Fintech Cyder announces $3 million funding round

Key Concepts

• Cider: A fintech company providing loyalty program solutions for credit unions.
• Credit Unions: Member-owned financial cooperatives offering benefits like better rates and personalized service.
• Fintech: Financial technology – innovative use of technology in the financial services industry.
• Loyalty Programs: Incentive schemes designed to encourage repeat business and customer retention.
• Software Licensing Fee: Cider’s revenue model, charging credit unions for access to their platform.
• Scalability: The ability of a system to handle increasing workloads or users.

Cider: Loyalty Program Solutions for Credit Unions – A Detailed Overview

Introduction & Funding

Cider, a fintech company focused on loyalty programs for credit unions, recently secured $3 million in strategic financing led by Saskatchewan’s Kexus Venture Capital. This funding round also included participation from existing investors like Mars Investment Accelerator Fund (IIAF), Graphite Ventures, and Stout Fund, alongside new investor Kexus Ventures.

Understanding Credit Unions

Will Christoulu, co-founder of Cider, began by explaining the fundamental nature of credit unions. He clarified that credit unions are essentially local banks where members, upon joining, become shareholders. This ownership structure translates into benefits for members, including free checking accounts, favorable loan and mortgage rates, and a community-focused approach. He emphasized their role in supporting local economies.

Cider’s Business Model & Value Proposition

Cider addresses a gap in the market by providing credit unions with the ability to create their own customized loyalty programs, similar to those offered by larger banks like BMO (with Air Miles) or TD (with Aeroplan). The company operates on a software licensing fee model, allowing credit unions to implement and utilize the platform quickly – within a couple of weeks – and predictably. This addresses a long-standing need for an affordable and scalable solution.

Member Benefits & Personalized Rewards

The benefits for credit union members using Cider’s platform are centered around personalization and supporting local businesses. Unlike traditional loyalty programs focused solely on transactions, Cider enables credit unions to reward members for:

• Shopping Local: Earning points for purchases at local businesses, such as coffee shops, instead of large chain stores.
• Positive Financial Behavior: Receiving rewards for achieving savings goals, improving credit scores, or demonstrating responsible financial habits.

Christoulu highlighted that this approach fosters deeper relationships between members and their financial institutions.

Investment & Market Opportunity

Mars Investment Accelerator Fund’s investment in Cider demonstrates a broader trend of venture capital firms recognizing the potential within the fintech sector. The fund was attracted by the significant market opportunity: over 400 credit unions in Canada, 5,000 in the US, and a substantial global presence. This large addressable market, coupled with the support of Canadian VC firms like Kexus Ventures and Graphite Ventures, positions Cider for growth.

Current Focus & Future Expansion

Currently, Cider’s business model is exclusively focused on partnering with credit unions. The company has developed technology that is scalable to institutions ranging in size from 5,000 to over 500,000 members. However, Cider plans to expand into other industries and markets, particularly in the United States.

Strategic Partnerships & Platform Growth

A key element of Cider’s future strategy involves forging partnerships with existing rewards programs, such as travel or gas rewards programs. With a current platform user base of almost 1.5 million people across over 20 credit unions in Canada and the US, Cider aims to allow members to redeem their points at partner locations like gas stations and grocery stores, enhancing the platform’s value proposition.

The Local Advantage

Christoulu emphasized the appeal of supporting local merchants, contrasting it with the anonymity of larger retail chains. This focus on community benefits resonates with credit union members and differentiates Cider’s offering.

Notable Quote:

“Credit unions are fantastic organizations that are basically local banks…by being a shareholder or an owner…they actually give you perks, incentives such as free checking accounts, better loans and mortgages and things like that and they operate in a specific community.” – Will Christoulu, Co-founder of Cider.

Conclusion

Cider is positioned as a key enabler for credit unions to compete with larger financial institutions by offering personalized and community-focused loyalty programs. Its scalable technology, strategic partnerships, and focus on rewarding positive financial behaviors represent a compelling value proposition for both credit unions and their members. The company’s expansion plans suggest a broader vision of integrating loyalty rewards across various industries, leveraging its existing platform and growing user base.