The Bank of Montreal is testing so-called micro branches in high-density urban areas, with a small staff able to provide mortgages among other services -- an old idea that may skirt concerns about the banks.
“People aren’t complaining about access; they are complaining about access to competent advisers,” says Calum Ross
, president of Verico
Calum Ross Mortgage. “There is a major shortage of people who are good mortgage professionals. The success of this model is going to depend on the quality of the people who work there.”
BMO Financial Group CEO William Downe told reporters following a speech at the Canadian Club of Montreal that many of the bank’s customers are now doing their transactions online using mobile devices, “but when they want to sit down and talk to someone, they want to do it in a convenient location.”
What is being dubbed a “micro location,” the first such branch will open next week in a Montreal residential building with just four employees in a 900 square foot space.
BMO’s move deserves praise, says Ross, but not for originality.
“This is really nothing new,” says Ross. “It’s not that different from the President’s Choice mortgage from 10 years ago. But it’s a great play by BMO.”
An estimated 15 “micro branches” at a time are expected to open across Canada, with customers able to get mortgages, discuss retirement planning and children’s education saving.
Layth Matthews, CEO of RateMiser Mortgage Advisors, feels the BMO experiment does have legs and should work so long as costs remain under control.
“If you get it right, it can work,” Matthews told MortgageBrokerNews.ca. “But the first thing that rose in my mind was ‘overhead.’”
Matthews believes the location of the micro branches in the retail sections of condominiums will provide “a captive market,” but also feels that most clients today don’t base their mortgage decisions on convenient locations.
“People don’t make their decisions that way,” he says. “It is the Internet and the strength of personality that generates leads and clients.”