Today Wealthsimple announced it is selling it’s block of US accounts to US-based robo-advisor Betterment, and will no longer support US accounts. While there’s not a lot of commentary to read around the strategic rationale, it exemplifies a core design principle that we see among fintech winners: it’s better to focus on someone than everyone. 

Doubling down on the Canadian consumer will allow Wealthsimple to tailor their experience to Canadians without the complications of serving the needs of two very different countries in terms of regulatory bodies, legislation, products and tax implications. Their recent move into tax planning software (through the acquisition Canadian software company SimpleTax) is consistent with a strategy of building a diverse product platform aimed at a specific geography. 

Tackling new countries is likely best served with a dedicated focus, and the financial services sector happens to be one of the toughest ones in which to break new geographic ground. Revolut’s lengthy approach to expanding to Canada illustrates this.

The withdrawal of Wealthsimple from the US market is also not entirely surprising given their ownership: Power Corporation of Canada (owner of Canada Life, among many others) has a huge 77.4% ownership stake. Power Corp. is also an investor in neobank Koho Financial, which we’ve included in our upcoming LARI Report: Digital Banking – Opening an account digitally ranges from easy to egregious.

The Toronto-based FinTech company, which provides robo-advice as well as access to financial advisors, has been rapidly expanding the product line, adding new capabilities for savings and spending, crypto investing, and now peer-to-peer payments. According to The Globe and Mail, Wealthsimple accounted for 43 percent of new trading accounts opened in January, more than any other Canadian brokerage.

Bitcoin, Ethereum, Litecoin… today’s sophisticated investors are increasingly asking about these digital asset alternatives to traditional wealth holdings. So it’s not surprising to see an investment pairing of minds and equity in the form of Mogo’s strategic investment in Coinsquare. 

Through the deal, Mogo acquires nearly 20% of Toronto-based Coinsquare, digital asset trading platform. The deal includes an option to expand to 40%. This deal expands an existing relationship – Coinsquare is the trading platform today for MogoCrypto, which allows Mogo members to buy and sell bitcoin. The current investment by Mogo brings their digital wallet capabilities closer to the digital trading platform operated by Coinsquare.

While bigger industry players may be inclined to write off digital asset alternatives as a niche market (Coinsquare saw trading volume of $525 million in Jan, 2021), it’s undoubtedly a growing need. Speaking of the investment in Coinsquare, Greg Feller, President of Mogo, said: “This major strategic transaction with Coinsquare gives us a significant stake in a highly valuable platform in one of the most exciting and fastest growing sectors of fintech. We believe there are significant opportunities to drive value for both Mogo and Coinsquare by bringing together Mogo’s leading digital wallet capabilities and Coinsquare’s leading digital trading platform.”

Mogo is undoubtedly an exciting Canadian FinTech to watch. With over one million members it’s user base growth is impressive. Through the Mogo app, consumers can access a digital spending account with Mogo Visa* Platinum Prepaid Card featuring automatic carbon offsetting, easily buy and sell bitcoin, and get free monthly credit score monitoring, ID fraud protection, and personal loans.

How will Canada’s big banks and brokerages address the new variety of digital assets some investors are looking for? Will they too pair up with FinTech players through strategic investments? Will they build-in house or license from a third party? From an experience perspective, what would happen today if I walked into a branch and asked to invest in Ethereum?