Sean Murray: Hello, everybody, it's Sean Murray here at
deBanked News. And today I am here with Rafael Rositsan and
Vlad Sherbatov at smarter loans. Thank you for being here, guys.
Vlad: Great to be here, Sean.
Sean Murray: So you both operate a company up in Canada. So I'm
going to ask you plenty of questions about the Canadian
market. Can you tell me a little bit about yourself, and also
what Smarter Loans does?
Vlad: Absolutely. My name is Vlad, this is my partner
Raphael. And together, we run smarter loans. smarter loans is
an online website that is visited by Canadians that are
looking for loans and financing of all purposes. It could be a
personal installment loan, it could be business financing, a
mortgage or auto, and other industries. And the way that
we're able to do this is that we aggregate on the website, the
top financial companies and brands, their products and
services that are available in the Canadian market. And we also
invest in educating Canadians about financial matters, how
these different products work, so that we can empower them to
help them make smarter financial decisions. Since we launched in
2016, we've been able to grow Smarter Loans into a household
name here in Canada, both with consumers that are looking to
find financial products online, and also for brands that are
looking to reach an audience and promote their products to
Canadians.
Sean Murray: So it's obviously been an interesting year. And so
I'm curious to get your take on the state of the Canadian
economy, what's happening in Canada right now?
Vlad: Well, overall, I mean, when everything went down in
March, shortly after we, as a country basically went into a
bit of a shutdown as well, businesses have closed down, and
people started to stay at home, the government has issued a
couple of subsidies, multiple subsidies actually, about a
couple of major ones. One is called CERB. And that was
towards just individuals to supplement with additional
income about $2,000 a month, and another one called a CEBA,
C-E-B-A and that one was toward small businesses and business
owners to help them through that time. And that was a $40,000
loan over three years. So those couple of subsidies helped
businesses and people kind of get through the initial couple
of months. And over the past couple of months, the
restrictions have been easing out. So businesses have started
to reopen, not to its full capacity, but at least in some
capacity. And that has brought more people to their jobs as
well. So that has picked some of the economic activity back up.
But of course, we're nowhere near the previous levels. And
there's still a lot of uncertainty here about what's
going to happen in the near term and in the long term.
Sean Murray: Okay, great, excellent. So your company puts
out a regular report like an annual report, and it's called
the state of alternative lending, right. And I'm looking
at the one you put out for 2019. And it looks like it was a real
standout year, in that more Canadians said that they first
applied with a non-bank lender that year than in any previous
year. And I imagine that certain events this year are going to
impact the stats. But what do you think we might see in 2020
regarding that?
Rafael: No, we're definitely seeing a shift towards more
digital products and digital behavior in the financial space
and outside of it as well. So we definitely anticipate an
increase in users, you know, engaging with brands that are
able to offer a digital experience, right, we're seeing
that across a variety of different industries, you know,
whether it's personal loans, the automotive sector, or the
business side of things as well. consumers that are aren't able
to go into a retail environment now are gravitating towards
digital. And that's a trend that we're you know, hoping to see in
2020 as well.
Vlad: And overall, I mean, when you look at COVID, and the
result that it's had on different activities in
different sectors, e-commerce has been on the rise, right. And
not just for everyday household items that maybe we go to Amazon
to buy, but also for financial products. And that behavior
change has, is something that we noticed in our previous studies
in 2019, and even in 2018. But that behavior change has been
given a jolt. So we're expecting that even if there's an economic
slowdown, that this shift in consumer behavior will actually
continue long beyond and we're starting to see that already.
And and one way that we've been impacted is that we've been a
leader in loans in quite some time. But even for our existing
customers, we've started to expand our service offering to
them and starting telling them about additional options for
financial products that they can obtain digitally and whether
that can be everyday banking solutions like checking and
savings accounts, or insurance services or investing, money
transfers, and so on and so forth.
Rafael: And just to Vlad's point, you know, we're seeing
brands sort of become a little bit more digital as well for the
consumer, you know, whether if you're trying to buy a vehicle,
for example, we're now seeing companies are able to offer, you
know, online purchasing and delivery to your home, you know,
so you don't have to go to a dealership in order to obtain a
vehicle. So we're seeing brands adopting as well, and their
product offering more and more so. And you know, that trend
will hopefully continue.
Vlad: I think it'll be interesting to see how different
sectors respond differently. Obviously, the government
subsidies have injected some additional capital into the
marketplace overall, that in the past, used to be covered by
service providers and by different companies. So that has
changed the short term demand for some of the financial
products. But overall, the consensus is, we need to be more
digitally accessible from a financial products point of
view, and customers are craving it right now. You know, even
those that were reluctant to do it in the past, now don't have
as many options. So they're going out of their comfort zone
and are more willing to adopt digital products if they weren't
in the past.
Sean Murray: between you both right there in that explanation,
I heard the term brand come up twice. So I want to ask you
about brands, because I feel like in our previous
conversations, you've raised brands as well. And I think
you've communicated that Generation Z, in particular is
all about personal brand. And I'm wondering, do you think
that's true when it comes to financial products?
Rafael: Absolutely. I think, you know, Brand is very important to
the consumer that they want to make sure that they're, you
know, giving their business to a brand that aligns with their
personal beliefs and values. So I think that's extremely
important. You know, another factor that's also super
important is, you know, the accessibility of your financial
product, right. So even though as a brand you might be in line
with my values, do you have products available and
accessible to me that I can easily experience online? Right,
so outside of sort of being just aligning my values, am I able to
provide a good experience and a service to to a potential
customer of mine?
Sean Murray: What are you seeing from bags? Because it seems like
fintech in Canada is competing against legacy institutions.
They're competing against traditional banking. Are banks,
there doing anything to cultivate their brands? Or are
they just depending on their name brand recognition that
they've always had? Are they doing anything active right now.
Vlad: So it's possible that in the past, they there may have
been a viewpoint that it's a us versus them mentality, or I
should say fintech versus, you know, non fintech. But over the
past couple of years, we've seen really is much more
collaboration than before. And banks are extremely active, I
should actually say, not just banks, but also credit unions
that are established large financial institutions here in
Canada. And they've all been much, much more active over the
past few years. And that comes in several forms. From one side,
they are innovating their own products to make them more
digitally accessible. They are also partnering with different
fintech companies, they are launching sub-brands to create a
more evolved digitally friendly, maybe younger generation
friendly brands and reach those consumers as well. So there's
been Yes, they do have legacy systems that can be a barrier
sometimes to that evolution. But they've been extremely active,
they're fully aware of what's happening in the marketplace.
And I think there isn't as much hostility now as there is a
recognition of opportunity and the fact that there is a greater
opportunity if there's collaboration happening, and
we've seen a lot more of that recently.
Rafael: And to add to Vlad's point, you know, we're on the
ground here in Canada. So you know, when we attend certain
events, we definitely see representatives from the banks,
they're, you know, they're interested in the fintech
industry and how it's been growing and developing, it seems
like the bankers right now have specific job titles for people
that are, you know, in charge of digital roles. So there is new
roles being sort of offered there for, you know, leaders and
digital transformation as well. So they're definitely very
active. And in terms of, you know, us talking to the banks
and credit unions has become a lot easier in the last few years
as well. You know, they have an appetite to explore our platform
and potentially reach our users as well. So they've been very
forthcoming and offering their products on platforms such as
smartphones and others as well.
Vlad: Exactly. And I mean, also keep in mind that the banking
system in Canada is very different from the United
States. We have a few major major banks and financial
institutions that cover a huge market share. So as consumers,
we are not sort of anticipating that they're going to be going
away anytime soon, or anywhere else. And I think there's
recognition of that both from not just from the banks, but
also the fintechs players and the fintech players that even
they have products that are competing with some of the
banking products, they're typically very open to
collaborations and exploring opportunities that they can all
work together.
Sean Murray: So Raf, you mentioned before going to
events. And one thing I've liked about the Canadian market is
that there are a lot of fintech events that that we were going
to many of them last year, we had one. But they've been
canceled, postponed, gone virtual, you know, it makes
sense. But what's the state of the fintech industry now that
those have kind of, you know, gone to the background, the
event aspect of it, are people working from home? It looks like
you're, you're in the office right now. But how, you know,
how is everyone operating in the fintech industry right now?
Rafael: Um, you know, definitely lots of cancellations. When it
comes to different events, I think companies are now trying
to adapt and you know, either will launch virtual events or
have smaller groups or smaller events that are, you know,
they're able to accommodate, I think most corporations have an
opportunity for employees to stay home and work from home
programs, I think until, until the end of the year, you know,
for sure, you can stay home and work from home and most
companies, but I think the leading brands are trying to
adapt, they're trying to figure out a better way to do it. I
think the appetite is still there, for us to meet, to
network and work together to move the industry forward. But
it's definitely taking some adjusting.
Vlad: Absolutely. And companies are evolving, like the fintechs
that are maybe becoming more remote, they're not just looking
at it as temporarily bandaid type of solution, like they are
changing the way that they recruit, some of them are still
actually hiring a lot of people. And all of that is happening
completely online completely digitally, because they're
hiring for remote roles. And there is this big shift in terms
of employment, the gig economy, and the freelance economy is on
the rise. So I think that in the fintech community that was
already a little bit more agile than some of the other
industries, this is their time to shine really, to be able to
leverage some of the innovation and technology that's available
out there, so that they're not as impacted as those businesses
that aren't as set up technically.
Sean Murray: Got it. So my next question is kind of twofold. And
it's, it's kind of an open ended, what's your prediction
for what's going to happen next? And part of that is in the
context of, you know, what has just happened with COVID? but
also with what's happening with digital adoption? What's your
prediction for where things are going to go next?
Rafael: I think it's gonna speed up a lot faster than you know,
it was on pace to happen, right? I think now, we're seeing a ton
of innovation and the insurance sector, in the loan sector in
the financial space, where companies are moving much faster
towards, you know, having a digital experience. I think part
of that is because the consumers were already trending in that
direction, right? There's an expectation from a consumer
standpoint to be able to easily shop financial products online.
Right. So I think that's going to continue, I think it's just
gonna be done at a much faster rate now,
Vlad: Exactly. When it comes to adoption of financial products
in Canada. And if you look at the financial sector overall,
over the past few years, a lot of the adoption has been
encouraged and driven really by the big players, and the brands
and the industries that have been able to bring good customer
experiences, secure experiences in the digital rail. And they've
been putting some money behind it as well to spread the word
that this these types of services are available. So now
within the financial sector, certain sub sectors have been
more efficient at this than others as well. And there's been
now thanks to some of that activity there is it's paved the
way for other financial industries to catch up. And
today, financial sectors, including the loans and
financing, insurance, investing, money transfers, and currency
exchanges, even cryptocurrency that's becoming slowly a more
significant part of the financial world. All of those
are very, very seriously focused on not just digital adoption as
an option, but as a must. And as the standard way of doing
business. And consumers, it's much easier for them now, for us
as consumers really to adopt this kind of behavior because
we're sitting at home for so much of the time. We've already
been used to shopping online and using e-commerce for everyday
household items. And digital financial items and products are
really no different. And those lines are starting to be more
blurred. So I think what we've started noticing over the past
few years with digital adoption of financial products will
continue to accelerate, like Raf said, and far beyond the impact
that's been brought on as a result of COVID
Rafael: Just to add to Vlad's point, you know, we sit in a
pretty unique position because we do offer connects financing
financing rounds with people in a variety of different
industries. Certain industries, were pretty old school, you
know, like equipment, truck financing boat financing, where
traditionally everything was done to the dealership level are
now becoming more and more digital as well, we're seeing an
increase in demand for those products, we're seeing an
increase in companies offering those products online. So we
hope that's going to continue. And we definitely see it from a
consumer standpoint, they're much more accustomed to going
and purchasing large ticket items online nowadays.
Vlad: And even if you look at the way that brands and
companies are adapting and responding to what's happening,
when we first started Smarter Loans in 2016, right, we were
convincing companies to work with us to helping them bring
their digital products online, and sharing them with the
audiences in Canada. And now leading up to 2020, ee were
working with over 50 different financial brands, okay, that are
available in the country. And if you look at just what happened
over the past three, four months, we were actually able to
establish relationships with significantly more companies,
right close to 40 companies just in the past few months, that
suddenly became so much more active and said that we need to
make digital accessibility a priority in order for us to
survive not just in the short term, but in the long term. And
we are happy to see this shift. We're encouraging it and we are
actually encouraging companies to come in and work with us
because this is what we do at Smarter Loans.
Sean Murray: Well, that's very insightful stuff. Thank you very
much, Vlad and Raf at Smarter Loans. Appreciate you being here
and your time.
Vlad: Sean, thanks so much for taking the time to speak with
us. It was really a great pleasure.
Rafael: Thank you, Sean. We're excited.
Sean Murray: Thank you.