From a shareholders perspective, the Canadian banks have been one of the safest and strongest performers in recent history. They were able to glide through the global economic downturn with relative ease, and continue to deliver exceptional returns each year.
From a customer perspective, the Canadian banks are pushing their borrowers deeper and deeper into debt. Canadians are now carrying record high consumer debt, often paying 20% interest rates on their credit card balance, while the big five banks’ profits have ballooned, eclipsing over $30 billion in 2014. Think there’s a relation between the continuing household debt with the Banks increasing profits?
This lack of customer care has made the Canadian banks susceptible to technology disruptors.
Kevin Sandhu, CEO of Grouplend, recognized this in late 2012 when he came up with the concept of a technology enabled, data-driven platform that could improve the speed, convenience, and costs for Canadians looking to borrow money.
Why should someone with decent credit have to pay 20% interest rates on their credit card? Sandhu started the company with the belief Canadians needed a cheaper option to access credit, and by removing a lot of the costly overhead, legacy costs, deposit requirements, and other inefficiencies of the Canadian banks.
By using Grouplend to obtain a loan, with rates starting at 6.3%, averaging around 11.5%, and never going as high as a credit card, Canadians will save thousands of dollars on their debt.
Sandhu mentions, being the first company in Canada to offer this cheaper service gives a great advantage as Grouplend continues to educate Canadians about this new industry, but it’s hardly a reason to stop innovating. He maintained that being a new financial service in Canada, Grouplend had to create a way for people to understand all of their credit options without any commitments or requirements.
Canadians have long been discouraged for shopping around for loans and other credit products, as each credit inquiry potentially lowers a consumer’s credit score. Grouplend was steadfast in creating an application process where the applicant can obtain an instant personalized quote without affecting their credit score.
“Worst case scenario, someone loses 120 seconds of their life when they apply for a loan with Grouplend,” says Sandhu.
Grouplend continues to prove the banks’ archaic systems are no longer in touch with the Canadian market by moving beyond traditional underwriting metrics. Grouplend has taken the position that people are much more than just a 3-digit credit score. Their technology and proprietary algorithms analyze data points beyond just a credit report to get a fuller picture of who an individual is. Using this method, the company is able to offer borrowers personalized interest rates.
If the banks are the newest industry ripe for disruption, how far will this go?
Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.
In the future, will the worlds largest bank hold no money?