costs of cybercrime at $2 trillion, with dramatic growth rates. With high enterprise risk but no single company leading the market for enterprise solutions, it’s an attractive sector for a new entrant.
Deloitte’s report argues that Canada, and Ontario in particular, should play a leadership role in the global development of this vertical.
Canada’s financial services sector is large, stable and increasingly interested in collaborating with new technology companies. Canadian banks have set themselves apart from the global class with a reputation for stability earned during the financial crisis. Investing in cybersecurity amplifies and helps protect that reputation. And as our friends at The Spotlight have covered, companies are increasingly becoming aware of the high costs of data theft.
This growing demand may soon be augmented by the actions of financial services regulators, who are increasingly turning their minds to regulatory technology as a means of imposing standards and solutions on the sector. If, for example, the Office of the Superintendent of Financial Services follows the EU’s lead and imposes standards for identify authentication and verification on the financial services and FinTech operators, it could be a huge payday for the right Canadian growth company.
In addition to thriving market demand, Ontario boasts world-class talent, R&D and incubation and accelleration facilities. The province is home to leading experts and commentators on cybersecurity, providing thought leadership and boosting traction. There is also significant access to capital from VCs, pension funds and government, allowing growth companies to scale when ready.
Finally, the Deloitte study identifies about 70 SMEs operating across the province in a variety of subject matter domains, with a majority of companies working on data protection, but others focusing on identification and authentication, application security, cloud and mobile security, and threat intelligence. This suggests that there are enough active companies on the ground to provide a healthy environment for competition, collaboration and talent acquisition, but there is still plenty of room for new entrants to gain traction.
In other words, the report suggests that the ingredients are in place for cybersecurity to become Ontario’s next big startup cluster.
On March 8th at the Design Exchange, OCE and TFSA will be co-hosting a “Finance Cybersecurity Partnering Forum,” intended to bring together Ontario’s top financial institutions, fintech and cybersecurity SMEs, and academic institutions. The Forum will discuss Deloitte’s report and feature case studies, talent development and collaboration models, and one-on-one networking. For more information or to register for the Forum, click here.