Bay Street Bull Magazine: Luxury Business and Lifestyle

Entrepreneurship

17 - 19 of the Bay St. Bull Power 50: Fintech

The Power 50 is a collection of Canada’s top people, places and things of 2016. Our list is filled with game changers from all corners of the nation that are inspiring, innovating and influencing the way we live and work from the top. Giving you the best from every city, industry, office and home, The Bull’s Canadian Power 50 is not your typical list and instead is the definitive guide to who and what is changing the way Canada lives, works and plays. 

Technology companies have been tackling the inefficiencies in our lives for a while now. Uber made getting around easier, while Airbnb simplified trip planning. A growing number of financial technology companies make up the new wave of disruptors that are transforming the way we bank, invest, and borrow money, as consumers demand more convenience, value and transparency from the traditional firms.

By August 2015, there were 100 Canadian startups in the fintech space, a 40 percent increase from just six months previously, according to OMERS Ventures. The companies combined have attracted over $1billion in investments since 2010, and the industry is projected to capture even more funding in 2017. Here are three noteworthy companies in the space that have caught our attention.

17. Daniel Eberhard: CEO, Koho

Daniel Eberhard studied business and consulting in Calgary and Europe, and built his first company Kineticor Renewables when he was still in university. He considered the venture mildly successful - it developed two mid-sized wind farms before being acquired by Algonquin Power, and moved on to build his next company in fintech after travelling abroad for a year.

“Renewable energy is amazing in terms of value creation, but it is capital intensive and slow moving due to a lot of regulation,” explained Eberhard in an interview with Crowe MacKay. “I wanted to continue solve problems, but at a faster pace with something that would scale more easily.”

Koho became his next business, and was founded near the end of 2014 in Vancouver. It was borne from the entrepreneur’s frustration with Canada’s banking system. “I am pretty good with numbers, but I was still getting hit with fees I didn’t understand while navigating old technology and clunky support,” says Eberhard. He dug deeper and found Canadians are actually paying some of the highest banking fees in the world to some highly profitable institutions. A sense of injustice pushed him to find ways to change it and provide people with a new way to bank.

Koho users get a Koho Visa and Koho Account upon signing up. The fintech company has partnered with Visa and People’s Trust, a chartered federal financial institution based in Vancouver, to hold and protect the client’s funds. Koho doesn’t touch their clients’ money. Its sole responsibility is the user interface design, which includes all the basic banking features a normal bank has (direct deposit, bill payment, e-transfer, ATM withdraw, etc.) and additional tools that help clients set saving goals, track their spending, and transfer money easily between friends at zero cost. The account is accessible online and through the company’s app. It makes money by taking a portion of the interchange fee that merchants pay to process credit card transactions.

Koho raised $1 million in their seed funding round last year, and recently received a second round of funding from Power Corp and a Shopify co-founder. It won the Nasdaq Award for best Fintech Company at New York TechDay last year, and is currently preparing for its official rollout in Canada after beta-testing. 6,000 users have already signed up to be on the waiting list for the launch. “Our one goal right now is to help Canadians reach their financial goals sooner,” says Eberhard. “ If we can do that, we will be successful.”

18. Guy Halford-Thompson: CEO, Blockchain Technology Ltd. 

Guy Halford-Thompson first became interested in bitcoin in 2011. He was intrigued by the technology behind the cryptocurrency, and wanted to learn everything about blockchain after recognizing its potential to transform industries beyond finance. Blockchain, the technology behind bitcoin, is essentially a digital ledger that encrypts transaction records in a way that inhibits tampering and revision. In 2013, Halford-Thompson launched a bitcoin trading company called QuickBitcoin in UK with his brother, then sold it last year in order to focus on their new company Blockchain Technology Ltd. (BTL), which offers to help companies increase security, reduce counterfeiting and transaction cost by using blockchain.

Last November, BTL became a publicly traded company on the TSX Venture Exchange, making it the first blockchain technology company to be listed there, after raising $2 million from investors. The company has offices in both Vancouver and UK, and works with clients in Canada, UK and Germany in the financial, gambling and auditing space. “Clients we work with are finding new ways to save money and increase revenue by first learning what blockchain can do for their company, and then rolling out their own blockchain strategy,” says Halford-Thompson.

BTL has already developed two blockchain platforms since its launch last June. Digital Asset Managment is an enterprise auditing program used to record financial and customer information. It can be used by luxury retailers, for example, to track goods in order to prevent counterfeit. The Interbit platform is a cross-border money settlement service and the core technology behind Xapcash, a consumer remittance platform launched at the beginning of this year. Xapcash can reduce the cost and time to remit funds from Canada to South America and Southeast Asia by more than 90 percent, according to Halford-Thompson.

Going forward, BTL wants to optimize their current platforms, grow their financial customers, and reach more industries through new product offerings. But for now, their main task is to educate the business landscape about blockchain. “We are still at an early stage for the technology, and the biggest challenge is getting everyone up to speed on how blockchain is going to affect their industry,” says Halford-Thompson.

19. Michael Katchen: CEO, WealthSimple

Since its launch in 2014, WealthSimple has become the fastest growing online investment manager in Canada with over $500 million assets under management and more than 15,000 clients today. Founder and CEO Michael Katchen has been investing since the age of 12, and wanted to make it easy for other people as well. All his friends wanted to invest, he observed, but they were reluctant to personally manage their money or hire a wealth advisor they didn’t trust.

After a consulting career at McKinsey and two years building a startup in Silicon Valley, Katchen came back to Toronto to start WealthSimple with the goal to change the advisory industry typically viewed as “expensive, scary and overwhelming,” to something that’s “easy, low-cost and transparent.” Investors liked the idea, and provided the company with $30 million in their Series A funding round, one of the largest in Canadian history.

WealthSimple offers to take care of your portfolio for you for $8 a month (a fifth of a traditional account fee). It will pick the best low-cost portfolio of ETFs based on your needs, and perform regular maintenance tasks like rebalancing and dividend investment using its automated software. Clients also have access to its on-demand advisory service through phone, text or email, as well as the ability to track and manage their portfolio on their mobile devices through its app.

Going forward, the financial service disruptor intends to create more tools to simplify clients’ lives and grow their customer base beyond Canada.