The financial industry is complicated. There are many financial institutions, offering a dazzling array of mortgages, credit cards, insurance and other products, all with various rates and options and special terms. Matching the needs of consumers with the offerings by financial institutions involves a lot of time, energy and cost – for both consumers and financial institutions. Improving this situation represents an enormous business opportunity that is good for everyone.
Alyssa Furtado was introduced to the US financial industry after graduating from Queen’s University’s Smith School of Business. She quickly realized that while all financial institutions are willing to serve customers with perfect credit, the hard part was providing service to the vast majority of consumers whose credit isn’t perfect. Institutions spend money advertising financial products, attracting potential customers, gathering data, and then filtering out consumers who don’t meet their criteria. Institutions know that they can save a lot of money if they are introduced to consumers who fit their criteria more precisely. Known as "Lead Generation", the business of educating consumers, discovering their needs and abilities, and referring them to financial institutions where they might be eligible had no formal counterpart in Canada.
"We saw the market need and we saw that there was this proven model in the United States," says Furtado, who staked her own claim on this market in Canada in 2010. She and her co-founder James Laird began by setting up the website "RateHub.ca" which provides consumers with useful information about available mortgages from multiple institutions, and an easy way for consumers to narrow down their choices and seek the mortgages they want.
At around the same time, Benson Wong had reached a similar conclusion, but with credit cards. He had imagined a website that helped consumers analyze their spending habits, and pick the credit card offers that gave them the most benefits for the least cost. He called it "Can I Pay Less". With assistance from National Research Council’s Industrial Research Assistance Program (NRC IRAP), Can I Pay Less developed technology that powered it to become the most popular credit-card comparison site in Canada.
In 2013 when RateHub was looking to expand beyond mortgages into credit cards, Furtado and Benson struck a deal for RateHub.ca to acquire Can I Pay Less. Furtado got even more than she bargained for, because along with the acquisition came the well established relationship with IRAP and the firm’s Industrial Technology Advisor, John Shannon.
From the outset, Shannon, who came to IRAP with a strong background in financial technology, recognized the potential in RateHub and Can I Pay Less. He provided the team with advice and guidance that helped to facilitate the firm’s growing business through a broad suite of services. For example, IRAP provided support for the integration and extension of the Can I Pay Less technology into the RateHub.ca site. IRAP also assisted the company with hiring several highly qualified new graduates under the Youth Employment Program to fuel its growth, and supported development of a long-term strategy for expanding its customer base as well as dealing with an even more diverse array of financial products.
Finally, armed with this strategy, and financed by profits from its growing and profitable core business, RateHub applied for, and received, a contribution of $495,000 to develop a suite of technologies to transform its business to develop deeper and more meaningful relationships with consumers.
According to Furtado, consumers aren’t just looking for mortgages or credit cards in a vacuum. These are all expressions of a larger context in which consumers are managing their income and their savings, while spending on their needs and acquiring assets.
"We’re a company that thinks financial advice and working with financial experts is still really important part of the process, but a lot of people want to self-educate in addition to that. We offer a lot of education and empowerment. Our internal sales team can assist them or we can connect our users with providers who can offer the next level of service."
This approach is paying off with explosive growth. RateHub has been growing revenues by more than 100% per year. Last year it earned more than $4M and this year it is on track to almost $9M. RateHub’s explosive growth has helped them attract a deal on Dragon’s Den and the attention of serious investors in the FinTech sector.
For John Shannon, the business reflects a change in the way the Canadians are viewing mortgages and other financial products. Although their neighborhood bank branch used to be the first place individuals would go when looking to buy a home or invest their savings, this role has been overshadowed by a wider array of information and services to be found online.
"RateHub resonates with the current generation of young people, who are looking at these transactional relationships with banks but are also willing to enter other business relationships with anyone who really helps them in their inquiries," he explains.
Above all, he concludes, RateHub is not simply responding to a change in the way Canadians sort out their financial priorities, it is helping to define that change.
"They are on the cusp of something that could be quite significant in Canada."