Bytes Better Have My Money

Robo-Advisors

Since 2014, many Canadian financial institutions have employed robo-advisors — financial advisory software that “provides algorithm-based investment management services, including automated portfolio planning, automatic asset allocation, online risk assessments, account rebalancing and numerous other digital tools”.^[10] Robo-advisors provide personalized customer service by collecting financial information from clients such as income, credit score, and expenses, as well as personally-identifiable information related to family, risk tolerance, and future goals. This software largely eliminates the need for human financial advisors, even though customers still have access to a human advisor when they would like to speak to one. Robo-advisors also provide clients with direct access to their full portfolios via an online platform.^[11] Many robo-advisors offer reduced fees in order to reach populations such as Millenials and low-income households.

One of the most popular robo-advisors in Canada today is Wealthsimple, an online investment management platform that uses intelligent technology to build clients’ investment portfolios and autonomously manage investments. Clients are required to provide personally-identifiable information such as name, address, phone number, email address, birth date, social insurance number, asset holdings and values, chequing account information (including account balances and limits), transactional history, as well as a spouse’s or designated beneficiary’s name and date of birth.^[12] This personal information is collected in order to verify the client’s identity, prevent fraud, and meet legal requirements. Wealthsimple’s website states that they believe understanding a client’s goals, financial position, and family issues enables them to ensure they are providing suitable investment options.^[13] For this reason, clients are required to complete a questionnaire about risk tolerance and goals to help determine the appropriate level of risk for their portfolio. According to Wealthsimple’s Privacy Policy, personal information may be transferred to third parties that provide identity verification, administration, technology, printing, marketing, data analysis, hosting, legal, and accounting services.^[14] Wealthsimple provides clients the ability to access their personal information, as well as correct any inaccuracies that may be present.^[15]

Wealthsimple uses cookies and other tracking technologies such as web beacons, and website analytics to better understand what pages a client visits most, improve user experience, and personalize content in relation to the user’s interests. There is also the option for clients to engage with Wealthsimple content through their social media sites, through plug-ins or applications. This will require users to grant access to information associated with their social media account, such as their name, user name, gender, email address, and profile picture. Information collected through social media sites can then be used to personalize the user’s experience and provide them with suggestions for products and services they may like.

Credit Score Apps

A number of applications have been developed in recent years to help individuals stay on top of their credit score. These applications often require individuals to provide personal financial information, such as their financial institution, credit card number, and social security number. Many credit score apps also provide insights into users’ spending habits by summarizing monthly debt, automatically categorizing expenses (e.g., food, entertainment, and housing), and providing tips on how to increase their credit rating.

Credit Karma is a free online credit score application that allows users free, unlimited access to their credit scores and reports from TransUnion and Equifax. As of January 2019, Credit Karma has over 85 million users. To register, individuals need to provide their name, email address, phone number, and Social Insurance Number (SIN). Unlike many other credit score applications, Credit Karma does not require users to register a credit card, and instead relies on an individual’s Social Insurance Number to access their credit information. According to Credit Karma’s privacy policy, the company does not share users’ credit reports or scores with third parties, and does not sell personal information to third parties for advertising.^[16] Credit Karma may, however, use tracking technologies such as cookies or web beacons to collect behavioural information on users and how they use the app.^[17] Credit Karma uses users’ credit history and behavioural data to suggest credit products and services, such as loans, credit cards, or insurance.^[18] If users make purchases from any of the suggested providers, Credit Karma receives a referral fee.^[19]

Financial Tracking Applications

Some applications track more than just an individual’s credit score, instead providing them with a detailed overview of their spending habits, financial goals, budget, and investments. Many of these applications are now widely available for free, and can be downloaded on smartphones and tablets or accessed through a web browser. While these applications are growing in popularity and use, some critics have expressed concern regarding the safety and privacy of sensitive customer data, such as log-in details and spending habits.

Mint is a popular financial tracking application that helps users monitor their spending and stick to a budget. To register, individuals need to provide their online banking log-in details (username and password) in order to allow Mint to sync with their bank accounts and track deposits and expenses.^[20] Users have the option to use Mint’s bill payment tracker, which requires individuals to enter details about the bills they have, such as the date and amount due, and then set reminders or give Mint permission to automatically pay the bill if funds allow.

While Mint’s privacy policy states that it does not sell any personally-identifiable information—information that could be traced back to one person—Mint reportedly sells aggregated data from its users to other financial institutions.^[21] Mint also makes referrals to financial services and products based on users’ spending habits and credit score. If users sign up to use a service or product advertised, Mint gets paid a referral fee.^[22] 

This is part of a series of articles exploring personal data collection practices in Canada. Check out our previous article on Shopping, or check out the following article on Public Spaces + Services.

Technology and policy related to this topic are constantly evolving. If you think we have missed something or see an error please contact Sarah Villeneuve (sarah.villeneuve@ryerson.ca). If you want to get involved in subsequent phases of this project, apply here.