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.

This week Toronto-based KOHO launched a new service, KOHO Credit Building, reports all activity to TransUnion, one of the two major reporting bureaus in Canada. The service costs $7/month, and is aimed at helping clients improve their credit scores. By issuing a small line of credit and reporting on it monthly, clients can generate a positive credit history. 

“Historically, the options for building credit are expensive, murky or both, especially for middle-class Canadians,” explains CEO of KOHO, Daniel Eberhard. “We think our approach to credit building is a new form factor. It’s simple, affordable and transparent. We’re really proud of it.”

The service complements KOHO’s existing product shelf, which is based on a full-service banking or savings account with no fees. The account includes a prepaid Visa card that earns cash back. 

The startup is backed by industry giant Power Corp., and it’s growth trends are impressive. With over 350k users, and $2 billion a year in transactions, it’s one to watch (but certainly not the only one, with a nod to MotusBank, Mogo, NeoFinancial and Revolut). 

Our insights team at LARI particularly likes their publicly accessible product roadmap. It allows anyone to see what’s in their development timeline for the year ahead, and provides virtual collaboration options for visitors to submit feature requests. We applaud this approach for a few reasons:

  • Engaging heavily with clients in product development is the surest path to a winning product
  • Transparency ranks highly on the list of what Canadian clients value from a financial services provider
  • Collecting client feedback during ALL cycles of product development will hands-down result in better products than a gated approach with “windows” for feedback and refinement