Features | From Pivot Magazine

Why it’s getting easier to find the best mortgage and credit-card rates

Tech startups are revolutionizing the way Canadians shop for financial products 

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Portrait of Jennifer Pollock, Ratehub’s director of finance and operations, in front of a glass wall with Post-it notesJennifer Pollock, Ratehub’s director of finance and operations (Derek Shapton)

Millennials have become an easy, if obvious, scapegoat for our culture of endless customization. With the rising dominance of on-demand services from Netflix to Uber, it was only a matter of time before the have-it-your-way ethos hit the personal finance sphere. In the last decade, homegrown startups like Wealthsimple and Borrowell have sparked explosive growth in the realm of self-serve fintech, largely by targeting a distinctly millennial demographic.

Canadians, on the whole, have been relatively conservative about spreading their wealth beyond the big banks. According to a 2017 EY survey, approximately one in five Canadians had recently used two or more financial technology services, compared with one in three people globally. One of the reasons for this could be a lack of understanding about the options: a study commissioned by LowestRates.ca and run by Ipsos found that 50 per cent of Canadians simply didn’t know of a good resource to compare credit cards across financial institutions. 

Scrappy fintech startups that encourage a shop-around attitude to banking have sprouted up to address this precise issue. In Canada, there’s RateSupermarket, a comparison tool for mortgage and credit card rates, and GreedyRates.ca, a service that matches users to credit cards based on their personal spending habits. The U.K.-based uSwitch.com expands beyond an exclusive focus on personal finance into energy, wireless and insurance rates, perhaps a sign of consumer trends to come.

Chief among these fintech wunderkind newcomers is Ratehub, a platform co-founder Alyssa Furtado has called “Expedia for financial services.” Founded in 2010, the Toronto-based operation’s offerings are three-pronged: its website, Ratehub.ca, allows users to compare the best rates on products like mortgages, credit cards, bank accounts and insurance (home, auto and condo); CanWise Financial is the company’s in-house mortgage brokerage; and MoneySense, a recent acquisition from Rogers Media that attracts a healthy 700,000 unique visitors per month, provides an editorial arm for its mandate of “helping Canadians make smart financial decisions.” 

Jennifer Pollock, a CPA and Ratehub’s director of finance and operations, likens this new swell of financial empowerment to the way consumers compare prices while grocery shopping (or furiously adding-to-cart on Amazon). “The way the banking industry has worked is that financial products are offered by the institutions and people are apathetic—they don’t necessarily know the range of what’s available to them,” she says. “Buying a home, for example, is one of the biggest transactions you’ll make in your lifetime. If you’re not comparing rates, you could be losing out or not finding the product that’s best for you.”

Ratehub experienced more than 600 per cent revenue growth between 2014 and 2017, a fact easily attributed to a wider demographic shift toward technological fluency and financial autonomy. (Unsurprisingly, half of Ratehub.ca’s customers are millennials. Surprisingly? They have pretty good credit.) In 2010, co-founder Furtado was the company’s sole employee and had acquired minimal outside financing. After a successful turn on CBC’s Dragons’ Den in 2016, things really took off: five million Canadians used Ratehub.ca’s services in 2017, and last year the company secured a $12-million series A financing deal, led by upstart venture firm Elephant Partners LP in Boston. Today, the business has more than 100 employees spread across offices in Calgary, Toronto, Kingston, Ont., and Montreal—a large percentage of whom are mortgage brokers working under the CanWise Financial brand. Co-founder James Laird has predicted that Ratehub could hit $100 million in sales by 2021.

Given all the buzz around fintech’s new wave, it’s tempting to get caught up in big-bank skepticism. But Pollock isn’t looking to antagonize traditional financial institutions. “Banks are quite transparent about their products, and many are trying to evolve with consumers,” she says. “I don’t always like putting blame on banks for [the lack of information out there]. Our job is to bring transparency between banks and consumers to the forefront.”

In fact, a 2016 Financial Post op-ed sponsored by Vancouver fintech firm Mogo suggests an ongoing interplay between big banks and smaller, comparison-happy upstarts. Fintech firms, the article argues, aren’t necessarily trying to replace traditional companies but instead see them as “strategic allies.” “Consider them ‘frenemies’: banks looking to infuse their firms with digital innovation are increasingly joining forces with agile entrepreneurs interested in collaborating with the incumbents, tapping into their distribution channels and regulatory expertise.”

For her part, Pollock insists that whether a customer decides to keep all their accounts with one bank or lean toward a slightly more smorgasbord approach is entirely a judgment call. More, perhaps, isn’t always more. “For some, they may compare rates and decide the status quo works for them; for others, maybe rather than having all their accounts at one bank, they end up having their chequing at Scotiabank and their RESP and mortgage at BMO,” she explains. “It really depends on the person and where they place their value. We just give you an opportunity to choose.”