By Felicia!
Is this the first domino to fall as some industry pundits are claiming throughout social media? Is the Canadian Real Estate sector in trouble? It depends on how you look at it really.
First, Rocket Mortgage. While they did grow quickly, they were not as serious a contender as some people might have imagined. Let me explain why.
Haystax originally launched with the idea that consumers would rally behind technology and prefer to have an experience driven by Artificial Intelligence. We built, we tested, and we stepped back and re-examined the reality we were faced with. Consumers do not, yet, trust technology when making major purchases because it lacks the capacity for one simple human trait. Empathy.
No matter who you are, getting a mortgage is stressful. The ever changing dynamics to pricing, the vast suite of products available, and the personal - emotional - needs of the consumer can make it challenging for technology to fully understand how a product may or may not impact a client. This is not due to the lack of data that technology has access too, it is the type of data.
No matter how good technology may be today, it cannot read body language or tone and it simply does not have all of the data points regarding a clients "non application" information. Those little nuanced items that are not provided space, nor deemed relevant, because most risk programs only measure key data points, like credit score and place less weight on what might be deemed as exceptions.
Rocket Mortgage went all in on the technology first experience for consumers, and while some may have found the process easy, most would find it stressful. Canadians, overwhelmingly, want to have tailored advice that meets their individual situation and goals. That is why a year before Rocket even ventured to come to Canada, Haystax did a significant pivot.
In our, Haystax's, drive to deliver a better consumer experience we decided to approach things very differently than Rocket, or any other brand in the country. Simply put we created a true franchise model instead of a quasi franchise model that is premised on thousands of self employed people "renting" their business. I say renting because if we look across Canada, none of the major brands (DLC, Mortgage Alliance, Centum, Etc.) have any actual brand consistency across the country. They actively tell their people to market "your brand your way" - and it doesn't really work. How does having, in the case of say DLC, to have thousands of mortgage professionals across the country all beating their own chests, all marketing their own personal brand, actually help build the number one consumer driver. Brand and brand experience.
Simply put, you cannot.
Mortgage professionals have lamented the Canadian banks dominance in the marketplace for as long as there have been mortgage brokers. It is the single most common complaint among mortgage professionals in Canada, that the big banks are not being "fair" by undercutting mortgage brokers. We need to dig deeper, because there has to be a reason why consumers continue to favour going direct to banks over mortgage brokers.
After extensive research, talking to professionals, consumers, and lender from across the country, we came to a rather simple conclusion. Consumers do not trust mortgage professionals - and not for the reason you might think.
When a consumer walks into a RBC, CIBC, Scotia, TD, or BMO branch anywhere in Canada they are faced with consistency and predictability. They know, and trust, that when they walk into anyone of those organizations their experience will be essentially the same in Toronto, Vancouver, or Regina. The process, the service level, everything is tracked and measured to enforce brand consistency for the consumers because brand is the ultimate power.
But brand only works when it is consistent and the experience the consumer has is predictable. Even Rocket Mortgage in the USA has stronger brand enforcement policies that what was implemented in Canada. Their agents still worked to build their "personal" brand and in doing so they diminish the brand under which they worked, and which unified them. This is not unique to Rocket, it is an systemic issue for brands across the country.
Depending on who you speak too there are around 30k licensed mortgage professionals in Canada, this includes people who work for lenders. Under the current models that exist that means there are tens of thousands of professionals across the country, all standing on their soapbox, all crying the same tune. I give the best advice, the best rates, and I am the best agent around. Instead of rallying behind a unified brand, their brand is relegated to a small passing mention - almost as an afterthought.
For consumers that does not drive confidence, and it never has. Most mortgage professionals are told that for them to succeed they need to solicit friends, family, realtors, and everyone else for referrals. They are told this is the single most effective way for them to build their personal business and brand. It might be OK for the first year, maybe two, but eventually that methodology doesn't work. What happens when my mortgage advisor changes brokerages, brands, leaves the industry, etc? They are going to ask... what happens to me? Simple answer, you get pushed and pulled around with the agent, who hopes that your personal relationship will mitigate the confusion caused. We know it does not work because broker retention industry wide is hovering at around 30%, a rather dismal number consider banks and some lenders are cresting 60% retention levels.
The reality is that having thousands of people all shouting the same message to the same people day in and day out, does not work. The messaging is not unified and it is often just click bate designed to stir negative emotion, or purely focused on rate. That is not building consumer trust or confidence in our industry. It builds doubt, confusion, and indirectly pushes the consumer towards brands where consumer confidence is high - in Canada that is banks.
We launched Haystax and based our model on tested and proven business methodology that works in almost every other G20 nation. A model that builds a unified brand and delivers a consistent consumer experience no matter what Haystax franchise they may deal with, anywhere in Canada.
It is time Canada. Time for Mortgage Professionals in this country to up their game and start actually driving real competition for our banks and capturing market share that more closely resembles the 50+% that exists in other countries.