Has Canada won its first broker-owned bank?

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With several brokers holding shares in the new parent company of MonCana, many are calling it Canada’s first broker-owned bank – something exciting brokers from one end of the country to the next.

A broker-owned bank is “exactly what it is,” Peter Majthenyi of Mortgage Architects told MortgageBrokerNews.ca. “We’re not re-inventing the wheel here; all you have to do is go to the Queensland Bank of Australia – they sold the bank to brokers and once the brokers take ownership of the branch, the momentum or the degree of involvement changes significantly.

“They have had huge success with mortgage brokers opening their own branches and cross-selling different kinds of products, more than just mortgages.”

And that’s the key to growth within the industry, according to Majthenyi, whose own brokerage offers Canadian First financial advisory services.

“The stats are very clear: once you get your client into 2.5 to 3 products, you own the clients; you own 80 per cent of their wealth,” he said. “The client will convert all of their financial relationships to you if you have three of their core products – such as a Visa, checking account and mortgage – the probability of that client doing banking elsewhere drops significantly.”

The merger essentially makes it possible for more brokers to offer that service.

“Brokers can do more for their clients and get compensated more as a result,” Majthenyi concluded.
For his part, James Laird of True North Financial is optimistic the two entities will create a viable option for doing business.

“The management of both institutions have shown that they appreciate the broker channel and view it as a profitable way to do mortgage business,” the Toronto broker told MortgageBrokerNews.ca.

And it’s no secret brokers will be more willing to support a business that supports them.

“Whenever there is a comparable product at two institutions, it’s best to choose the one that is more dedicated to the broker channel in the long term,” Laird said. “It’s looking like this new entity is going to be dedicated to the broker channel in the long term, so as a broker, it’s important that we support institutions such as this.”

  • Ken Reinhardt, Port Perry, ON on 2013-08-13 10:52:03 AM

    Congratulations to All Involved !

  • Gale Tracey AMP, Mortgage Architects on 2013-08-13 10:53:40 AM

    Congratulations Peter you are and continue to be an inspiration to us all in the industry for your ground breaking continuous innovation to take your business to the next level!! Mortgage Architects is lucky to have you on our team!

  • Wane Davis on 2013-08-13 11:37:41 AM

    No surprise that Peter is involved in a game changer...his own business model thrives on maximizing opportunities generated from a steady stream of client referrals from both his MA and CFFC sides of the office. He and Andre have mastered the use of social media...are innovators and strategic thinkers. Cheers Peter and Andre!

  • Peter J White - National President & CEO FBAA on 2013-08-13 1:21:57 PM

    Hi Canada, I run the peak national finance broker body in Australia (www.fbaa.com.au) with our national office based in Brisbane, Queensland Australia. I'd like to add a couple of comments on this. Firstly I loudly applaud the undertakings of this initiative and it merits, and can be very financially rewarding. But here it hasn't been all clear sailing with Bank of Queensland / BoQ (it's correct name) and there were many issues which resulted in a class-action by the branch franchisees against the bank and many collapsed. A lot of branch franchises were not bought by brokers which in my view didn't help. But that said it's a great idea, please learn from the hard lessons learnt here on this as BoQ certainly is not a broker owned bank - but personally I wish it was.
    My contact if you want to reach me for more details on this or other matters here in Australia is president@fbaa.com.au
    Go hard Canada and make this a great broker-owned bank !

  • John Bargis, Mortgage Edge on 2013-08-13 2:18:45 PM

    Am I missing something here?....How does ownership have any relevance?....The bottom line is that if the concept is good, and it improves and strengthens the broker industry at large, then it has a greater chance of success since the market is likely to embrace it.....Just because a few brokers have invested their own funds in CFF, doesn't mean the model will necessarily work if the stars don't align.

  • BC Broker on 2013-08-13 2:48:45 PM

    I think that this is a great concept and one that certainly has potential. I do agree however that it is premature to be calling it a broker owned bank.

    I have stocks in four of the big five banks, as well as several other companies, including a few of the monoline lenders - so technically I too am an owner of those companies.

    To own shares in a company gives you input, but unless you are a significant majority holder you have limited input into the operation of the company.

    No matter what any person may think, this company - like all companies - will look to the bottom line first. It is all about profitability and the return to shareholders, the model will change according to thos two factors.

    It's great to see this happening in the industry - but let's not get ahead of ourselves.

  • Walid Hammami on 2013-08-13 10:15:34 PM

    Guys, this is the future of our industry, we need to own lenders, we need to have some that are not competing against us with their own sales force or their calling center. I also applaud First national for their new program: when they get a call from a prospect they refer him to a mortgage broker they deal with.

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