Kanetix buys RateSupermarket

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Brokers may not like it, but this is the reality of the industry today.
 
A man largely viewed as a vision has moved to deepen his commitment to rate sites, with the purchase of RateSupermarket to bring alongside his other mortgage holdings Kanetix and Comparasave.
 
Kanetix has taken a giant leap in the online mortgage market, buying RateSupermarket.ca and placing itself on the first page of any Google “best mortgage rate” search.
 
“It made sense to them and it made sense to us,” said Yousry Bissada, president and CEO of Kanetix. “The travel industry has been conquered by online, as has music with iTunes and movies with Netflix. The insurance and mortgage industry is going that way too.”
 
Bissada told MortgageBrokerNews.ca in an exclusive interview that adding RateSupermarket.ca will “lay the foundation” for an online offering of insurance, credit card and mortgage services that includes Comparasave.com, Insurance Hotline.com and Kanetix.
 
“These online services are just in the early stages here in Canada,” said Bissada. “It is much more substantial in the U.S. and Europe. All the numbers point to 70 per cent of mortgage holders shopping online now.”
 
Kelvin Mangaroo will be staying on as president of RateSupermarket, largely viewed as one of the top three lead-generation sites in Canada.
 
“I’m delighted the entire team is staying on,” said Bissada, “and very glad that Kelvin will be leading the team.”
 
For Bissada, he sees websites like Kanetix and RateSupermarket growing business for mortgage brokers.
 
“We are very big at feeding brokers business at Kanetix,” he pointed out. “I expect those numbers to grow for brokers – but the websites aren’t designed to replace banks; they are here to show people ‘how to deal’ with those institutions.”
 
Bissada, has a reputation for being on the leading edge of where the mortgage industry is headed, and some brokers are already viewing his latest purchase as strong indication comparison sites are here to stay.
 
“Everybody should sit up and take notice,” says Ron Butler, the owner of Verico Butler Mortgage. “Brokers need to stop whining about these sites and move into the future. Rate sites are not going away – they are here to stay.”
 
Butler points to the 25 years of experience Bissada has in the industry, and an impressive track record of choosing the right horse to bet on every time.
 
“He’s (Bissada) been doing this within our industry since 1988 when he started at FirstLine,” says Butler. “He’s had nothing but success in his career, knowing where the trends will be coming. He knew he couldn’t get where he wanted to be fast enough with Kanetix, so he went and purchased the guy on Page One (of a Google search).”
 
Butler also has high praise for Mangaroo, whom he credits with developing and nurturing RateSupermarket into the success it is today. He sees the marriage of the two companies as a good fit, as RateSupermarket will continue with its independent website and business partners, while Kanetix would continue its current arrangement with Invis/MI on its website.
 
  • @kiltedbroker on 2013-06-04 9:55:21 AM

    Congratulations to Yousry and Kanetix on the purchase of rate Supermarket - Yousry is a class act in our industry and is certainly making a statement with this acquisition. I agree with Ron Butler - brokers should take notice.

    Business is moving online, this is a reality. Our long term success depends on how able we are to adapt to the changes in our industry. And so it begins...

  • David Larock on 2013-06-04 10:51:10 AM

    Ron, I have read your many comments to CMP regarding rate sites and I have a couple of questions for you:

    With respect, are you at all concerned about the long-term ramifications of adapting your business model to depend on leads generated from these sites? What happens when you can’t live without them and they decide to raise their pricing? Or are you betting that won’t happen? Did you give any thought to creating a broker-led rate site before deciding to partner with third parties who would hardly have to lift a finger to become your fiercest competitor someday?

  • Ron Butler on 2013-06-04 12:40:25 PM

    David, those are intelligent comments and good questions.

    The pricing issue has actually rationalized itself, there are such narrow margins in the rate discount business even a small price increase from the sites would drive all of the consistent brokers away. There is a balance of actually fulfilling the rate offer versus the cost of the lead that the sites have respected because they have to.

    A broker lead site is a false hope, the main players own the Google real estate to such a degree that very a well funded company just decided it was better to spend millions for a guaranteed result then spend millions building a successful site from scratch. Its hard to get a group of individual brokerages to jointly spend $300.00 let the alone the $3 Million it would take to compete from a standing start.

    As far as the sites turning into direct competitors, I never worry about that because converting these leads is an execution nightmare. Successful Websites are hard to build but have a great pay-day when they sell.

    Try selling a mortgage brokerage today, likely you will get enough money from your brokerage to live comfortably for 6 weeks and then start serving coffee at Starbucks.

  • darick.ca on 2013-06-04 1:23:57 PM

    The appraisal industry went through a similar transition with the introduction of solidifi, brokerworx and NAS. It would be interesting to see how their bottom line has been changed.

  • David Larock on 2013-06-04 1:56:39 PM

    Thanks for responding to my questions Ron.

    Your point about the margins being too narrow to allow discount sites to squeeze brokers today is well taken. But if margins widen in future I wonder who will win the tug-of-war for that additional profitability? Especially if only a few main players “own the Google real estate” as you say? Won’t the rates sites have the real pricing power?

    I’m not so sure that converting leads would be an execution nightmare for Kanetix. And even if it was, couldn't they just buy their way in like they did with RateSupermarket? Especially if brokerages are a cheap to buy as you say? They have a lot of infrastructure already in place and I'd bet it has come up in their planning sessions. It certainly would if I was in the room ...

  • Ron Butler on 2013-06-04 2:13:37 PM

    David, your days of working at a lender serve you well.

    Take my word for it, its a nightmare, just try it for a few weeks.

    The real discussion in the planning sessions is not site to broker, its site to white label lender.

  • Sean Binkley, Your Home Team @ DLC Alliance on 2013-06-06 9:37:13 AM

    Although I'm not familiar with the sites mentioned, why would anyone reply on a lead generation site anyway.

    Here's the formula on how to generate a lead (listen carefully and take notes)...

    1) Go out and meet some people
    2) Tell them what you do
    3) Ask for their business
    4) Repeat steps 1-4

    If you need a reminder, look at your shampoo bottle the next time (hopefully daily) you are in the shower. Lather, Rinse, Repeat... It's the same thing.

    Have a great day everyone!

  • Sean Binkley, Your Home Team @ DLC Alliance on 2013-06-06 9:37:53 AM

    Although I'm not familiar with the sites mentioned, why would anyone reply on a lead generation site anyway.

    Here's the formula on how to generate a lead (listen carefully and take notes)...

    1) Go out and meet some people
    2) Tell them what you do
    3) Ask for their business
    4) Repeat steps 1-4

    If you need a reminder, look at your shampoo bottle the next time (hopefully daily) you are in the shower. Lather, Rinse, Repeat... It's the same thing.

    Have a great day everyone!

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