Wealthsimple unveils new chequing account partnership with two major Canadian banks

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Online financial services provider Wealthsimple Inc. has partnered with two major Canadian banks as it prepares to launch the first of three new banking products under development – a chequing account service to be called Wealthsimple Cash.

The firm, which manages more than $6-billion in assets and is majority owned by Montreal-based Power Financial Corp., has partnered with two of Canada’s Big Six banks to launch a “hybrid” bank account that offers clients a chequing account with a “non-introductory” high interest savings rate of 2.4 per cent.

CEO Michael Katchen would not reveal which banks are partners in the program, but confirmed that Wealthsimple does not have a banking licence. Rather, the two unnamed banks will hold client assets and client money will be protected up to the $1-million limit guaranteed by the Canadian Investor Protection Fund (CIPF).

When it comes to everyday banking, Mr. Katchen says, Canadians are used to “the status quo” of high service fees and low interest rates on savings. He says Wealthsimple Cash has an attractive offering that could persuade clients to take the leap into switching bank providers.

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The account offers no monthly account fees, unlimited transactions, no low-balance fees, no foreign transaction fees worldwide and ATM fee reimbursements.

“We’re trying to build a new kind of financial services company that really centres around the needs of our clients,” Mr. Katchen says. “We started with investing, and over the last year and a half, we’ve started expanding into a whole new suite of products.”

Over the past three months, Wealthsimple also registered the names of two other businesses – Wealthsimple Payments Inc. and Wealthsimple Digital Assets Inc. – according to government documents.

Mr. Katchen would not comment on what services would be offered under these domains. Over the past two years, Wealthsimple has been trying to broaden its business beyond online investment portfolios. In 2018, it entered the discount brokerage business with Wealthsimple Trade and launched a savings account –Wealthsimple Save – in partnership with Equitable Bank.

Mr. Katchen says the company now has more than one million Canadian clients using its financial products. That number includes a large segment of clients who use the company’s online tax-return service, SimpleTax.

Wealthsimple first entered the industry five years ago with its online investing business. Known as robo-advisers, online portfolio managers were seen as the next big disruptor to the financial services industry. Now, as the company expands beyond its investing roots into other banking products, Mr. Katchen says he continues to be focused on the evolution of financial services and the way clients do business – rather than disrupting the big players in the game.

“If the impact [Wealthsimple] has is moving the industry forward versus putting someone out of business, then that’s a good success story,” he says. “We don’t obsess about how to disrupt anyone.”

Last fall, competitor Questrade Inc. also began to branch out from its online investing business when it acquired a Mississauga-based lending and deposit-taking business, Community Trust Co.

Questrade filed an application in November with government regulators that, if approved, will allow it to operate a division under the name Quest Bank (Banque Quest in French).