We need new banks
This is my mullet strategy of investing, by the way. Business in the front (RRSP, low-fee index funds, 80%), party in the back (TFSA, stockpicking, 20%).
But that’s not what this post is about.
I like the Wealthsimple products. They’re well-designed, easy to use, and get out of your way. They do what they’re supposed to do and do it well.
Wealthsimple has also recently launched a new product, Wealthsimple Cash, which provides you with (effectively) a bank account.
Also well-designed, also easy to use.
A couple of years ago, I was at an RBC event that featured panelists discussing innovation generally and fintech specifically. The RBC-employed moderator asked the panelists what the Big 5 banks should do to avoid disruption by fintech startups.
The answers were what you would expect: recommendations that investments be made in innovation, de-bureaucratization, and that sort of thing.
The right answer of course is: spend as much money as necessary to ensure that the feds never issue another bank charter.
Which brings me to the point of this post.
The feds should issue Wealthsimple a bank charter and see what they do with it.
Innovation only rarely happens through innovation budgets and old firms re-inventing themselves. More often, it happens through disruption: new firms displacing old firms with new and better ways of doing things and less legacy overhead (including technical debt).