Canadian companies are using technology to improve your financial life. Big changes are coming to make things simpler and more rewarding, from how you pay for a lunch-time coffee to how you plan for retirement.
A recent report from the Canadian Centre for Policy Alternatives highlighted how high fees on mutual funds are eroding Canadians’ retirement savings in their RRSPs: over a working life, an average RRSP investor would have to work until 72 to build the same savings as a pension plan holder would have built by 65! It is clear that you can’t just invest, but need to invest smart.
So how do you drive engagement in investing? By de-mystifying the process and making it more accessible. That is where the internet comes in, with a number of online Canadian wealth management platforms having recently launched. In 2014, Wealthsimple and Nest Wealth in Toronto and WealthBar in Vancouver started offering better investing options to Canadians across the country.
While each platform has a different approach to pricing and investment strategy, there are some common themes. They have lower minimum investment amounts than is typical in the industry. Your portfolio is rebalanced regularly (even daily!) to keep your investment goals on track. Online dashboards and mobile apps keep you up-to-date and show the two things investors really care about: how much you’ve earned and how much you’ve paid in fees. You can move your RRSP or TFSA over, as well as invest additional funds.
Your smartphone has become your music player and your GPS, and companies are trying to make it your wallet too. Not only does an e-wallet save you ruining your pant-line with a brick-like wallet, but there are also anti-fraud benefits. Encryption keeps your card details safe, and if you lose your phone you can shut down access in one step.
Silicon Valley has put payments on its menu of things to shake-up, with the likes of Apple, Google and PayPal battling it out in this space. Apple’s Service, Apple Pay, has launched in the US and lets you pay with your phone at Visa, MasterCard and American Express quick payment terminals.
In Canada, the UGO Wallet app lets you access loyalty cards and payment cards from one point on your phone. Leave the plastic at home. You can use the app at any merchant that accepts contactless payments. The suretap wallet service from Rogers uses the same technology as when you pay by tapping your payment card, but in your SIM card. You can load up a digital pre-paid card on the suretap app with your existing bank card, as well as digitizing a bunch of rewards cards.
If you get an e-wallet, you’ll have nowhere to put those paper receipts merchants seem intent on giving you for everything. The paper receipt should be viewed in the same way as we do early surgical tools: sympathy for those who lived while they were in use, and relief that our age has moved beyond such primitivism.
Another Canadian company, Sensibill, provides a digital receipt platform used by major banks. Now you can look up all your receipts via online banking or an app. Returning items, filing taxes, tracking expenses – all are made easier with digital receipts.
Small and medium businesses are the backbone of an economy. Statistics Canada reports that banks are lending more to large businesses, but loans funded to smaller businesses have dropped.
Montreal-based Advanceit lends to businesses based on amounts that will be coming in from customers. Businesses repay the loans as a percentage cut of customer card payments. FundThrough focuses on businesses that sell to other businesses, providing lines of credit based on outstanding invoices. US business lender OnDeck expanded into Canada in 2014 and has funded more than $1.7bn in loans in North America.
Technology is also giving Canadians consumers more options on how they borrow.
Companies like Financeit and Wellspring Financial work with merchants to provide point-of-sale financing. Merchants get set-up with a tablets at the register or software on a website, letting them compete with bigger companies’ finance offerings.
Finally, marketplace lending is helping credit-worthy Canadians get the rates they deserve. Consumer choice is key to a healthy market, and marketplace lenders like Borrowell are making borrowing money simpler and fairer. A more tailored interest rate can result in lower monthly payments and provide a real alternative to fixed-rate credit cards, secured lines of credit or payday loans.
What ties these technologies together is giving people tools to take better charge or their financial lives. Online does not mean impersonal. Lower costs do not mean less service. And accessibility does not mean one-size-fits-all. Technology is empowering how people use financial services.
Do you think these technologies are ready for mainstream adoption? Let us know your thoughts.
Andrew is Manager of Strategy & Operations at Borrowell. Having moved to Canada from the UK in 2014, he learned that while many things are similar here, cycling to work in winter is not one of them.
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