“Innovation” is a favourite buzzword in the halls of both financial services and technology firms, but it’s following in the latter’s footsteps that’s helped Toronto-based online investment management service Wealthsimple Inc. succeed in a competitive industry.

Speaking to ITBusiness.ca the same week his two-year-old fintech announced that it was expanding to the U.S., founder and CEO Mike Katchen said his goal has been to run Wealthsimple as a technology company, rather than as a financial services company – an important distinction, since the two sectors define the concept of innovation differently.

Mike Katchen believes his decision to run Wealthsimple like a tech firm rather than a traditional financial services provider has been crucial to its success.

“I think when a lot of big institutions think about innovation, they think about projects and products – like, ‘We’re going to launch an innovative new product’ – and for us, that’s not actually what innovation is about,” he said. “For us innovation is about a process, a culture… We operate like a tech company in the sense that we move really quickly.”

Founded in 2014, Wealthsimple combines a user-friendly digital platform with personalized expert financial advice to help users of all ages – and income levels – enter the world of investing. As of this writing, the company serves more than 20,000 clients with $750 million in assets, and 85 per cent of its clients are under the age of 45.

The company’s success isn’t merely financial: its website, particularly the iteration built around the company’s “Take Care of Yourself” campaign that encouraged users to invest in “future you,” was awarded Best Financial Services at the 2016 Webbys, an honour Katchen used to illustrate the difference between Wealthsimple and more traditional banks such as TD and RBC.

A screenshot of Wealthsimple’s 2016 Webby award-winning website.

“You can imagine that if a big financial institution won that award, they would probably tell their design department, ‘Great job! It’s perfect. Now don’t touch a thing,'” he said. “‘Keep it exactly the same, and we’ll milk it for as long as we possibly can.’ Well, it’s been six months, and we’ve torn down the website and redesigned it from scratch twice since then.”

This disruptive treatment of its own website is a good illustration of Wealthsimple’s approach to both digitally transforming the investment industry and developing its own products, Katchen said – and like the best tech firms, any changes made to the company’s core platform are designed with a single goal in mind: optimizing the client experience.

“It’s not like we’re dreaming up products in a boardroom somewhere for 12 months, launching them into the world hoping that people will like it,” he said. “We work with our clients, rely on their feedback, and are constantly reiterating ourselves to deliver ever more value to meet their needs.”

That said, Katchen was quick to acknowledge that Wealthsimple’s $50 million in financial support from the Power Financial Corporation, whose vice president Paul Desmarais III praised the company’s “innovative model” in a Jan. 31 statement, has helped give the company a solid foothold in the more traditionally-minded financial services world.

“It’s a really powerful combination for us,” he said.

U.S. foundation to remain the same

In expanding to the U.S. – prior to Jan. 31, the company’s services were available only in Canada – Wealthsimple will inevitably need to adjust certain institutional practices to comply with American regulations, Katchen said, but its underlying foundation is likely to remain intact.

“Investing is a confusing, expensive endeavour,” he said, “and the problem that we’re solving, which is all about cutting through the noise and helping our clients make sense of their money, exists just as much in the U.S. as it does in Canada, so we’ve got a lot of work to do.”

He believes the company’s model leaves it uniquely positioned to succeed in the U.S., however, for several reasons, not least of which is the fact that Wealthsimple marries its cutting-edge platform with human advisors, who remain a key component of the Wealthsimple brand regardless of its website’s latest window dressing.

That focus on the human element, which Katchen said should help set Wealthsimple apart from the army of robo-advisors U.S. investors have to choose from, is another lesson he believes the financial services industry could benefit from learning before implementing its next innovation agenda.

“We push code to production many times a day,” he said. “A bank operates on a code roll-out schedule that may be monthly, quarterly, annually, semi-annually. I think the more they can move towards an iterative process that enables true innovation and experimentation, instead of pushing these massive projects that were dreamed up in the boardroom with armies of consultants out the door, the better off they’ll be.”

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