A new challenger is charging into Canada’s credit card market, promising a fresh approach to consumer lending in a sector dominated by major banks and retailers.
Brim Financial Inc. officially opens for business on Wednesday, launching a suite of new credit cards offering generous perks and loyalty rewards, paired with a tool to finance larger purchases from any merchant in instalments.
At its core, Brim is a lender offering credit. And as with most most financial-services startups, the firm’s leaders seems especially zealous about breaking down industry norms that have traditionally limited the ways cardholders can pay off purchases or redeem loyalty points.
Yet Brim is entering a crowded market for consumer credit dominated by some of Canada’s largest, most established lenders. With 74 million Canadian cards already issued by Visa Inc. and Mastercard Inc., it is no simple task to stand out, and attracting enough customers will be Brim’s biggest challenge. The company knows it must evolve quickly if it plans to keep a competitive edge against well-capitalized rivals that may look to mimic key features and neutralize its appeal.
“We feel that there’s a definite need for a transformation in the space. The status quo in cards ... is really unacceptable,” Rasha Katabi, Brim’s founder and chief executive officer, said in an interview. “We keep seeing basically a rehash of the old models that we have been seeing for the past 20 years or so.”
Ms. Katabi knows the sector well: Before she started Brim, she spent 18 years in banking and consumer finance, with stints at Canadian Imperial Bank of Commerce and Bank of America Merrill Lynch. Over three years spent building Brim, she has assembled a team of roughly 100 people, including engineers, developers, credit specialists and call-centre staff.
“We feel that really [consumer credit] needs a quantitative transformation, and we built this from the ground up,” Ms. Katabi said.
She describes Brim’s backers as “squarely Canadian,” with long track records in financial services, but she’s reluctant to name them. Two advisers who sit on the company’s board are Christian Lassonde, a venture investor who has backed successful startups such as Wealthsimple, and John Reucassel, a former analyst at BMO Nesbitt Burns Inc.
Mr. Lassonde is an investor in Brim through his firm, Impression Ventures, which has raised tens of millions of dollars from prominent investors, including the innovation arm of Fairfax Financial Holdings Ltd. Impression focuses its bets on financial technology startups aiming to disrupt traditional banking. “Rasha and Brim, we believe, offer the very best of those opportunities,” Mr. Lassonde said. “We’re happy backers, and we’re in there for the long haul.”
Brim’s core products are three Mastercard-certified credit cards, one of which has no annual fee. In an effort to be different from existing cards, Brim offers a range of benefits: No fees on foreign transactions; loyalty points that can be redeemed at any merchant, in store or online; free access to a worldwide network of Boingo WiFi hot spots; and the ability to guard against fraud by locking certain types of purchases on Brim cards through a mobile app.
On purchases of $500 or more, Brim will also offer instalment financing at any store, through its app. There is no interest on the instalments, which can stretch over 12 to 24 months, but Brim charges a 7-per-cent fee up front and a 0.475-per-cent monthly processing charge.
Aside from Mastercard, Brim has recruited several merchants with household names as partners, including Amazon.com Inc. and food delivery services Uber Eats and Foodora. It is in talks with a range of other businesses, Ms. Katabi said, from auto manufacturers to gyms and coffee shops.
Thousands of customers preregistered for early access to the card, the company said, but Brim will rely on merchants to promote its cards and services to their own customers.
Brim’s real test begins now, and there are early indications Canada’s banks may be taking notice: On Monday, Royal Bank of Canada announced a feature similar to Brim’s that allows customers to lock credit cards from the bank’s mobile app.