Wealthsimple posts CAD $17 billion inflows on banking push

Wealthsimple reported about CAD $17 billion in net inflows in the second quarter and ended the period with CAD $155.6 billion in assets under administration.

Demand for its chequing and spending products drove the result, with new chequing account openings outpacing new investment accounts for the first time.

Assets under administration rose 24.7% from the previous quarter and 84.1% from a year earlier. Wealthsimple also said it now has 3.6 million clients, excluding tax filers, and that nearly a quarter of Canadians aged 18 to 40 use at least one of its products.

The figures suggest a shift in the company's growth mix as it pushes further beyond investing and trading into day-to-day banking services. Chequing accounts, cards and related spending tools featured prominently in the quarter's expansion.

Mike Katchen, Co-Founder and Chief Executive Officer, said the company built those products around practical everyday financial needs.

"We built our everyday chequing and spending products by listening to clients and understanding when, how, and where they need their financial institution to show up for them," said Mike Katchen, Co-Founder and Chief Executive Officer of Wealthsimple.

"If you're closing on a home, we'll deliver your bank draft straight to your door. When you're traveling, you can withdraw cash at any ATM without worrying about the fee, and make purchases on your credit card with no FX fees. It's clearly resonating with Canadians, and we're excited to keep building for them."

Product push

During the quarter, the company added new spending and credit features, including Spend Insights, which gives users real-time analytics on chequing accounts and credit cards, and Business Chequing, an interest-paying spending account for small business owners.

Those additions sit alongside other products Wealthsimple has been rolling out across consumer finance. The line-up includes a portfolio line of credit priced at 3.95%, a credit card offering 2% cash back and no foreign exchange fees, a high-interest chequing account and same-day delivery of bank drafts.

The company also introduced a brand campaign built around the slogan "Banking Is Over". While the campaign was not part of the financial update, the message reflects Wealthsimple's effort to position itself against incumbent banks by focusing on ease of use and lower fees in selected areas.

Trading access

Wealthsimple also expanded its trading offer with the launch of IPO Access, a service that allows retail investors to buy into initial public offerings at the offering price. The product targets an area of the market often reserved for institutions and wealthier clients.

The move adds to a trading business that already includes equities, options, futures, fractional shares, direct indexing, real-time charting, USD accounts and margin accounts. Wealthsimple said it was previously the first firm to bring commission-free trading to Canada.

The company added that J.D. Power ranked it the top brokerage for customer satisfaction for the third consecutive year. The recognition comes as competition among digital investing platforms and established financial institutions intensifies in Canada.

Savings incentives

In a separate consumer push, Wealthsimple launched Monthly Millionaire, a programme designed to encourage saving and investing through cash prize draws. Clients can earn entries by opening and funding a chequing account, depositing money into any Wealthsimple account, referring friends, setting up direct deposit or writing an essay.

Direct deposit doubles the number of entries available to a client. Wealthsimple said the programme paid out CAD $2.18 million to clients during the second quarter, including weekly prizes and a monthly grand prize of CAD $1 million.

The range of initiatives in the quarter suggests Wealthsimple is trying to increase engagement across more parts of a customer's financial life rather than relying mainly on investment balances and trading activity. The strong inflow figure indicates that strategy is helping it attract fresh money at scale.

Founded in 2014 and based in Toronto, Wealthsimple describes itself as serving more than 4 million Canadians across chequing and spending, managed investing, self-directed trading and tax filing. In its quarterly figures, it said it had 3.6 million clients excluding tax filers and approximately CAD $155.6 billion in assets under administration.