Innovative options, such as earned wage access and alternative currencies, may help expand access for those struggling to find financial services in the current landscape.
Innovative options, such as earned wage access and alternative currencies, may help expand access for those struggling to find financial services in the current landscape.
Inflation is taking its toll on Canadian households.
According to arecent studyconducted by consumer credit agency TransUnion, 86 per cent of those surveyed included steadily increasing costs in their top three worries about money. More than half of respondents feel they’re not currently making enough to account for inflationary pressures — and as a result, 27 per cent will be looking to credit to stay afloat.
While this is an issue across the board, not everyone has equal access to the full range of financial tools available. A 2023Bank of Canada reportfound that 11 per cent of Canadians do not have a credit card — and about two per cent have no relationship with a bank whatsoever.
These findings build onresearchconducted by the firm Mintel in 2016, which suggested that 28 per cent of Canadians were underbanked — that is, they have a basic account, but rely on alternative service providers (such as predatory payday loan services) for many financial needs. The gap is likely wider forracialized Canadians, who experience more institutional discrimination than their non-racialized counterparts.
The perception that certain individuals are “too risky” to responsibly use products such as overdraft protection is one of many barriers that contribute to disparities in access. Other obstacles include minimum balance requirements, high fees, and a lack of financial literacy. On top of that, traditional banks tend to favour high-end credit products and large loans where the bar for qualification is beyond the reach of many consumers, explains Tate Hackert, the co-founder and president of earned wage access companyZayZoon.
“Consumers need easy access to short-term liquidity without egregious fees,” he says.
ZayZoon wants to level the playing field by giving employees instant access to their earned wages so that they can pay bills and make necessary purchases without having to wait for a scheduled payday. The platform — which must be implemented by employers — allows workers who pay a nominal flat fee to “withdraw” a percentage of the money they are earning before it is deposited in their accounts — without having to incur interest.
“With earned wage access, consumers can avoid high-cost alternatives, gain better control of their budgets, and improve their overall financial health,” Hackert says.
As ZayZoon illustrates, expanding financial stability for Canadians may require thinking outside the box. In the context of sky-high inflation, “the status quo is just not working,” says Jean Amiouny.
His creative solution involves encouraging people to “embrace the potential of Bitcoin as a long-term investment and a way to finally accrue wealth.” To that end, says Amiouny, the CEO ofShakepay, a banking platform that allows Canadians to buy and send the cryptocurrency (users can also earn Bitcoin by shaking your phone, hence the name), his company has launched across-country van tour. The “Inflated Tour” will host giveaways and other events atsmall businesses, grocery stores and other community spots from coast to coast to raise awareness about Bitcoin’s potential.
While the crypto caravan is at heart an innovative marketing strategy, Shakepay is illuminating how and why access to financial services must extend beyond conventional institutions. “There needs to be more alternatives to traditional offerings,” Amiouny says. “Canadians deserve equal access to modern finances with no special tiers and equitable rewards, regardless of network or balance.”
Sunny forecast for startup funding
After a long period of minimal activity, some Canadian VCssay startup fundraising is turning a corner, thanks in large part to the Bank of Canada’s recent interest cuts (and the prospect ofmore on the horizon).
“We have seen an overall improvement in the VC investment environment,” says Emil Savov, who heads upMaRS IAF. While the number of deals has remained fairly stable, he notes, the quality of those deals has noticeably improved. “Many entrepreneurs have absorbed the lessons over the past few years, and have made the necessary adjustments to their business models and fundraising strategies,” Savov says.
Shopify saw a somewhat unexpectedboost in Q2:the Canadian e-commerce giant’s revenue increased by 21 per cent during that time period after it expanded its offerings beyond online retailers to support brick-and-mortar businesses.
OVHCloud partners with InnerSpeech
Innerspeech, a Kitchener-Waterloo company that is developing non-invasive tech to facilitate communication for users with speech impairments,has joinedOVHCloud’s yearlong startup program, which provides high-performance infrastructure and computational support for early-stage startups looking to scale AI solutions.
$13.8 million:How muchRetispecraised in series A funding. Retispec’s tech can catch the early signs of neurodegenerative diseases by performing an eye test.
26:The number of deaths caused by COVID-19 each week in Canada. Despite that sobering figure, Ontario isofficially endingits wastewater surveillance program, a move that has been criticized by public health experts. In addition to identifying trends in COVID-19 infections, the program tracked other potential threats to the province’s population, including the presence of avian flu.
Rebecca Gao writes about technology forMaRS. Torstar, the parent company of the Toronto Star, has partnered with MaRS to highlight innovation in Canadian companies.
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