Kanetix Launches Online Pre-Approvals

KanetixThere are a slew of rate comparison sites out there, but they all present a similar challenge for consumers. People are forced to call a broker or lender to know if they qualify for the rates being advertised.

Kanetix.ca believes it has a better approach. On Monday it launched a revamped version of its rate comparison site that helps consumers get firm quotes with minimal human interaction.

“A lot of websites give you a teaser rate and make you contact the broker for details,” says Yousry Bissada, President and CEO of Kanetix Ltd. “At Kanetix you get an actual pre-approved rate online.”

To do that, Kanetix takes a mini-application and Equifax checks the person’s credit – all online – to confirm qualifications. (It’s a “soft” credit check that doesn’t adversely impact your score.)

Once clients are pre-qualified online, they receive a rate quote and “pre-approval certificate” and are contacted by the call centre of Invis-Mortgage Intelligence, a national brokerage.

From there, a call centre rep (or Invis-MI broker, if it’s not a straightforward deal) completes the application with the client and forwards it to the lender for underwriting.

“This is exactly how it works on the insurance side,” Bissada says.


(click to enlarge)

The proposed benefits to the client are a wide choice of lenders and options (via the Kanetix website), fast online pre-approval, low rates and no need to travel to a branch or broker’s office.

At the moment, the site has a more limited number of lender options than competitors like Ratehub and RateSupermarket. But that may change. Moreover, Kanetix displays only actionable discounted rates as opposed to sprinkling in lenders who advertise only posted rates.

It’s also important to note that Kanetix pre-approval doesn’t absolutely guarantee you the rate. The rate is contingent on an appraisal, underwriting and so on. “But it’s certainly a lot more firm than most rate comparison sites,” Bissada says.

The Model

One interesting part is that the leads are sent to a call centre, as opposed to a full-service mortgage planner. That’s presumably to keep costs low so the client can get a better rate.

Our first thought after hearing the phrase “call centre,” was: “What will Invis-MI’s 1,000+ brokers think of this?”

It turns out that Invis-MI brokers will benefit by being referred clients who don’t meet normal lending standards—a portion of the market that’s rapidly growing thanks to new mortgage regulations.

The goal, says Invis-MI CEO Bob Ord, is to maximize the number of qualified leads Invis-MI receives so brokers aren’t dependent on traditional referral sources like Realtors.

“These are applicants who want to deal online,” Ord explains. “If they wanted to talk to a live body they would have called a broker or gone to a branch.”

“It’s a huge opportunity,” adds Ord. “I believe there’s probably 5-10 per cent of the public who are qualified and will close online. The other 90 per cent will be opportunities for the traditional broker market.”

(CAAMP data from 2011 indicated that approximately 158,000 residential mortgages close in the average month.)

Because it’s a new model, Bissada says he chose one brokerage to work with initially and one defined area (Ontario). “Invis-MI is highly capable and has an established call centre, so it was a good fit.”

What’s in it for Kanetix?

Mortgage-TechnologyKanetix makes its money by being paid for the referrals.

Longer term, our sense is that Kanetix wants to build this portal and send qualified leads to several brokerages and/or lenders. In fact, as soon as I saw this news, I thought of MortgageBot, a subsidiary of D+H in the U.S. MortgageBot does something similar and is very successful with 1,100+ banks and credit unions on its system.

“Online is coming and we want to do it well,” says Bissada. His other business, insurance, is Kanetix’s bread and butter and the upside there is enormous. “Only 12 per cent of Canadians apply for insurance online. That compares to 70 per cent in the U.K. and 30 per cent in the U.S.,” he says.

More interestingly, Kanetix research shows that 55 per cent of people don’t even know insurance comparison websites exist. Bissada says that number is even higher for mortgage comparison sites.

“Canada is as tech savvy as any of those countries,” he says. “It is early days” in the online mortgage space.

Back to the Past

“Back in 2000 when we started Filogix, we expected the majority of mortgage shopping to occur online,” says Ord. “Invis-MI built call centres to handle that flow.”

“Our experience, however, was that mortgage shoppers would accept a commitment, take it to their bank, and the bank would undercut it. The web strategy was then abandoned,” he says.

But fast forward a decade and now virtually everyone shops online. With the right client experience, Ord and Bissada believe their venture will succeed.

“Online is a new channel that no one can stop,” says Bissada. “Online is not going to be 20-30 per cent of originations, but it won’t be just a blip either.”

For more: Here is the press release from Kanetix.

Rob McLister, CMT

  1. I have constantly repeated the same thing Yousry has said: online will never replace full service mortgage brokers but its share of the market will grow.
    Hat’s off to Yousry for adding a smart feature: the automated soft pre-approval. This is a very clever addition that is designed to turn an inquiry into a warmer lead, wish I had thought of it.
    A word of caution to M.I. / Invis brokers from someone who is getting 20 leads a day from a rate site just like this one. 65% of the leads are cookie cutter triple A deals. A monkey could process 65% of this business if the monkey had the best rate.
    So if anyone says that 90% of the business will end up being referred to brokers that person is either massively misinformed or knowingly misleading the brokers in his network.

  2. FYI the CEOs of Kanetix and Invis-MI worked together as execs at Firstline (CIBC) and both are members of CAAMP’s Canadian Mortgage Industry Hall of Fame. This model is similar to how Kanetix has operated in insurance business for years.

  3. Just a quick question – don’t they have to be registered with FSCO in order to do mortgage application in Ontario?
    Getting more information than name and phone number (simple referral) requires mortgage broker licence and than…read Ron Butler post about brokers being undercut by site-creators

  4. Den makes a good point, however if the FSCO licensed agents in the call center are the ones who view the credit bureau and issue the soft pre-approval it is a totally legitimate operation.

  5. Yes, but I couldn’t find any brokerage license on web-site and Kanetix is the one who collects data and does bureau request?
    In my opinion we have enough uncompetitve advantage from branch reps who dont have to be licensed…

  6. Do I have this right? Minvis is feeding the A-clients to its salaried call centre staff and the B-clients to brokers? Isn’t that competing with your own brokers for A business?

  7. “the leads are sent to a call centre, as opposed to a full-service mortgage planner?”….to me this looks like the call centre reps are not licensed. Mr. Bissada…Online line is not comming, its already here! Brokers and Agents, I think if your not online by now, and driving traffic, you run the risk or being extinct in the next 3 yrs.

  8. At this time Kanetix.ca is unable to provide a mortgage rate in your province. Please fill in your email below to get notified when our services becomes available in your province.

  9. In BC anyone who discusses mortgages with clients or are paid over $1000 in referral fees annually are required to be licensed. They are not licensed in BC so how will that work there?

  10. just checked the Kanetix.ca website…They are offering mortgage rates…This is considered “Trading In Mortgages”…you may be partners with Invis but its your site….Knock! Knock!.. is that FSCO at your door..Invis you should also watch out.

  11. Could you say the same about RateSupermarket.ca and ratehub.ca?
    Aren’t all of these sites just providing information?
    I guess the difference with Kanetix is that it’s providing pre-approvals. I wonder if FSCO would consider that mortgage brokering.

  12. It is worth checking the flow on the site before getting all excited about FSCO. The rate is provided from Kanetix based on two user questions 1) employment status, and user impression of own credit. Then when the rates are displayed and the user clicks through, the rate and credit application is presented by Invis.

  13. I don’t understand how Kanetix complies with regulations.
    FSCO says
    1. Before or at the time of making a mortgage referral, a person or entity must inform the prospective borrower in writing that the person or entity has received or will or may receive a fee or other remuneration, whether directly or indirectly, for making the referral.
    2. The only other information that the person or entity is permitted to give to the prospective borrower is the name, address, telephone number, fax number, email address or website address of the prospective lender or of an individual who acts on behalf of the prospective lender. O. Reg. 407/07, s. 1 (1).
    I don’t see anything allowing Kanetix to get paid and quote rates, take applications, pre-approve someone or facilitate a credit check.

  14. This is just a smart marketing measure of Invis/MI to camaflauge themselves as a rate website like Ratehub. They got in with Kanetix.ca and likely get all the leads.
    Kanetix, are you allowing other brokerages on this site or is it just Invis/MI as it appears.

  15. First mortgage brokers complained about DLC and Don Cherry.
    Now they complain about Invis-MI and Bob ord.
    I think mortgage brokers just like to complain!

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