New Zealand fintech startup Wedge has made a remarkable entry into the financial market, securing US$57.6 million in managed funds from nearly 2,000 customers within its first six months of operation. The Auckland-based company is directly challenging the nation's established banks by offering significantly higher returns on savings. Founded by brothers Dave and Andy McLeish alongside partners Angela Quirk and Lyle McNee, Wedge is on a mission to reshape the savings landscape for all New Zealanders.
A New Model for Savings
Wedge’s innovative platform combines the superior returns characteristic of a managed fund with the liquidity and simplicity of a bank account. Customers benefit from on-call access to their money without facing penalties, fees, or minimum balance requirements, a stark contrast to many investment products. All activity is managed through a sleek mobile app that pays returns daily, allowing users to tangibly see their savings compound in real-time rather than waiting for monthly statements.
Challenging the Banking Establishment
The company’s strategy targets the estimated $173 billion currently held by New Zealanders in low-yield bank savings accounts, where interest rates can be as low as 0.05%. Wedge estimates that if this capital were managed on its platform, Kiwis could collectively earn an additional $3.4 billion annually, money that currently pads the profits of bank shareholders. Even at its present size, the fintech is already making a tangible impact, saving its customer base approximately $1.1 million a year.
Ensuring Security and Trust
Addressing potential concerns about risk, Wedge has built its model on a foundation of security and transparency, investing client funds in low-risk global cash and bond assets. This conservative strategy has earned its portfolio a credit rating of AA, which is higher than the AA- rating held by most major New Zealand banks. Co-founder Andy McLeish emphasizes that the company guarantees its advertised return, ensuring savers can trust the platform as a secure home for their money.
The Path to Market
The journey to launch was a testament to the founders' resilience, marked by a significant six-month delay while navigating regulatory approval with the Financial Markets Authority (FMA). The FMA struggled to categorize Wedge's unique hybrid model, as it didn't fit neatly into existing financial frameworks, a challenge McLeish described as trying to define a new category. To protect their vision, the founders self-funded the entire venture, turning down multiple private equity offers to retain complete control.
A Vision for a Fairer System
The founding team brings a wealth of diverse experience, uniting Andy McLeish's background in advertising for major banks with his brother David's deep expertise in investment banking at firms like Fisher Funds and Goldman Sachs. This blend of consumer insight and financial acumen is central to their mission of creating a product that is genuinely beneficial for the country. The decision to bootstrap the company reflects their commitment to building a business that prioritizes customer outcomes over shareholder returns from the outset.
With its initial product validated and a growing customer base, Wedge is now poised for further expansion into notice savers and term deposits, alongside its recently launched business and trust accounts. The company has successfully demonstrated a strong market appetite for alternatives to traditional banking, establishing a solid foundation for future growth. By continuing to prioritize higher returns and customer-centric features, Wedge is on track to make a material difference in the financial well-being of New Zealanders.