By: Drishti Jindal, RIC Centre Market Research Intern
With building customer loyalty being their top priority, once their full solution is live JustCompare.ca ensures that their customers are paired with the right lender for their needs. They are the only company in Canada with the most comprehensive list of financial products such as credit cards, loans and mortgages all available in one place. JustCompare.ca campaigns for transparency and builds loyalty between lenders and value for customers. This is why we wanted to know their thoughts on the system here in the Canadian environment, where rate is king and borrowers and brokers undercut the rates they’re offered to attract and retain customers.
The following is a dialogue between Drishti Jindal (RIC Centre Intern) and Nilay Lad / Ryan Sharma from JustCompare.ca
D: Welcome Ryan and Nilay. So, do you think this system is good? Or does it have to change
R: “The system does have to change. Having an environment where people are undercutting each other in order to sell a product doesn’t help build loyalty. Instead it tends to develop consumers that just chase rate. Based on experience, this normally leads to high attrition within banks, making it a cost for both banks and the customer. If banks focus less on undercutting each other and instead on providing better features and products tailored to customer needs, they will attract loyal customers. The share of value from consumers increase as a result.”
N: “Don’t mis-understand us, the culture of rate chasing will not change, its human behavior, however there are more and more customers realizing that the cost of chasing rates is high with some lenders providing poor service and additional fees which customers get caught off guard. After they experience a poor service, customers tend to learn their lesson and try to renew only with high quality lenders or go to a broker they trust.”
D: What else, besides rate, should customers be focused on?
N: “I think customers should be asking more questions about what the penalties are. If you choose to break your offer early and move to another deal or even what the repayment schedules that can change are; whether or not there are any payment holidays? Especially while going into a rising environment, it’s important to ask those questions when sitting with your provider and not just select a product because it has the cheapest rate on the market. Education is a powerful tool. Also, when looking at a mortgage, one must consider, what is the initial fee? It might be 1% or 2% interest rate but might be $1000 or $2000 fee, which might not look expensive but is equivalent to a 3% rate. People need to be mindful of that of these other factors to make a more informed decision.”
D: Do you think anyone in the market is getting this right?
N: “We can’t say for certain that anyone has got it right yet but I have seen various lenders in the past offer some great services. There are people that we have talked about in the past that are developing products in this mindset. It will take them time to do well but they are definitely in the right direction. A lot more product managers within lending institutions need to really look at how to grow a share of wallet in the long term rather than just the short-term sales.”
D: How does your free service help customers in this area? What will you be doing different?
N: “We are still the only place in Canada with the most comprehensive list of lenders for mortgages. We continue to talk to our partners and disclose all the information possible Canadian’s and as we get more partners we will advocate them to tell us more about their products, fees and features. This way, we can provide transparency in the market and help those lenders find the right customers and help the customers find the right lender that has the right product for them and not just choose by rate.
R: We will continually campaign for transparency; for products to be more tailored to, today’s customer and their needs which offer great features, build loyalty and value with the lenders rather than having lenders just develop cheap products to attract customers which provide little value for all parties.”
JustCompare.ca aims to empower and put customers in the driver seat, for managing their own finances with confidence.
As our society is becoming more digital savvy, they are going to want and expect the ability to take control of their own financial situation. Hopefully, customers in this position take this as an eye opener for the future.