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The Financial Data Exchange (FDX), a non-profit looking to get fintechs and banks to agree on a data-sharing standard, launched in Canada with 31 financial institutions as partners. (The Logic)

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Talking point: An agreed-upon common standard is a key step to allow open banking in Canada. The FDX’s standard is designed to be secure, interoperable and royalty-free. Fintechs and banks have been clashing about the details of an open banking framework for several years. In May, the federal government’s open banking review was delayed until the fall, a move Borrowell CEO Andrew Graham described as “worrying.” Some Canadian fintechs, including Flinks and Koho, have joined the FDX’s consortium. However, it’s executives from RBC and Interac who are joining the board of directors, which also includes U.S. banks. Similarly, TD and Interac execs will co-chair the working group of Canadian members.

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Neo Financial, helmed by Andrew Chau and Jeff Adamson, intends to offer a credit card and savings account, and has over 17,000 people on its waitlist. (The Logic)

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Talking point: Chau and Adamson helped grow SkipTheDishes into a made-on-the-Prairies tech success story—with 4.4 million customers and over 2,300 employees—that was purchased by Just Eat for $186 million in 2016. The two plan to build this 50-person company in Western Canada, as well, launching first in Calgary in the next few months. It’s partnering with a bank outside the Big Five for its savings account before rolling out Canada-wide. Neo is the first portfolio firm under Harvest Venture Builder, an accelerator for Prairies-based startups that hopes to build multiple tech successes in the region. However, Neo plans to focus on consumer financing, an increasingly crowded market. Koho and Wealthsimple are offering bank accounts, and U.K.-based fintechs TransferWise and Revolut have been granted money-services business licences in Canada. Acquiring customers for this kind of business can be costly. Wealthsimple, for example, spends an estimated $20 million a year on marketing. Neo thinks it can compete by offering an easy user experience, a loyalty program and partnerships with smaller merchants.

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The San Francisco-based online loan firm will pay US$185 million for Boston-based Radius Bank. LendingClub said it will break even after two years if the deal, which is expected to take up to 15 months to close, goes through. (The Logic)

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Talking point: LendingClub is not only the first U.S. fintech to buy a bank—it’s also leapfrogging rivals like Square and Varo Money, which are looking to offer bank-like services by securing their own federal licences. Banks are able to offer a wider array of products than the fintechs seeking to take away their customers. LendingClub was a pioneer of personal online loans: it had the largest U.S. tech IPO in 2014, hitting an US$8.5-billion valuation. Its shares have dropped significantly since then—its current market cap is US$1.1 billion—but the firm is hoping today’s news will improve its prospects. LendingClub expects to save US$40 million a year in bank fees and other costs from the deal, and it will also be able to make money off the approximately US$1.4 billion in assets that Radius holds. In Canada, fintechs are offering bank-like products in an attempt to grow their market share. Both Wealthsimple and Koho have chequing accounts. U.K-based fintechs Revolut and TransferWise both have acquired money-service licences in Canada, as well. 

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The accounts come with no monthly or low-balance fees. Wealthsimple will also roll out ATM fee reimbursements, foreign-exchange-transaction fees and a tungsten metal card with the accounts. (The Logic)

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Talking point: Today’s move is a challenge to Canada’s big banks. In its press release, Wealthsimple highlights how much more money would accrue at a 2.4 per cent interest rate compared to high-interest savings or traditional chequing accounts from other institutions. At the same time, however, this chequing account is only possible because Wealthsimple has made a deal with two of Canada’s Big Six banks to actually hold the money, as the company does not have a banking licence. Keeping banks happy while trying to take their customers isn’t the only tightrope to walk for Wealthsimple: it’s heavily backed by financial services giant Power Corporation, but so is Koho, which already offers a bank account.

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The Toronto-based fintech recently incorporated three subsidiaries: Wealthsimple Digital Assets, Wealthsimple Payments and Wealthsimple Cash. The Digital Assets and Payments moves were first reported by the newsletter OPM Wars. (The Globe and Mail, OPM Wars)

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Talking point: Wealthsimple CEO Michael Katchen said he wants to offer chequing accounts to customers, and the company’s new subsidiaries also come with licences for money transfers, foreign exchanges and dealing in cryptocurrencies. The new ventures follow similar moves from Wealthsimple’s rivals. Last month, Questrade applied for a banking licence. In November 2019, The Logic broke the news that RBC was exploring building a cryptocurrency trading platform. These licences will potentially create greater overlap between Wealthsimple and Koho, both of which are heavily backed by insurance firm Power Corporation. Koho already offers bank accounts. U.K.-based fintechs Revolut and TransferWise, both of which are trying to expand in Canada, also have licences for electronic money transfers and foreign exchange.

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Existing anchor investor Portag3 Ventures—the fintech arm of Power Financial—led the investment in Diagram, which uses its money to co-found new businesses with entrepreneurs in financial services, health care and insurance. Angela Strange, a partner at Andreessen Horowitz, and Bruce Heyman, the former U.S. ambassador to Canada and former managing director of Goldman Sachs, were among the high-profile angel investors who also participated in the fund. (Financial Post)

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Talking point: Access to Diagram’s portfolio companies could help Power’s core insurance operations understand what new technologies to apply to their businesses. In the past, the firms have also matched up the startups in which they have invested to increase their chances of finding customers. In 2017, one of Diagram’s first investments, Dialogue, integrated its service—which allows customers’ employees to chat with doctors—with benefits platform League, a Power Financial portfolio company. A year later, Power Corp. subsidiary Great-West Life launched Dialogue to employers across Canada. Power and its subsidiaries own robo-adviser Wealthsimple, while Portag3 has invested in digital account service Koho and Borrowell, which provides credit scores and facilitates personal loans. The startups in Diagram’s second fund could benefit from the customer base of those existing scale-ups.

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Manulife wants to attract millennial customers from Canada’s Big Five banks with new digital products, including a cash-back credit card, a high-interest savings account, an unlimited-transaction chequing account and travel insurance. The firm is also is waiving its $10 monthly fee for each month customers add $100 or more to their savings. (Financial Post)

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Talking point: Manulife Bank has been around for 25 years, but it’s never been able to take much market share away from the Big Five, as 80 per cent of millennials have an account with one of them, according to Manulife Bank CEO Rick Lunny. Lunny is hoping that this new package can help his firm take market share away from those banks. However, Manulife is far from the only one looking to sign up customers by offering digital banking services. In April, the credit union Meridian launched Motusbank, which offers online bank accounts and mortgage lending. Insurance giant Power Corporation has backed Toronto-based startup Koho through its fintech fund, Portag3 Ventures. Koho provides a digital bank account linked to a prepaid card, automates savings for customers and offers cash back for groceries, travel and dining out.