While many older Canadians still bank almost exclusively in-person at brick-and-mortar institutions, a majority of the nation’s younger investors are managing their financial assets using entirely digital processes supported by financial firms that often don’t even attempt to offer physical branches.
Among Canada’s pioneers in the rapidly evolving fintech space is Wealthsimple.
Founded in Toronto in 2014, Wealthsimple has experienced steady growth as the fintech has continued to add features to its app over the years.
For example, building on venture capital and private credit offerings, Wealthsimple last year unveiled its third alternative investing option for retail investors: private equity.
And in addition to breaking down barriers to institutional-grade investment opportunities, Wealthsimple also bolstered its cash account and added stock lending to its mix of offerings in 2023.
Even more recently, Wealthsimple revealed an ambitious growth target: the company wants to quadruple assets to $100 billion within five years, according to chief executive officer Michael Katchen at an investor conference this week.
“I’m proud of what we’ve built here in Canada in eight short years,” Katchen stated last May, when the fintech reached three million users.
In effect, the company wants to be Canada’s Next Big Bank—or, as Katchen put it to The Globe and Mail in January, “something better than the bank.”
It’s a bold notion. And an interesting one.
While others have tried to compete at scale with the incumbents, recently shifting conditions may be different—and more in favour of a fintech upstart.
One factor is that technology is permeating the financial sector worldwide at a rapid rate, and challengers are more nimble and agile with regards to leveraging next-gen tech.
Another factor is changing demographics. As tech-wary boomers retire en masse, younger digital-forward generations appear eager for viable alternatives to the stuffy Big Five banks which have dominated the nation’s financial landscape for decades.
“I must say that Wealthsimple has done a very good job at appealing to the younger generation,” one recently popular post on Reddit’s Wealthsimple forum reads.
“Can’t stand dealing with the old banks anymore,” a replier lamented.
“They can innovate where traditional banks and their legacy systems and processes are slow to adapt,” another user offered.
Of course, not everyone is satisfied with everything.
For example, Wealthsimple was scrutinized for its lack of in-depth analytics data and reporting.
“Their charts are way too basic and can be incorrect a lot of times,” the original poster said.
“I would like to see a dividend schedule and dividend income projections,” another user suggested (a lack of data around dividends has been a continuous complaint of longtime Wealthsimple users).
Perhaps there is such a thing as too much simplicity.
One user summed up both sides: “Wealthsimple does a fantastic job of making things accessible to those who may be less financially literate,” they said, adding that platform remains “severely lacking in analytics and displaying useful stats.”
Overall, Wealthsimple appears on a trajectory of steady growth as the Canadian company continues to innovate and add products that appeal to tomorrow’s investors.
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