Toronto-based FinTech startup Cyder has secured $1.5 million CAD 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 through its new Cyder Rewards platform, which enables credit unions to design and deliver custom loyalty programs. The company plans to use this funding to fuel the launch of Cyder Rewards, which it intends to pilot with Canadian credit unions over the next quarter.

“Our goal is not to become the name of the program,” Cyder co-founder and CEO Sukhman Dulay 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 compete in a new digital environment.”

“Credit unions did invent 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 MaRS Investment Accelerator Fund (MaRS IAF), Calgary’s Aperture Group, Québec-based financial services co-operative Desjardins through its Startup in Residence program, and California’s Berkeley SkyDeck. The startup also scored an investment from Dragons’ Den star Arlene Dickinson after pitching on the CBC television show last year. Raised via simple agreement for future equity, this marks Cyder’s first external funding to date.

“We led this funding round because we believe that the Cyder team has developed a very promising technology for loyalty and data solutions for financial institutions,” MaRS IAF managing director Emil Savov told BetaKit over 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 personalized experiences at scale.”

Desjardins’ Startup in Residence program supports and invests in high-potential Canadian tech startups across verticals. “Cyder embodies the qualities we prioritize in our investments: amongst other things, positive market signals, strong traction, and team strength,” Desjardins’ Startup in Residence managing director Eric Morin told BetaKit over email.

Founded in 2021 by Dulay and CTO Will Christodoulou, Cyder initially built a platform designed to help banks better understand their loyalty program members by gathering data using browser extensions.

As Cyder began working with more financial institutions, Christodoulou said the startup noticed “a massive gap” in the market—credit unions lacked the ability to easily and effectively launch loyalty programs. This became apparent after some credit unions asked Cyder to help them develop their own loyalty programs, and so the startup began building Cyder Rewards.

“Most Canadians, when they think about it, they always say … ‘We only have access to [five] banks,’ but that’s just not true—there’s hundreds of credit unions that can support their exact [needs] and give them just as good, if not better, banking services,” Christodoulou said.

Loyalty programs can be a useful means of attracting and retaining customers. “Credit unions did invent loyalty through something called patronage,” he said, referring to the payments credit unions issue to members when the institution does well. “But the big banks ran away with it, so we created this platform.”

RELATED: Two years after Graphite Ventures spinout, MaRS IAF is ready to invest again

Cyder advisor Carrie Forbes noted that credit unions are co-operatives in which every member is an owner. “If the credit union is profitable, dividends can be paid to the members,” Forbes told BetaKit over email. “The concept of loyalty is also part of their DNA, where it’s embedded in their co-operative values. Plus, it makes really good business sense. Loyalty programs can connect local small businesses to the members in their community, helping to support local economies and entrepreneurship in ways larger banks can’t.”

Forbes is the former CEO of Halifax-based League Data, a FinTech co-operative owned by over 35 Canadian credit unions. In her experience, Canadian credit unions want to adopt new technologies, but doing so is “not an easy task” given the complexity of the country’s banking system. Forbes noted that many existing unique credit union loyalty programs also “lack the user experience, automation, and data insights credit unions are looking for.”

Another problem credit unions are facing is an aging membership. “This isn’t a secret,” Dulay said. He believes that loyalty programs and Cyder’s platform can play an important role in helping them draw in younger members.

RELATED: PayTic raises $2.95 million to help banks, credit unions centralize program management

“Which millennial or Gen Z [person] doesn’t want to shop local and give back to their community?” Dulay added. “It’s the ethos of what a credit union is, and [loyalty programs are] how they’re trying to emphasize this and yell this from their rooftops.”

Cyder aims to give credit unions the software they need to offer programs that meet their needs. Cyder Rewards enables credit unions to offer local, white-label rewards programs. Credit unions can identify behaviours they would like to reward, onboard customers and local businesses as loyalty partners, integrate donation options for local charities and causes, and redeem and issue rewards for buying local, opening new accounts, or other actions.

Dulay and Christodoulou claim that nothing else exists in Canada like this for credit unions. Down the road, they also see lots of potential for the startup’s platform south of the border. For now, Cyder plans to pilot the platform with Canadian credit unions, and the company is bringing on four undisclosed credit unions from across the country as anchor partners.

Feature image courtesy Cyder.

The post Cyder closes $1.5 million to fuel launch of loyalty platform for credit unions first appeared on BetaKit.