Backers of the FinTech startup include MaRS IAF, Aperture, Desjardins and Arlene Dickinson.
FinTech startup based in Toronto Cyder has secured C$1.5 million in pre-seed funding to help Canadian credit unions offer their own loyalty programs.
Cyder aims to help credit unions compete with banks and attract younger members with its new Cyder Rewards platform, which allows credit unions to design and offer personalized loyalty programs. The company plans to use this funding to fuel the launch of Cyder Rewards, which it intends to test with Canadian credit unions in the next quarter.
“Our goal is not to become the name of the program,” Sukhman Dulay, co-founder and CEO of Cyder, told BetaKit in an exclusive interview. “Our goal is to become the program that allows these programs to exist and, essentially, allow these credit unions to be competitive in a new digital environment.”
“Credit unions invented loyalty… but the big banks ran away with it, so we created this platform. »
Will Christodoulou,
Cyder
Cyder’s pre-seed round, which closed in late October, saw participation from Toronto-based companies MaRS Investment Acceleration Fund (MaRS IAF), Aperture Group of Calgary, Quebec financial services cooperative Desjardins through its Startup in Residence program, and Berkeley SkyDeck of California. The startup also secured an investment from Dragons’ Den star Arlene Dickinson after throw on the CBC television show last year. Raised via a simple future equity agreement, this is Cyder’s first external financing to date.
“We led this funding round because we believe the Cyder team has developed a very promising technology for loyalty and data solutions for financial institutions,” Emil Savov, Managing Director of MaRS IAF, told BetaKit by email. “Their platform uniquely combines data ownership, member rewards and marketing analytics (and) automation, enabling (financial institutions) to incentivize customers, collect actionable data and deliver experiences personalized on a large scale.
The Desjardins Startups in Residence program supports and invests in high-potential Canadian technology startups across all verticals. “Cyder embodies the qualities we favor in our investments: among others, positive market signals, strong traction and the strength of the team,” the general manager of Startup in residence Desjardins, Éric Morin, told BetaKit by email. .
Founded in 2021 by Dulay and CTO Will Christodoulou, Cyder initially built a platform designed to help banks better understand the members of their loyalty programs by collecting data using browser extensions.
As Cyder began working with more financial institutions, Christodoulou said the startup noticed “a huge gap” in the market: Credit unions didn’t have the ability to easily and effectively launch loyalty programs. This became evident after some credit unions asked Cyder to help them develop their own loyalty programs. So the startup started creating Cyder Rewards.
“Most Canadians, when they think about it, always say…’We only have access to (five) banks,’ but that’s simply not true: there are hundreds of credit unions that can meet their (needs) exactly and give them equally good, if not better, banking services,” Christodoulou said.
Loyalty programs can be a useful way to attract and retain customers. “Credit unions invented loyalty through something called favoritism,” he said, referring to payments credit unions make to their members when the institution is doing well. “But the big banks fled, so we created this platform.”
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Cyder Advisor Carrie Forbes pointed out that credit unions are cooperatives in which each member owns. “If the credit union is profitable, dividends can be paid to members,” Forbes told BetaKit via email. “The notion of loyalty is also part of their DNA and is anchored in their cooperative values. Plus, it’s a really good idea from a business point of view. Loyalty programs can connect local small businesses with members of their community, helping to support local economies and entrepreneurship in ways that big banks can’t.
Forbes is the former CEO of Halifax-based League Data, a FinTech cooperative owned by more than 35 Canadian credit unions. In his experience, Canadian credit unions are keen to adopt new technologies, but it’s “not an easy task” given the complexity of the country’s banking system. Forbes noted that many existing credit union unique loyalty programs also “lack the user experience, automation and data insights that credit unions are looking for.”
Another problem credit unions face is the aging of their members. “It’s not a secret,” Dulay said. He believes Cyder’s loyalty programs and platform can play an important role in helping them attract younger members.
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“What millennial or Gen Z (person) doesn’t want to buy local and give back to their community? » Dulay added. “It’s the philosophy of a credit union and (loyalty programs) the way they try to emphasize that and shout it from their rooftops.”
Cyder aims to provide credit unions with the software they need to offer programs that meet their needs. Cyder Rewards allows credit unions to offer white-label, local rewards programs. Credit unions can identify behaviors they want to reward, onboard customers and local businesses as loyalty partners, integrate donation options for local charities and causes, and redeem and issue rewards for local businesses. local purchasing, opening new accounts or other actions.
Dulay and Christodoulou claim that nothing else exists in Canada for credit unions. In the future, they also see great potential for the startup platform south of the border. For now, Cyder plans to test the platform with Canadian credit unions, and the company is tapping four undisclosed credit unions from across the country as lead partners.
Featured image courtesy of Cyder.