As RRSP season approaches, two notable Toronto FinTech startups are teaming up to help Canadians looking to invest in their future.
Investment platform Wealthsimple and peer-to-peer lending company Borrowell are partnering with the goal of helping Canadians get the most out of their RRSPs. While a majority of Canadians want to contribute to their RRSP and get the tax return, both startups acknowledged that most don’t have the cash on hand to do it, and often take out loans to contribute to their RRSP with the hope of paying it back with a tax return.
But the reason why companies like Wealthsimple and Borrowell exist is because bank loans aren’t always the most convenient for customers and navigating investments is rarely easy. So the companies decided to take their respective strengths and combine it into one platform.
“We know that maybe not all of us will make it, but most important thing is to get the FinTech category off the ground.”
Michael Katchen, founder of Wealthsimple, and Andrew Graham, founder of Borrowell, are longtime friends who both say that such a partnership was bound to happen. Both founders also spoke to the struggle for FinTech to get widespread recognition, as it is still an emerging category working on building public trust and understanding.
“You’re dealing with people’s money so you have to make a compelling proposition for why consumers should try you, and I think those messages are breaking through now,” said Graham. “By partnering together it allows us to raise each other’s profiles, and it makes it easier for consumers to use our products.”
Users can apply for a loan with Borrowell, invest it in Wealthsimple, and pay the loan within six months. Borrowell waives all fees associated with the loan, as it’s designed for people who are topping up their RRSP contributions.
As the partnership between between Grow and First West Credit Union shows, FinTech partnerships seem set to be a trend for 2016. Banks are either looking at FinTech companies to figure out how to update their own services, or are outright working with them.
— Borrowell (@Borrowell) February 9, 2016
In the same way, Borrowell and Wealthsimple benefit more from working together to gain more customers rather than working apart. The end goal, ultimately, is to create innovative financial services that should already exist in a financial service-dense city like Toronto.
“Toronto has the third-biggest stock market in the world, one of the most developed financial services industry in the world, and one of the best software engineering programs in the world is just an hour outside the city,” said Katchen. “We should be the world leader when it comes to financial services.”
Katchen also said that as FinTech startups have been mostly about unbundling bank services, the coming months may see a ‘rebundling’ as these partnerships become more common; in general, startups are known for being more about collaboration than competition, and Katchen anticipates that this collaborative nature means there will be more companies trying to work together even if they don’t necessarily have the same customers.
“We’re all going from zero to one, we’re all just trying to get out of the gate and be successful,” said Katchen. “We know that at some point maybe not all of us will make it, but most important thing is to get the [FinTech] category off the ground, and if we as a category can’t do that as a first step, nothing matters. The winner of nothing matters not.”
Disclosure: Wealthsimple is BetaKit’s FinTech sponsor and the reason we deliver the FinTech Times hot and fresh every week.