Brokers: New MonCana will better the banks

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By Justin da Rosa

Brokers are weighing in on the acquisition of MonCana by Canadian First Financial and while opinions diverge many laud the deal as a way to better compete with the banks.

“In the market, it’s so challenging with all the changes and any cross-sell is going to be effective,” said Clinton Wilkins of Centum Home Lenders Ltd. “They are able to increase the product mix which will be positive and it creates more competition with the banks.”

Ron Butler of Verico Butler Mortgage shares similar sentiments: “MonCana supplies the tech, portals, software, hardware; the new bank has some of the top brokers in Canada and they can stop sending their business to the banks.

“It’s a perfect match and (deals like this) may be a requirement for tons of these small lenders to consolidate in a market that is shrinking and has more and more discounting of rates,” Butler adds.
Others mention the industry may take note and partnerships like this will become more commonplace.

“This may incent other lenders to explore this type of model, which to date has likely only been back of mind,” John Bargis of Mortgage Edge told “The broker market needs to find ways to bring true value to their business; for the most part brokers simply play the role of the middleman.”

Bargis is among those suggesting brokers who concentrate their business on the old “eat-what-you-kill concept” need to re-think that strategy.

“This is revolutionary,” he added, “and I personally support the multi-product renewal model. This creates true value for one’s business, independent or otherwise.”

Not every broker is as optimistic about the Canadian First-MonCana deal, however.

“With the new rules and regulation,” writes one MortgageBrokerNews reader, “It doesn't make sense to be a bank unless you have $250 million plus in start-up cash; it will take 10 years before this bank can even be considered a small player in the marketplace.”


  • Wane Davis on 2013-08-12 8:53:40 AM

    Assuming that this bank doesn't have deep pockets or serious investors would be a mistake...looking at the Board of Directors and CF Centre owners/partners and suggesting it will take 10 years is a serious underestimation of the markets needs and the strength of the team that has been built.

  • Ron Butler on 2013-08-12 9:10:24 AM

    The comment about 10 years might make sense if you were starting a bricks and mortar bank but Street Capital proved you can go from zero to multiple billions of mortgage funding in just a few years. I think these guys are on to something. The future of most banking products is likely to be web based so if the CF centres can take advantage of the low overheads associated with being part of existing mortgage brokerage office and leverage off of the mortgage broker's existing relationships then there is some definite upside.

  • Peter on 2013-08-12 9:37:11 AM

    This will be a "Different Bank" which is owned and operated by the individual broker. The motivation to cross sell, or "Do More" for their new and existing clients is HUGE compared to the traditional salaried personnel at a typical Bank branch.

  • Reid on 2013-08-12 1:34:31 PM

    The industry doesn't need another mono lender trying to be a bank. We need to lose the "if you can't beat them, join them" mindset and get back to the basics of what we do - provide great service and great rates that the banks cannot.

  • John Bargis, Mortgage Edge on 2013-08-13 2:32:13 PM

    To Peter....Lets not get ahead of ourselves....This is not a broker owned Bank. This is a bank owned by a few investor brokers, and several others.....I still like the concept, but the road ahead is very long and much more needs to come to light before its success is measurable.

  • BC Broker on 2013-08-13 3:02:44 PM

    It is just as foolish to think that all start ups will be successful - especially if that success is hanging its hat on the broker community exclusively.

    There are a lot of examples in Canada over the decades that clearly demonstrate the difficulty of entering into the banking sector and being able to effectively compete with the big five. The only ones that have ever truly had any real success in the consumer banking landscape (not credit unions) are companies that are backed by multibillion dollar multi nationals and even then it is a crap shoot – just look at CITI and their failed entry into big consumer banking in Canada – and they are the largest bank on the planet.

    Street opened in 2007 after a couple of years of hard work doing planning. Yes they are now wildly successful, but they also were purchased by Counsel and never really took off until they were because of capitalization issues. Street also started business before the big tumble and managed to capitalize on that when they launched.

    I wish Canadian First all the success in the world, and I truly hope that they do succeed – competition is good for Canadians.

  • Lior, Mortgage Edge on 2013-08-14 9:23:42 AM

    BC Broker:

    You can also add Wells Fargo to the list of foreign banks that failed to gain traction in Canada.

    The problem with Citi and Wells Fargo is that instead of focusing on prime consumers and creating a traditional banking experience, they established themselves as players in the alternative lending market. When the credit crisis hit, they left the Canadian market literally overnight.

    I applaud the efforts of CFF to deliver a unique value proposition to consumers. However, it is going to be an uphill battle. They are competing with major banks control over 90% of the financial assets in the country. They spend hundreds of millions of dollars each year just on marketing.

    How can an upstart compete with the major banks? The answer, in theory, is simple: deliver the best customer service, the best products, the best price. In essence, deliver a lot more than a traditional bank can for quite less all while keeping yourself profitable. Service, products, and pricing can be achieved over time... but profit is totally different.

  • Ron Butler on 2013-08-14 9:39:07 AM

    I think the discussion of foreign banks coming here is a bit misguided. There was a real inflection point at the 2008 Financial Crisis that saw a lot of foreign banks leave. The ING sale was a direct result of the 2008 Crisis. ING was likely poised to take advantage of their 15 year investment in Canada but OSFI was worried about their parent and the parent needed cash.

    Here's the truth: a new bank in a country where 90% of financial services is controlled by 6 companies is fantastically tough. But here's the good news: the world is changing, 77% of North Americans under the age of 30 think the majority of ALL major transactions they will do in the future will originate online in some way, either through a referral from social media or from online research or directly from online vendors.

    As rich and successful as the 6 banks are they are so heavily invested in their present business model, it will take a long time for them to make the shift. When societal change occurs there is always opportunity. Good luck to CFF Bank!

  • BC Broker on 2013-08-14 11:22:47 AM

    Lior: Actually when CITI first came to Canada in the early 1980's they tried traditional banking. Two major issues: (1) OFSI made their lives miserable to protect the big 5 (2) Consumers did not take to them.

    I know these things because my god mother was the Senior Executive Vice President of CITI Bank Canada. She could tell you some horror stories about what it was like dealing with OFSI and the million and millions they spent and lost trying to get into Canada.

  • Ron Butler on 2013-08-14 11:45:38 AM

    @BC Broker, I agree 100% OSFI brutalized lenders other than the Big 6 in the 80's. There are many examples of them driving out lenders or driving them under.

    Times seem to have changed a bit and bank licenses seem to be flowing more freely.

  • M. Robertson on 2013-08-14 11:45:40 AM

    Hi Ron, Trust you are well. I would not be so sure that the big 6 will struggle in the new era. Remember, it is their technology that has driven most of the innovation in banking in Canada. CIBC has won more than one international award for their online banking platform, as have RBC, BMO and TD. Our big 6 banks have the most secure banking system in the world, and they update their online technology regularly and introduce innovation to meet the needs of the new consumer at almost break neck speed. The biggest inhibitor to them doing some changes comparable to what their U.S. counterparts do is regulations, not their drive to make the changes. Those big banks spend more money on lobbying the government to allow change than any of their competitors do. They don’t do it for fun, they do it because they want to innovate and remain world leaders.

    It always comes down to money, and Canada’s top 5 or 6 banks have more than enough to stay competitive in the new era of business. They also have the capitalization to compete that some others lack. We need increased competition of that there is no doubt, but we Canadians are conservative when it comes to banking, and we like the fact that our major banks are held as an example of strength around the world. That is a reputation that is over 200 years old and one that is hard to overcome for any competitor. Credit unions have been trying for decades to overcome the banks, and they are a drop in the bucket compared to even one of our big banks. I wish CFF all the luck in the world, but don’t be naïve people – the big banks will do what it takes to protect their turf. Ultimately it will be up to the consumer, and they will be influenced by the experience they have and the ease by which they can bank.

    I do all of my banking with one bank in Canada, have for 40+ years, and I have zero reason to change that. I get great service, pay minimal fees, rates on my credit products are very competitive, I can bank from just about anywhere in the world that has electricity/internet/cell service, and if I ever needed to walk into a branch to talk to someone, I can do that – in every city and almost every single small town that has a population of 2000 or more in the country. Have I had the odd issue over the years? Sure but over the past 40 years my experiences have been above par. My kids bank where I do, and they have for over a decade, if you ask them to change they will ask you why, and there are very few reasons you could give them to make the change.

  • Ron Butler on 2013-08-14 12:00:22 PM

    @ M. Robertson, please don't get me wrong, I have relentlessly said the Big 6 banks are formidable adversaries. Richest companies in the country, well managed and full of smart people.

    I just think there is a bit of an opportunity now, an opening if you will, young people will care less and less about the bricks and mortar, do more and more online, less desire for face to face relationships. The opening I am talking about; is pivoting a huge company. Yellow Pages tried and went into Creditor protection, Newspapers are trying with poor results.

    I have a huge respect for the Big 6 banks but they are invested in bricks and mortar and let's face it, we all spend less time in the branch than we did 2 years ago, we all look for ways to spend less time there. Ultimately that means something to companies that built their franchises around buildings.

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