Toronto-based loyalty app Drop has acquired predictive analytics company Canopy Labs with the goal of using its capabilities in data and AI to further personalize its service for users.

Canopy Labs uses artificial intelligence (AI) and machine learning to power a predictive analytics solution for a company’s data, offering them an automated way to track, optimize and personalize their customer journey. It has previously worked with companies including: Indigo, BMO, Roots, Travelocity, JetBlue and the Art Gallery of Ontario, and was backed by prestigious seed accelerator Y Combinator.

Drop is a loyalty app that allows users to sync their debit and credit cards and earn points for every dollar they spend at a selection of their preferred retailers, as well as through one-time or limited-time offers with more than 150 merchant partners across different product categories. The company has over 2 million cards registered and has attracted several big name brands to the app. Those partners range from established brands like Tim Hortons, Shoppers Drug Mart, Sephora, Lululemon, Cineplex and Costco, to startups such as Foodora, Casper and Bark Box. Points can be redeemed for gift certificates from a similarly robust list of brands.

Going forward, Canopy Labs’ team will be brought into the Drop fold, using its platform and capabilities to improve and optimize the customer experience on the app.

Derrick Fung, Drop’s CEO, says the company already has a data team in place, but acquiring Canopy Labs allows it to “significantly advance” its plans around utilizing machine learning. Though he didn’t say exactly how many, Fung says the company is bringing on “a lot” of users every month, which brings with it a greater need for data capabilities like those at Canopy Lab to both organize its data and put it to good use.

“We get billions of transactions through our platform and we’re adding a ton of payment data every day and every month,” he says. “The ability to have clean data and then learn from that data to predict what our customers will want in the future is a big part of what we’re hoping to achieve.”

Fung says that, for both Drop and the loyalty space as a whole, marketing and personalizing based on transaction and payment data is a major opportunity, and Canopy Labs provides a “best-in-class” solution to do that.

“With how much data we get from a user, the experience they have on the product should be completely personalized,” Fung says, adding that design and user experience are “table stakes” and it is personalization that will set programs apart. “Users should not see brands they don’t like or would never shop from. How they can earn points should be at relevant retailers that they already spend with, or we have reason to believe they would like. Same goes for rewards. It’s just going to be a much more personalized experience.”