The Vancouver-based company aims to change the way Canadians save
Since founding Mogo in 2003, Dave Feller has been trying to help Canadians save money. The Vancouver-based company was created to revamp the payday loans space. But that mission has since shifted to its main priority: helping customers get rid of their debt.
“Today, 17 years later, we don’t offer paydays loans. We’re primarily focused on creating a holistic financial health solution,” says Feller of Mogo and its 175 employees.
That solution comprises a few different products, including a multi-purpose app and a MogoSpend card that offsets one pound of C02 for every dollar spent. We talked to the Vancouver native about that, Mogo’s other offerings and where he sees Canada’s finance industry going.
1. So the MogoSpend card essentially acts like a debit card. Why should people want to add it to their portfolios?
I went to university [at the University of Western Ontario], took economics. No one taught you financial literacy and how to manage your money; you learned by trial and error, and unless you’re going on your own personal quest of reading and studying, it’s not what most people learn.
So that’s also what we’ve been trying to do—how do you create an experience in which the next generation of consumers can learn these healthy financial habits from the get-go and never get into credit card debt in the first place? The goal is to create a solution and an experience that helps people live that zero-debt lifestyle, so that right away they learn to spend less than they make, and are always in a position where they can start saving and investing and hopefully avoid the consumer debt we’re talking about.
So we develop products that make it easier to be smarter with your money and harder to make bad decisions. Our prepaid card is a good example—it’s not a credit card. Studies show that if you use your own money, you’ll spend less than if you use a credit card. There’s a psychology with credit cards that says, Technically, I could buy this. And there are these reward programs that essentially gamify overspending, if you will. We build our products around what we call the four habits of financial health.
2. What are those four habits?
One is monitor and protect—monitor your credit score, protect yourself against identify fraud. We were the first to introduce free credit screening in Canada and now the first to offer free identify fraud protection to all Canadians, except Quebec. Both are so important in this digital world.
Habit two is controlling your spending, which is where the Mogo card comes in. Ultimately, the key to financial health is spending less than you make.
Habit three is borrow responsibly. That really is acknowledging that we do offer consumer loans, and the reality is, there’s a lot of times when people do need to borrow money, and it’s about helping people pay that loan back while trying to get out of that debt.
And the fourth one is save and invest wisely. But it’s really the first three that, without doing those, you don’t have enough money left to save and invest wisely. Today, we don’t actually offer investments within the Mogo app, but we do have a referral program with EQ Bank in terms of a high-interest savings account, one of the highest-interest-rate savings accounts in Canada.
3. The card also offsets one pound of C02 for every dollar spent. Is it fair to say a big part of your approach is in marketing to millennials and Gen Z?
Absolutely. Ultimately, this is about becoming the go-to finance app for the next generations. And I would say the majority of the members who sign up fall into that category. Having said that, we still have a large segment outside that as well. Like all technologies, the early adopters are usually the younger generations, but you still have the older generations. I’m in my early 50s, and I’m always looking for something that makes it easier and more engaging to be in control of my finances in a relevant, cool way.
But it’s like investing—people are increasingly saying, I’m not just investing for a return. I actually want to know it’s going to companies that are socially responsible and doing the right thing both from an environment and a people perspective. The same thing applies to managing money. When I’m spending my money, am I spending it in a way that actually aligns to my goals for both society and the planet?
Climate change a perfect example—80 percent of Canadians believe climate change is a serious issue. The vast majority want government to do more, companies to do more, but we all have a carbon footprint. If all Canadians were spending on this card, Canada could become climate neutral almost right away. The key is how to get people more mindful around spending, both to be financially healthier, as well as helping to reduce the impact on the planet.
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4. Have you gotten pushback from the bigger financial institutions in Canada?
I don’t think pushback, no. Four years ago, when we launched the free credit score, none of the banks offered it; now most of them offer it in Canada. I fully expect one of the big banks, if not all of them, to offer a carbon offsets card. I truly believe it’ll become a mainstay because people will realize that solving climate change is critical and is actually directly related to our consumption.
We’re out there trying to innovate and in the typical scenario, when they see things and say, Hey that’s working, they start to adopt. So we aren’t seeing pushback, just seeing that competition is good, because it helps motivate everybody. Every one of our customers has a bank account. We have over a million members, and for some of them we’re part of their financial wallet, and in many cases they’re doing less and less with their bank. The reality is, the banks are losing market share, and the share of wallets, to companies like Mogo and Wealthsimple.
5. How close are we to a more open banking system?
Well, you’ve got Robin Hood in the U.S., which completely changed the industry and forced firms to offer free investing. The same thing is now happening in Canada—we’re always a few years behind the U.S. The big banks in Canada still charge $15 a month even though the Mogo account is free, with no monthly fee.
Eventually, that’s going to catch up; the banks are going to take away their fees. They’re obviously trying to get the digital experience innovative and on par, but because they have the market and the majority of the customers, they’re not going to be quick to cut fees. It took until Robin Hood got big enough. And when one big firm did it, everybody does it.