After 10 years in operation, the Wealthsimple CEO, Michael Katchen stated in an initial public offering that it could be in the cards at some point in the future, while an acquisition remains unlikely in the near future. As Canada’s banking sector has been ripe with consolidation over the past few years, Katchen said in an interview with BNN Bloomberg Thursday that the company is eminently committed to the independent path. This is with regard to the prospect of a potential acquisition by one of Canada’s big banks.
“I think we have the opportunity to build Canada’s leading financial institution in the years ahead,” he said.
Despite knowing of the view that a merger or acquisition is not in the best interest of the company at this time, Katchen stated in an initial public offering (IPO) that it could be a future possibility.
“I think that’s (an IPO) very much in the cards for us … it’s not a focus for us right now, but I think that’s absolutely a path that we’ll be on,” he said.
What You Need to Know About Wealthsimple
Below are some points that you should know about Wealthsimple
i. Wealthsimple has partnered with two major Canadian banks. It has also launched a hybrid savings and spending product: Wealthsimple Cash.
ii. Wealthsimple Cash, is a “non-promotional” interest rate of 2.4%. It will feature no monthly account fees, no low balance fees or account minimums. No exchange fees on foreign currency transactions, ATM fee reimbursements at select ATM’s, direct deposit. Bill pay and will support Apple Pay and Google Pay.
iii. The new account will be accessible via app and a physical metal bank card.
iv. Wealthsimple launched as an industry disruptor in 2014. This was done by using technology to provide products and financial advice that was accessible and affordable, recently re-focusing on the evolution of financial services.
v. Currently, over one million Canadians use Wealthsimple products for the purpose of investing, saving, tax filing, and trading.
What is the Present State of Wealthsimple?
The company as of now boasts more than three million Canadian users. Plus, it has around $50 billion of assets under management. This means that almost half of those assets have been deposited just in the past 12 months.
When asked what it took to get them there Katchen said “It’s taken scale. Plus it’s taken as a commitment to using technology to automate. So much of the back office that we can offer all of those savings back. This is to be done to our clients in the future.”
However, Wealthsimple’s growth story hasn’t always been smooth sailing. Plus, the previous expansion efforts have proved difficult. In 2017 the company expanded its service to the United States. Later that same year, the firm made a move into the U.K. as well.
“I think the big learnings for us back then was, it’s hard to do too many things at once. Especially as a new business,” Katchen said.
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In 2021 Wealthsimple sold its U.S. and U.K. books to focus on its Canadian business. When it was asked if it would ever attempt an expansion again. Katchen said “Our ambitions are bigger than Canada. However, right now for the foreseeable future, we’re going to be focused here. Canada is a huge market, and we still have our work cut out for us.”
While Katchen, the firm owner, is confident that the company has a bright future ahead. This is stated no matter the path, he is less confident as well. This is with regard to the outlook for the next generation of Canadians. Due to the country’s productivity issues and the current entrepreneurship landscape.
“I’m a deeply proud Canadian who is always worried about the future of Canada. If we want to maintain the prosperity that we have. We have an obligation to diversify our economy and add more innovation,” Katchen said.
“We have some incredible operators and founders down the pipeline. They are building great businesses, and we need more and more of it.”