Robinhood, an American fintech, is sometimes called a "Superapp". A superapp is an app that offers all kinds of financial-related services. In Robinhood's case, they offer everything from literal cash deliveries to your house to stock trading, bank accounts, cryptocurrency dealing, and prediction markets. They're now offering 24/5 trading via MiCA (based in Lithuania) across the EU for tokenized stocks (see my piece on that from last year). They're currently expanding in Canada, and perhaps gearing up to launch the same sort of thing here. Whether it's Robinhood or someone else, what would they need to do to launch a Superapp in Canada?
Stock Trading: Off & On-Chain
There's a reason why Robinhood is pushing on-chain stock trading across Europe: it sidesteps a complex legacy systems. It also opens up something new that brokerages can't offer: self-custody. No one can take their shares out of their Wealthsimple account, other than transferring them to another brokerage. On-chain stocks are standard tokens that can be moved to any wallet, and then they can be piped into lending markets, and an endless variety of on-chain utilities. Innovation with traditional stocks is essentially impossible, due to a complex web of jurisdiction-specific regulatory systems and the many companies that are required to intermediate that. y
On-chain stock trading is still not as good an experience as traditional brokerages, for most customers, but it's catching up and it offers interesting new possibilities. More importantly: it's globally standard. A company like Robinhood can reuse the same components across their global business, even where the underlying licensing is different. This is something traditional brokerages can't take advantage of, and it's one of the reasons why TD doesn't operate in Ghana.
A Superapp would need to have an actual brokerage and should have on-chain trading as well. This is best achieved with a combination of CIRO membership for the securities trading and then a separate non-regulated user-controlled wallet. A smartly-desigend Superapp can have both aspects, although it remains to be seen what Canadian regulators will think about this. In America, Coinbase has long been following this model with their regulated crypto exchange/dealing business and their user-controlled Coinbase wallet program. There's already a precedent for this type of dual-offering in the form of Wealthsimple's "Crypto Web3 Wallet" (but not yet marketed as being for on-chain stock trading).
A major business starting a Superapp today would want to do both. Likely this would require a skillful submission to the regulators on why there's no added risk in having something outside of their jurisdiction closely coupled to something that is. For many users, this is surely a better experience than having a separate user-controlled wallet.
Money Movement
It's relatively easy to do money movement in Canada, at least from a regulatory perspective. Registration with FINTRAC (MSB) and the BoC (RPAA) allow most kinds of money movement. The harder part is getting the right financial arrangements underneath to make that work well. And then stacking on the anti-fraud on top of that in a way that fits the special parameters of the underlying banking rails. That's not trivial in Canada. But it's not a major roadblock to a Superapp.
Peer-to-peer money transfer is possible as an MSB with users of the Superapp. With the right scale, this could be functionally rather similar to e-Transfers.
Insurance & Wealth Management
Robinhood doesn't sell insurance alonside their products but they could! Think flight cancellation insurance or warranties offered at checkout. A Superapp could team up with insurers and be a channel to sell their products. The same applies to wealth management services like Manulife and Sunlife offer. Canadian incumbents have not been keen on exploring the potential for selling through fintechs but sooner or later a company with enough heft will offer them enough new users that they'll say yes. And the ability to easily buy and manage insurance within the Superapp will lead to more policies being sold. Ultimately, more insurance will reduce instability for Canadians so this should be a plus for regulators.
Debit Cards & Credit Cards
Payment networks can be accessed through debit or credit cards - this is a well-worn path too. It's not too difficult to manage a program that's being run by an existing card issuer like Peoples. Prepaid cards are where most fintechs start but it's possible to move up to credit cards.
Bank Accounts
Wealthsimple isn't a bank but they offer a "high-interest chequing account" as a PSP under the Retail Payment Activities Act. A similar type of dollar account can also be done in a securities context.
It's very difficult to start a bank in Canada, so the right answer is to partner with one. Sooner or later someone will be offering banking-as-a-service like in the US, and it'll likely be one of the smaller banks. Contrary to popular belief in the banking world, this isn't a particularly dangerous product with the right technology around it. To the extent that greater anti-fraud vigilance is required, that's a good thing! There's widespread abuse of stolen payment credentials in Canada, just like in the US, and more technological attention to this issue would be a benefit to more than just the users of these BAAS accounts.
Prediction Markets
This is starting in Canada, but probably the answer is just to integrate this on-chain. Might that run afoul of the law in Canada? Maybe, but this isn't known. When does a user-controlled wallet cross over from merely being software like a web browser to software like a website? An aggressive, probably foreign-backed, Superapp will probably test these waters soon enough. If they are themselves a first-party CIRO member then they'd immediately have to answer for it, but is there jurisdiction? There's a lot of unknown questions for lawyers to battle over. If this isn't the right avenue, Wealthsimple has already laid out the path for doing this in a regulated context.
Conclusion
Cost, banking difficulties, technology development, and the small size of the Canadian market have been roadblocks to-date. Wealthsimple is trying to be a Superapp but they don't offer as extensive a suite of services as their American competitors.
What's required is a combination of partners, licenses, and technology. Some parts can be done with user-controlled wallets, some with licensed partners, and some with first-party licenses that are relatively easy to obtain. The big challenges: banking would be a major issue (but solvable with volume), compliance/pricing with license-holders might be a struggle (compliance especially), and of course: technology development. It would cost millions to build this and have it operate as a coherent whole, but costs are coming down every day with AI-driven development. Perhaps a Canadian Superapp/competitor to Wealthsimple is already on its way with Robinhood, Coinbase, or one of the other large American players. When and if this happens, Canadians will be the winners.
Advantage #1: Safety
A Superapp could be safer than incumbent offerings. To the extent that transactions happen within a walled garden, rather than between different companies, there may be a consumer benefit that's bigger than just the integration advantages. A Superapp can also give people a better view of their finances and risks. To-date, regulators have not been keen on AI-assisted risk reviews, but sooner or later they'll come around to seeing how this improves the lives of Canadians.
Advantage #2: Reduced Cost
Many of the costs in the Canadian financial system are at the borders between companies. Integration of these services all under one roof means reducing those transaction costs and ultimately improving overall efficiency. Increasingly, people are coming to simply expect this. Waiting weeks to move between securities dealers is a frustrating experience.
Advantage #3: Digital Identity
A Superapp can become a digital identity, which can then be leveraged for other services. Right now, Canadians are forced to give up sensitive information that is the exact same information that scammers can use to impersonate them. With the latest leak of 153 million full digital scans of North American drivers' licenses, it's becoming more obvious every day that this approach is flawed. A Superapp solves this problem by providing multiple authentication points that are integrated into a single externally-facing ID. WeChat, a Chinese Superapp, offers this. The need isn't widely known yet in Canada but it will be.