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Weekend Reading: FinTech Edition

There’s a disruptive shift happening in the financial industry where nimble technology start-ups are moving in on traditional bank-dominated services such as lending, investing, payments and retail transactions, and everyday banking. Dubbed FinTech, this financial technology renaissance is quickly moving from alternative to mainstream and is something to watch in 2016 and beyond.

We’ve already seen the rise of the robo-advisor in Canada, with new firms like Wealthsimple and Nest Wealth leading the online wealth management revolution. Online lending entered the marketplace this year with startups like Borrowell, Grouplend, and Mogo offering personal loans without the hassle of visiting a branch. Grouplend raised $10 million this year and recently rebranded into Grow in order to better reflect the wider range of products and services it offers.

Mobile payments should finally move to the forefront as Apple Pay made its long-awaited Canadian debut this week. Vancouver-based nTrust is an alternative to PayPal that lets you send and receive money instantly for free within Canada. Knightsbridge Foreign Exchange offers bank-beating exchange rates and free wire transfers. Coming soon – EQ Bank – a digital bank that will combine your chequing and savings into one account and promises to pay market leading rates without any fees.

While many of these companies won’t survive beyond a few years, clearly this technological revolution is here to stay. Banks and investment firms have been put on notice and the hope for consumers is that we’ll get cheaper and easier access to financial services in the future.

This week(s) recap:

Last Monday I shared how I went from credit card abuser to rewards card master.

Last Wednesday Marie explained the real cost of investing.

And last Friday Marie concluded her retirement series with a financial assessment for your retirement.

On Monday I helped a reader who was over-contributing to his RRSP.

On Wednesday Marie shares some useful tips on how to determine your asset allocation.

And on Friday I shared my favourite tips on how to simplify my finances and save money.

Once a month I write a column for the Toronto Star’s new Star Touch tablet edition (for iPad). The app has recently surpassed 100,000 downloads in just two months.

Over on Rewards Cards Canada I compared the top two travel rewards cards in Canada to see how they stack up.

Weekend Reading:

Speaking of banking technology, Big Cajun Man Alan Whitton is on-board with mobile cheque deposits but advises readers not to do so over public Wi-Fi.

A new study confirms that people are unlikely to change their mind, even when facts contradict their views.

At the Wallet Hacks blog, Jim Wang lists 70 essential money skills that everyone must know.

Do you owe your mother $1,000,000? John Ryan at Money Time blog explains.

Today’s good was born from yesterday’s bad. The Motley Fool’s Morgan Housel shares the upside of being miserable.

Jonathan Chevreau confesses seven financial mistakes that still haunt him – including when he impatiently sold his Apple shares in 2002.

That makes a nice segue into how Michael James takes his investment decisions out of the loop.

If left to drift, your portfolio can morph into a different beast.

Preet Banerjee explains why the financial advice industry is moving from an investment-centric view to a planning-centric view. The highlight is that if you’re paying full-service costs but only getting investment advice, that’s a big problem.

Ethan Bloch has some financial advice for his millennial peers: “Just have your f—— latte!”

What you need to know about your credit score in your 20’s and 30’s: Try something called the Netflix and chill loop.

It may be time to let go of the Canadian hang-up that everyone must own a home.

Super seniors may face the danger of outliving their savings.

Rob Carrick has a nine-step boomer retirement planning guide.

Squawkfox is back to share her olive rule: track your spending to prevent the pits.

Million Dollar Journey explains how to save more money with less effort.

Finally, John Heinzl shares a great story about how dividend investing can help you raise your family.

Have a great weekend, everyone!

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13 Comments

  1. Big Cajun Man (AW) on November 21, 2015 at 1:44 pm

    I am astounded sometimes to hear the cavalier attitude folks have about network wireless security, but I suppose when they get burned they might notice then? It does not take a lot of work to set up some basic security, do it, and then you are safe (funny you don’t have to tell people to put locks on their front doors, do you?).

    Thanks for the inclusion this week.

    • Echo on November 22, 2015 at 10:10 am

      Since WiFi has become one of Maslow’s hierarchy of needs it’s possible that people believe it’s as safe as the air we breathe.

  2. Michael James on November 21, 2015 at 2:07 pm

    It’s about time cheaper alternatives to Canada’s big banks started breaking into the market. This is one of the reasons I fear for people who own just a few big banks and call themselves dividend investors. Thanks for the mention.

    • Echo on November 22, 2015 at 10:08 am

      @Michael James – Agreed. Funny enough, the argument used by dividend investors that the banks have been paying dividends for over 100 years should actually raise an eyebrow – it’s rare to see a company on top and thriving for that long and perhaps they’ve reached their peak.

  3. Sean Cooper, Financial Journalist on November 21, 2015 at 8:10 pm

    “While many of these companies won’t survive beyond a few years”
    That remains to be seen. Hopefully these companies survive and prosper, forcing the big banks to be more competitive.

    • Echo on November 22, 2015 at 9:59 am

      Hi Sean, I have no doubt that some of these companies will survive and go on to have an Uber-like impact on the financial services industry. But that means one or two survivors in each category, not 10-12. Free or low-cost services will take a massive amount of scale in order to become profitable. There’s simply not room for a dozen robo-advisors fighting over a tiny fraction of the market.

  4. John Ryan on November 21, 2015 at 8:25 pm

    Thanks so much for the mention! What did your mom think, do you owe her $1 million? =)

    • Echo on November 22, 2015 at 10:03 am

      I’ll let her respond to that…

  5. Jim Wang on November 22, 2015 at 6:41 am

    Thanks for including the 70 Skills post in your weekend reading roundup!

  6. kcowan on November 22, 2015 at 8:11 am

    Apple Pay uses NFC and most retailers limit it to under $100 or $50. Is this really significant?

    • Echo on November 22, 2015 at 10:02 am

      @kcowan I think it’s a start (Apple is a big name, not a tiny start-up), plus the vast majority of transactions are under $100 and so there’s a high volume to work with, even if you’re only taking pennies per transaction.

  7. Richard on November 22, 2015 at 10:42 am

    Online banking over public Wifi is no more dangerous than doing it at home. All online banking websites and apps use encryption, so no one (except the NSA) can tell what’s going between your computer or phone and the bank’s servers. There are occasional problems with this encryption but the algorithms used are updated regularly. Unless your software is over 5 years old, you’re safe.

    The only way around this would be if you get a virus on your computer since that can intercept your information before it gets encrypted. If you connect to a public Wifi network you might get a virus that catches your information when you later log in at home. In that case it doesn’t matter whether you actually used your online banking on the public network.

    Even when you connect at home your information may go through 30 networks before it gets to the bank (and this applies to every website and everything you do online). Information security is only as good as the weakest link so banks have a pretty big incentive to make sure you’re safe no matter where you’re connecting from.

    • Doug on November 23, 2015 at 12:38 pm

      That assumes you’re actually sending info to your bank.

      One way thieves can target people is to route any traffic for mybank.com to a different website that looks identical. Then you try to log on with your username/password and it’ll return a “sorry, we’re having technical difficulties, please try back in an hour”.

      Browser’s have security features that might warn you that the website isn’t what you think it is, but there’s always ways around it (and a lot of people just hit “ignore”).

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