Wealthsimple, a fintech with over 2 million users, offers investing, savings, and money transfers, and raised CAD$750 million ($598.2 million) in May 2021. The funding seems to align with a shift in banking regulation in Canada.

Last May, online investment manager Wealthsimple brought in C$750 million ($598.2 million) and plans to push deeper into banking territory by adding services in insurance and mortgages to a product mix that includes investing, savings, and money transfers. As barriers to entry in the Canadian banking market recede, incumbents will face a dual threat of customer attrition and competition for talent.

The retail trading bonanza helped Wealthsimple rake in a roughly $559 million funding round that valued the company at more than $3.5 billion. The fintech also surpassed 2 million users in its home Canadian market.

Wealthsimple hits 2M Canadian users amid neobanking push: The Canadian fintech reached a user threshold as it hit a CAD$5 billion valuation from its latest funding round—positive signs that it could become a significant player despite the challenges in its home market.

Startup wealth managers saw an uptick in adoption in 2020: Wealthfront, for example, saw a 50% spike in sign-ups in late February, while Wealthsimple reported 27% year-over-year (YoY) growth in deposits in March and April.

Wealthsimple has secured $559M in funding at a $3.7B valuation thanks to the success of its retail trading and new crypto and P2P money transfer products. The Canadian fintech should now roll out customized portfolio options to double down on growth.

Startups in other fintech hubs are already moving forward: UK digital wealth manager Moneybox is helping users find the best mortgage deals, while WealthSimple is planning a mortgage product in Canada.

Meanwhile, Canada’s biggest robo-advisor, Wealthsimple, has entered the banking space with the rollout of its peer-to-peer payment platform, Wealthsimple Cash. The challengers’ early signs of momentum point to intense competition within the neobanking space. The crowding may also make it harder for Revolut to stand out when it returns.

Wealthsimple is pivoting away from its US-led growth strategy and reprioritizing its domestic Canadian market. Wealthsimple struggled to gain a foothold in the US digital wealth management market since its 2017 launch, and its AUM was dwarfed by players such as Betterment and Wealthfront.

This category counts fintechs that sell their products directly to consumers, such as digital wealth managers like Wealthsimple and Betterment, as well as neobanks like Monzo and Chime. Risks: These companies are competing directly with incumbent FIs for consumers’ loyalty and deposits, and so risk more by relinquishing control of the customer relationship than their B2B counterparts.

Wealthsimple, Canada’s largest robo-advisor, took its first stab at banking with Wealthsimple Cash, a peer-to-peer payment platform, and is expected to expand into other areas like checking, insurance, and mortgage products.

And just last October, Wealthsimple announced it will develop additional financial products, including mortgages. This underscores how a robo-advice offering alone is no longer sufficient, pitting digital wealth managers against each other in a never-ending arms race.

Despite Nutmeg’s AUM milestone, it still faces tough competition ahead since UK consumers have access to a range of robo-advisors, including Moneybox and Wealthsimple. In addition, personal finance management apps like Plum and Chip are also adding robo-advisory offerings. These players could slow Nutmeg’s AUM growth and, in turn, its ability to break even.