BREAK THE BANK
Toronto-based Wealthsimple is leading a pack of “robo-advisors” that use software to build their clients' personalized investment portfolios in just a few minutes. Powered by a simple website that makes jokes about avocado toast, it has courted a demographic once dismissed as investment-averse: millennials. Newly expanded to the U.S. and U.K., the company now manages over a billion dollars — and isn’t planning to surrender any of that cash to competing robo-advisors recently launched by RBC and BMO.
You’re a leader of Canada’s fintech movement. What’s your take on that term?
I hate it. It’s applied so broadly that it means nothing. Technology is not some separate thing — it’s fundamental to the way that you run any business today. And we don’t want to be quoted just against other fintech startups. We want to be mainstream. In the same way that no one says e-commerce when talking Amazon.
Amazon started reshaping retail two decades ago. Why was the financial services industry so late to the tech revolution?
Because banks are incredibly daunting as competitors. Very few companies had the conviction, the capital, and the credibility to go up against them.
People’s expectations. We launched as Uber and Airbnb had found traction challenging established industries, and people were starting to wonder why banking still sucked. For a long time, there had been no room for better alternatives because banks had a monopoly on trust — no one would take a chance on a new competitor. But today’s young professionals lived through the financial crisis, which shook the perspective that banks should be trusted just because they’re big and old.
How have the big banks reacted to your success?
When we launched, their attitude was dismissive. They thought that, if we ever went anywhere, they’d just launch their own players and crush us. Now that they have introduced direct competitors, and we’ve still managed to grow our share of the market, there’s a new respect.
Why aren’t their competitors taking off?
If a bank has a client sitting in a mutual fund who’s paying a 2 per cent fee, it’s hard for that bank to cannibalize itself by introducing a digital advice offering that has a much lower fee. We don’t have that problem — we can out-execute them.
What’s still left to fix in the financial industry?
I have found a lot of inspiration from Asia. There isn’t the same legacy there that there is here of organizing things into product lines. If you’re an investment client of a bank who’s now applying for a mortgage, those shouldn’t feel like completely separate experiences.