With new investment product, is Neo Financial’s biggest competition now Wealthsimple and Questrade, or the big banks?

Neo Financial
The Prairie FinTech has teamed up with fellow Calgary startup OneVest for Neo Invest.

What if the future of banking wasn’t a bank?

The question posed in the slogan of Neo Financial’s new marketing campaign shows that the FinTech startup is clearly positioning itself against Canada’s big banks.

But the company’s newest product launch and broader roadmap continue to put upstart Neo in competition with both the incumbent big banks and fellow challengers like Wealthsimple and Questrade.

The three-year-old startup has been vocal about its plans to take on Canada’s incumbent financial giants by creating a full suite of FinTech products. Today, the company officially launches its new product, Neo Invest.

Neo Invest is an actively managed investment platform: unlike robo-advisors like Wealthsimple, Neo has built a digital investing platform that will be managed by professional money managers.

Neo Invest will allow consumers to start investing with as little as $1, and to customize their portfolios based on goals and risk comfort. The platform will allow for investments in cryptocurrencies, real estate and infrastructure funds, and other hedge fund-like strategies.

Neo is able to launch its investment platform through a partnership with startup OneVest, which will manage the portfolios, according to Neo co-founder and CEO ​​Andrew Chau. The fellow Harvest Builders company is a wealth and asset management startup, which allows FinTechs and financial institutions to build on its customized wealth management tech.

OneVest is a registered portfolio manager in each Canadian province and territory, and an investment fund manager in Alberta, Ontario, Newfoundland and Labrador, and Quebec. Registered Investment Industry Regulatory Organization of Canada (IIROC) investment dealer CI Investment Services holds the assets in OneVest accounts.

RELATED: How Neo Financial plans to take on the Big Five banks from Calgary

Chau told BetaKit that the decision to launch an actively managed digital investment platform was very deliberate, noting that all other digital investing platforms are focused on automatic investing, a DIY approach, or a blend of both. Chau called active management a differentiator in a world of robo-advisors and bank-run mutual funds with high fees.

The idea for Neo Invest, he said, is to give Canadians access to types of investments that are typically reserved for high-net-worth individuals. Chau called the investment platform the most-asked-for product from Neo customers.

The investment platform adds a third prong to Neo’s product line, including a savings account and credit card. Neo’s interest in some of the main products offered by banks – savings, spending, and credit – is an approach that has been taken by other Canadian FinTech startups, like Koho, as means to find product-market fit.

Chau has been clear from the beginning about his intention to make Neo a full-service digital bank. “The way we can have the biggest impact is by truly owning the entire [financial] stack,” said Chau, speaking with BetaKit after securing $64 million CAD in the fall.

Much like Wealthsimple, which started out with an investment platform and has since grown into saving, crypto, and taxes, Neo is actively working to broaden its scope. Chau called what Neo offers today “just scratching the surface.”

RELATED: Neo Financial to bolster presence in Calgary with 113,000 square feet of new office space

The next product on Neo’s roadmap appears to be mortgages. Chau noted that Neo Mortgage is still “under development,” and declined to share any additional details. However, Neo’s website indicates that the startup has already secured a handful of mortgage lending partners, including CMLS Financial and Home Trust. Late last year, Neo also hired mortgage professional Wayne Kainu as its head of mortgages.

A mortgage product would also put Neo in more direct competition with Questrade, which launched its mortgage product earlier this year. Wealthsimple CEO Michael Katchen has also teased mortgages as something that is on his company’s product roadmap – though mortgages might be one feature where Wealthsimple enters the market after Neo and Questrade.

In addition to investing and mortgages, Neo’s CEO has also discussed adding retirement planning to its platform. Shawn Abbott, co-founder and partner at Inovia Capital (a Neo investor) has indicated that Neo is also exploring crypto – something that would only move it closer to Wealthsimple (also an Inovia portfolio company), which is currently running an extensive ad campaign in Canada focused on its Wealthsimple Crypto app.

While Neo might soon be fighting Wealthsimple and Questrade on two fronts, the startup’s CEO has been open about the fact that he sees the real competition as banks. He noted that Canada’s Big Five Banks are still home to the lion’s share of consumers, which makes them Neo’s primary competition.

Speaking on the BetaKit podcast last year, Chau also claimed there is enough space for multiple players to exist. “The more choice we have the better off everyone ends off being,” he said.

Image source Neo Financial via Twitter

Meagan Simpson

Meagan Simpson

Meagan is the Senior Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

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