Canadian banks definitely could use the competition. But I wish we nurtured markets with many smaller competitors in this country instead of big oligopolies.
There are quite a few competitors in retail banking, like EQ Bank, Alterna Bank, motus, …
But none of them have achieved a critical size IMO, especially when compared to WS.
The article is behind a paywall but…
Wealthsimple isn’t even a bank, let alone the next big bank. They are not a deposit taking institution. Their ‘savings account’ is just an agreement with a number of actual banks to accept deposits from Wealthsimple on behalf of their clients. Wealthsimple is merely acting as an intermediary.
Being a true deposit taking institution comes with a lot more regulation and institutional sophistication. Never mind the fact that deposit taking is only one side of what truly defines banking: aggregating demand deposits to enable lending. I’m sure Wealthsimple is looking to get into that game, but since they aren’t deposit taking I’m sure it will just be a pretty wrapper around another actual bank just like their ‘savings accounts’.
Is Horizons ETFs the next big bank because of their CASH.TO ETF? Horizons is doing a very similar thing through a different vehicle.
Having said, Wealthsimple has clearly created a competitive product suite. But their ability to offer these products fundamentally relies on other organizations (e.g., Mastercard, Big 5 banks) to do the heavy lifting. Wealthsimple’s competitive advantage is in product design and advertising.
It’s why Laurentian bank is still looking for a buyer. Wealth Simple could have at least some banking assets already and simply build out their web presence. That they didn’t means power Corp didn’t want to get into the banking business.
Oh, that’s really sad for the banks, then, because WS’s product design is decidedly mid, at best.
Please do start, the only thing Weathsimple is missing right now for me is credit score building. It can even stay pre-paid, I don’t care.
Having to maintain a separate credit card just to play the 30% game every month is the biggest banking pain in my life.
Personally, I’d like a solution to have more cash accounts, and especially joint ones and maybe kids accounts.
A real interact debit card would also be great, but that I can more easily deal with.