Vault is the latest Canadian startup looking to make banking easier for small-to-medium-sized businesses (SMBs).

Toronto-based Vault recently launched its platform across Canada, joining the likes of Float and Loop in looking to address pain points small businesses experience when it comes to traditional banking.

“We came out directly into the market to replace one of the Big Five [banks] in terms of your daily operations.”

Vault was created in 2021 by Saud Aziz and Ahmed Shafik, former Revolut and Koho employees, and has secured backing from Google’s Gradient Ventures as well as a number of undisclosed founders and executives of financial-service companies like Paypal, Google Pay, Affirm, Airbnb, BNY Mellon, Coinbase, Revolut, and Robinhood.

Vault has secured $5 million CAD in funding to date in a round that was co-led by Gradient Ventures and fellow Silicon Valley venture firm Fin Capital. The round closed in the fall of last year, and marks Vault’s total funding to date.

Vault is not the first company looking to make banking easier for small businesses, but Shafik told BetaKit in an interview that the startup thinks it is approaching the problem in a different way.

“We came out directly into the market to replace one of the Big Five [banks] in terms of your daily operations from day one,” he said, noting that Vault is launching with a handful of products that he argued will make it easier and cheaper for SMBs to replace their existing banking and financial services.

Those products include banking accounts, corporate cards, spend management, bank transfers, investments into Guaranteed Investment Certificates (GICs) — services you’d receive from traditional banks. Like all other Canadian FinTech companies, Vault has to partner with traditional financial institutions to provide these services. However, Vault argues its other differentiator is that it built its own tech stack to support these services.

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For example, Vault offers multi-currency bank accounts, meaning an account that allows businesses to send, hold, and receive various currencies in one place. Vault built a tech stack that handles things like the payment infrastructure, ledger, and fraud risk for those accounts, which is meant to make the process of receiving or using local currency more efficient. Shafik argued this all-in-one approach eliminates the need for multiple accounts and transaction fees that are required when dealing with traditional banks.

While Shafik and Aziz see their platform as unique, they are far from the first entrepreneurs who have seen a need to make Canadian banking easier for SMBs. Fellow Toronto-based startup Float was created four years ago to bring a corporate card offering to the Canadian market. It has since become popular among Canadian tech startups and recently boasted a 4x increase in its revenue. Similarly, another Toronto-based company, Loop (formerly Lending Loop) pivoted its business following COVID-19 to a financial-management platform for businesses. Like Vault, Loop also offers multi-currency accounts as well as corporate cards for Canadian companies doing business internationally.

Vault has entered a competitive market where Float and Loop have already established themselves as Canadian players offering corporate cards tailored to startups. There are also United States-based players that have eyes towards Canada. New York-based Jeeves launched in Canada in 2021, while Brex and Ramp, which are sizeable players south of the border, have yet to launch in Canada.

The reason this space may be so attractive, particularly in Canada, is that SMBs have historically struggled to easily access financial offerings from traditional banks in the country. Banks often require personal guarantees from company founders or leaders, which can put those individuals in difficult financial positions. It is not uncommon for SMB leadership to use personal credit cards rather than businesses credit cards, or if they do have corporate accounts, the spending limit is low.

Aziz and Shafik also have first-hand experience trying to open and manage business bank accounts in Canada. Both have parents that run their own small businesses, and both were also part of British neobank Revolut’s attempted expansion into Canada.

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Shafik explained that he’d watch his parents spend an inordinate amount of time each week on banking, having to go in-person or pay $200 in surprise banking fees per month. When Revolut made its attempt to move into Canada (before backing out), Shafik and Aziz also faced difficulties. Aziz served as a Canadian strategy and operations lead for Revolut while Shafik was in product and operations.

“Going through the process with some of the big banks to open an operational bank account for the company, I just had to experience the antiquated or old-school bank account opening process where we have to go in person, sign documents, show proof of identity, etc.,” Shafik said, adding that given Revolut operates in other countries he saw how much easier those processes were there.

Vault is cumulative result of those experiences and Aziz and Shafik’s time at other FinTech companies, like Koho and Paris-based restaurant payments company Sunday. Their overall goal is to provide a cheaper and easier way for SMBs to manage financial needs.

With more than 1.2 million t of businesses in Canada being SMBs, the pair feel they have a sizeable market opportunity and are looking to serve customers in a wide variety of verticals.

“Our mission is to revolutionize banking for SMBs in Canada,” Shafik said.

Feature image courtesy Vault.

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