00:05.520 --> 00:07.230 Sean Murray: Hello, everybody, it's Sean Murray here at 00:07.230 --> 00:11.640 deBanked News. And today I am here with Rafael Rositsan and 00:11.670 --> 00:15.300 Vlad Sherbatov at smarter loans. Thank you for being here, guys. 00:15.480 --> 00:16.800 Vlad: Great to be here, Sean. 00:17.550 --> 00:20.910 Sean Murray: So you both operate a company up in Canada. So I'm 00:20.910 --> 00:22.770 going to ask you plenty of questions about the Canadian 00:22.770 --> 00:25.440 market. Can you tell me a little bit about yourself, and also 00:25.440 --> 00:26.700 what Smarter Loans does? 00:27.140 --> 00:29.690 Vlad: Absolutely. My name is Vlad, this is my partner 00:29.690 --> 00:34.040 Raphael. And together, we run smarter loans. smarter loans is 00:34.040 --> 00:37.580 an online website that is visited by Canadians that are 00:37.580 --> 00:41.570 looking for loans and financing of all purposes. It could be a 00:41.570 --> 00:45.230 personal installment loan, it could be business financing, a 00:45.230 --> 00:49.490 mortgage or auto, and other industries. And the way that 00:49.490 --> 00:53.000 we're able to do this is that we aggregate on the website, the 00:53.000 --> 00:55.910 top financial companies and brands, their products and 00:55.910 --> 00:59.480 services that are available in the Canadian market. And we also 00:59.480 --> 01:03.380 invest in educating Canadians about financial matters, how 01:03.380 --> 01:06.620 these different products work, so that we can empower them to 01:06.680 --> 01:11.060 help them make smarter financial decisions. Since we launched in 01:11.060 --> 01:14.360 2016, we've been able to grow Smarter Loans into a household 01:14.360 --> 01:17.840 name here in Canada, both with consumers that are looking to 01:18.230 --> 01:21.830 find financial products online, and also for brands that are 01:21.830 --> 01:24.830 looking to reach an audience and promote their products to 01:24.830 --> 01:25.580 Canadians. 01:26.430 --> 01:29.490 Sean Murray: So it's obviously been an interesting year. And so 01:29.490 --> 01:33.300 I'm curious to get your take on the state of the Canadian 01:33.300 --> 01:35.940 economy, what's happening in Canada right now? 01:36.980 --> 01:39.800 Vlad: Well, overall, I mean, when everything went down in 01:39.800 --> 01:44.840 March, shortly after we, as a country basically went into a 01:44.840 --> 01:48.320 bit of a shutdown as well, businesses have closed down, and 01:48.320 --> 01:51.170 people started to stay at home, the government has issued a 01:51.170 --> 01:54.530 couple of subsidies, multiple subsidies actually, about a 01:54.530 --> 01:58.130 couple of major ones. One is called CERB. And that was 01:58.130 --> 02:01.730 towards just individuals to supplement with additional 02:01.730 --> 02:05.570 income about $2,000 a month, and another one called a CEBA, 02:05.630 --> 02:09.290 C-E-B-A and that one was toward small businesses and business 02:09.290 --> 02:13.520 owners to help them through that time. And that was a $40,000 02:13.520 --> 02:19.250 loan over three years. So those couple of subsidies helped 02:19.610 --> 02:22.610 businesses and people kind of get through the initial couple 02:22.610 --> 02:25.460 of months. And over the past couple of months, the 02:25.460 --> 02:28.820 restrictions have been easing out. So businesses have started 02:28.820 --> 02:32.390 to reopen, not to its full capacity, but at least in some 02:32.390 --> 02:36.470 capacity. And that has brought more people to their jobs as 02:36.470 --> 02:41.840 well. So that has picked some of the economic activity back up. 02:41.840 --> 02:45.530 But of course, we're nowhere near the previous levels. And 02:45.530 --> 02:47.420 there's still a lot of uncertainty here about what's 02:47.420 --> 02:49.940 going to happen in the near term and in the long term. 02:51.110 --> 02:54.950 Sean Murray: Okay, great, excellent. So your company puts 02:54.950 --> 02:59.090 out a regular report like an annual report, and it's called 02:59.090 --> 03:02.480 the state of alternative lending, right. And I'm looking 03:02.480 --> 03:06.680 at the one you put out for 2019. And it looks like it was a real 03:06.680 --> 03:10.160 standout year, in that more Canadians said that they first 03:10.160 --> 03:13.820 applied with a non-bank lender that year than in any previous 03:13.820 --> 03:17.630 year. And I imagine that certain events this year are going to 03:17.630 --> 03:22.640 impact the stats. But what do you think we might see in 2020 03:22.820 --> 03:23.660 regarding that? 03:25.229 --> 03:28.979 Rafael: No, we're definitely seeing a shift towards more 03:29.309 --> 03:33.209 digital products and digital behavior in the financial space 03:33.209 --> 03:36.089 and outside of it as well. So we definitely anticipate an 03:36.089 --> 03:39.899 increase in users, you know, engaging with brands that are 03:39.899 --> 03:43.859 able to offer a digital experience, right, we're seeing 03:43.859 --> 03:45.929 that across a variety of different industries, you know, 03:45.929 --> 03:49.109 whether it's personal loans, the automotive sector, or the 03:49.109 --> 03:52.529 business side of things as well. consumers that are aren't able 03:52.529 --> 03:55.289 to go into a retail environment now are gravitating towards 03:55.319 --> 03:58.859 digital. And that's a trend that we're you know, hoping to see in 03:58.859 --> 04:00.179 2020 as well. 04:00.660 --> 04:03.630 Vlad: And overall, I mean, when you look at COVID, and the 04:03.630 --> 04:06.480 result that it's had on different activities in 04:06.480 --> 04:10.470 different sectors, e-commerce has been on the rise, right. And 04:10.500 --> 04:15.090 not just for everyday household items that maybe we go to Amazon 04:15.090 --> 04:19.170 to buy, but also for financial products. And that behavior 04:19.170 --> 04:22.650 change has, is something that we noticed in our previous studies 04:22.650 --> 04:28.230 in 2019, and even in 2018. But that behavior change has been 04:28.260 --> 04:33.450 given a jolt. So we're expecting that even if there's an economic 04:33.450 --> 04:37.590 slowdown, that this shift in consumer behavior will actually 04:37.590 --> 04:41.910 continue long beyond and we're starting to see that already. 04:41.910 --> 04:45.330 And and one way that we've been impacted is that we've been a 04:45.330 --> 04:48.300 leader in loans in quite some time. But even for our existing 04:48.300 --> 04:51.270 customers, we've started to expand our service offering to 04:51.270 --> 04:55.140 them and starting telling them about additional options for 04:55.410 --> 04:58.350 financial products that they can obtain digitally and whether 04:58.350 --> 05:02.040 that can be everyday banking solutions like checking and 05:02.040 --> 05:06.210 savings accounts, or insurance services or investing, money 05:06.210 --> 05:08.250 transfers, and so on and so forth. 05:08.550 --> 05:10.830 Rafael: And just to Vlad's point, you know, we're seeing 05:11.040 --> 05:14.040 brands sort of become a little bit more digital as well for the 05:14.040 --> 05:16.740 consumer, you know, whether if you're trying to buy a vehicle, 05:16.740 --> 05:19.320 for example, we're now seeing companies are able to offer, you 05:19.320 --> 05:22.320 know, online purchasing and delivery to your home, you know, 05:22.320 --> 05:24.210 so you don't have to go to a dealership in order to obtain a 05:24.210 --> 05:26.760 vehicle. So we're seeing brands adopting as well, and their 05:26.760 --> 05:30.150 product offering more and more so. And you know, that trend 05:30.150 --> 05:30.960 will hopefully continue. 05:31.950 --> 05:34.410 Vlad: I think it'll be interesting to see how different 05:34.440 --> 05:37.650 sectors respond differently. Obviously, the government 05:37.650 --> 05:41.160 subsidies have injected some additional capital into the 05:41.160 --> 05:45.270 marketplace overall, that in the past, used to be covered by 05:45.300 --> 05:49.410 service providers and by different companies. So that has 05:49.410 --> 05:52.140 changed the short term demand for some of the financial 05:52.140 --> 05:56.610 products. But overall, the consensus is, we need to be more 05:56.610 --> 05:59.460 digitally accessible from a financial products point of 05:59.460 --> 06:03.960 view, and customers are craving it right now. You know, even 06:03.960 --> 06:07.980 those that were reluctant to do it in the past, now don't have 06:07.980 --> 06:11.190 as many options. So they're going out of their comfort zone 06:11.220 --> 06:15.240 and are more willing to adopt digital products if they weren't 06:15.240 --> 06:15.960 in the past. 06:17.490 --> 06:19.830 Sean Murray: between you both right there in that explanation, 06:19.830 --> 06:23.100 I heard the term brand come up twice. So I want to ask you 06:23.100 --> 06:25.470 about brands, because I feel like in our previous 06:25.470 --> 06:29.700 conversations, you've raised brands as well. And I think 06:29.700 --> 06:33.090 you've communicated that Generation Z, in particular is 06:33.090 --> 06:36.240 all about personal brand. And I'm wondering, do you think 06:36.240 --> 06:39.450 that's true when it comes to financial products? 06:39.600 --> 06:42.420 Rafael: Absolutely. I think, you know, Brand is very important to 06:42.420 --> 06:45.300 the consumer that they want to make sure that they're, you 06:45.300 --> 06:47.460 know, giving their business to a brand that aligns with their 06:47.460 --> 06:49.860 personal beliefs and values. So I think that's extremely 06:49.860 --> 06:52.890 important. You know, another factor that's also super 06:52.890 --> 06:55.320 important is, you know, the accessibility of your financial 06:55.320 --> 06:59.070 product, right. So even though as a brand you might be in line 06:59.070 --> 07:01.140 with my values, do you have products available and 07:01.140 --> 07:05.010 accessible to me that I can easily experience online? Right, 07:05.010 --> 07:09.780 so outside of sort of being just aligning my values, am I able to 07:09.780 --> 07:12.870 provide a good experience and a service to to a potential 07:12.870 --> 07:13.770 customer of mine? 07:14.430 --> 07:17.280 Sean Murray: What are you seeing from bags? Because it seems like 07:17.280 --> 07:21.660 fintech in Canada is competing against legacy institutions. 07:21.660 --> 07:24.990 They're competing against traditional banking. Are banks, 07:25.050 --> 07:27.930 there doing anything to cultivate their brands? Or are 07:27.930 --> 07:31.110 they just depending on their name brand recognition that 07:31.110 --> 07:33.870 they've always had? Are they doing anything active right now. 07:34.350 --> 07:37.470 Vlad: So it's possible that in the past, they there may have 07:37.470 --> 07:41.310 been a viewpoint that it's a us versus them mentality, or I 07:41.310 --> 07:45.960 should say fintech versus, you know, non fintech. But over the 07:45.960 --> 07:48.540 past couple of years, we've seen really is much more 07:48.540 --> 07:52.470 collaboration than before. And banks are extremely active, I 07:52.470 --> 07:54.930 should actually say, not just banks, but also credit unions 07:54.960 --> 07:58.740 that are established large financial institutions here in 07:58.740 --> 08:02.280 Canada. And they've all been much, much more active over the 08:02.280 --> 08:07.080 past few years. And that comes in several forms. From one side, 08:07.110 --> 08:10.530 they are innovating their own products to make them more 08:11.100 --> 08:15.330 digitally accessible. They are also partnering with different 08:15.330 --> 08:20.610 fintech companies, they are launching sub-brands to create a 08:20.610 --> 08:25.380 more evolved digitally friendly, maybe younger generation 08:25.380 --> 08:29.220 friendly brands and reach those consumers as well. So there's 08:29.220 --> 08:33.660 been Yes, they do have legacy systems that can be a barrier 08:33.660 --> 08:37.650 sometimes to that evolution. But they've been extremely active, 08:37.650 --> 08:40.470 they're fully aware of what's happening in the marketplace. 08:40.860 --> 08:45.120 And I think there isn't as much hostility now as there is a 08:45.120 --> 08:49.470 recognition of opportunity and the fact that there is a greater 08:49.530 --> 08:52.590 opportunity if there's collaboration happening, and 08:52.590 --> 08:54.060 we've seen a lot more of that recently. 08:54.600 --> 08:57.150 Rafael: And to add to Vlad's point, you know, we're on the 08:57.150 --> 08:59.460 ground here in Canada. So you know, when we attend certain 08:59.460 --> 09:01.680 events, we definitely see representatives from the banks, 09:01.710 --> 09:04.230 they're, you know, they're interested in the fintech 09:04.230 --> 09:07.140 industry and how it's been growing and developing, it seems 09:07.140 --> 09:10.890 like the bankers right now have specific job titles for people 09:10.890 --> 09:13.590 that are, you know, in charge of digital roles. So there is new 09:13.590 --> 09:17.190 roles being sort of offered there for, you know, leaders and 09:17.190 --> 09:19.230 digital transformation as well. So they're definitely very 09:19.230 --> 09:21.540 active. And in terms of, you know, us talking to the banks 09:21.540 --> 09:24.480 and credit unions has become a lot easier in the last few years 09:24.480 --> 09:27.630 as well. You know, they have an appetite to explore our platform 09:27.630 --> 09:30.240 and potentially reach our users as well. So they've been very 09:30.240 --> 09:32.880 forthcoming and offering their products on platforms such as 09:32.880 --> 09:34.620 smartphones and others as well. 09:35.170 --> 09:37.390 Vlad: Exactly. And I mean, also keep in mind that the banking 09:37.390 --> 09:39.670 system in Canada is very different from the United 09:39.670 --> 09:44.470 States. We have a few major major banks and financial 09:44.470 --> 09:49.630 institutions that cover a huge market share. So as consumers, 09:49.660 --> 09:53.410 we are not sort of anticipating that they're going to be going 09:53.410 --> 09:56.350 away anytime soon, or anywhere else. And I think there's 09:56.350 --> 09:59.380 recognition of that both from not just from the banks, but 09:59.380 --> 10:02.530 also the fintechs players and the fintech players that even 10:02.530 --> 10:04.390 they have products that are competing with some of the 10:04.390 --> 10:07.510 banking products, they're typically very open to 10:07.510 --> 10:09.880 collaborations and exploring opportunities that they can all 10:09.880 --> 10:10.570 work together. 10:12.460 --> 10:16.090 Sean Murray: So Raf, you mentioned before going to 10:16.120 --> 10:20.530 events. And one thing I've liked about the Canadian market is 10:20.530 --> 10:23.860 that there are a lot of fintech events that that we were going 10:23.860 --> 10:28.030 to many of them last year, we had one. But they've been 10:28.090 --> 10:30.940 canceled, postponed, gone virtual, you know, it makes 10:30.940 --> 10:34.420 sense. But what's the state of the fintech industry now that 10:34.420 --> 10:37.330 those have kind of, you know, gone to the background, the 10:37.330 --> 10:41.680 event aspect of it, are people working from home? It looks like 10:41.680 --> 10:44.740 you're, you're in the office right now. But how, you know, 10:44.740 --> 10:47.410 how is everyone operating in the fintech industry right now? 10:48.730 --> 10:51.730 Rafael: Um, you know, definitely lots of cancellations. When it 10:51.730 --> 10:54.400 comes to different events, I think companies are now trying 10:54.400 --> 10:57.910 to adapt and you know, either will launch virtual events or 10:57.970 --> 11:00.580 have smaller groups or smaller events that are, you know, 11:00.580 --> 11:04.270 they're able to accommodate, I think most corporations have an 11:04.600 --> 11:07.000 opportunity for employees to stay home and work from home 11:07.000 --> 11:10.090 programs, I think until, until the end of the year, you know, 11:10.090 --> 11:12.730 for sure, you can stay home and work from home and most 11:12.730 --> 11:15.580 companies, but I think the leading brands are trying to 11:15.580 --> 11:18.100 adapt, they're trying to figure out a better way to do it. I 11:18.100 --> 11:20.830 think the appetite is still there, for us to meet, to 11:20.830 --> 11:23.650 network and work together to move the industry forward. But 11:23.980 --> 11:25.510 it's definitely taking some adjusting. 11:26.350 --> 11:29.290 Vlad: Absolutely. And companies are evolving, like the fintechs 11:29.290 --> 11:33.190 that are maybe becoming more remote, they're not just looking 11:33.190 --> 11:38.410 at it as temporarily bandaid type of solution, like they are 11:38.440 --> 11:41.230 changing the way that they recruit, some of them are still 11:41.260 --> 11:44.230 actually hiring a lot of people. And all of that is happening 11:44.230 --> 11:46.990 completely online completely digitally, because they're 11:46.990 --> 11:52.030 hiring for remote roles. And there is this big shift in terms 11:52.030 --> 11:55.210 of employment, the gig economy, and the freelance economy is on 11:55.210 --> 11:58.600 the rise. So I think that in the fintech community that was 11:58.600 --> 12:01.570 already a little bit more agile than some of the other 12:01.900 --> 12:05.500 industries, this is their time to shine really, to be able to 12:05.500 --> 12:08.140 leverage some of the innovation and technology that's available 12:08.140 --> 12:12.520 out there, so that they're not as impacted as those businesses 12:12.520 --> 12:15.340 that aren't as set up technically. 12:15.940 --> 12:18.970 Sean Murray: Got it. So my next question is kind of twofold. And 12:18.970 --> 12:22.960 it's, it's kind of an open ended, what's your prediction 12:23.200 --> 12:25.420 for what's going to happen next? And part of that is in the 12:25.420 --> 12:29.590 context of, you know, what has just happened with COVID? but 12:29.590 --> 12:32.890 also with what's happening with digital adoption? What's your 12:32.890 --> 12:34.960 prediction for where things are going to go next? 12:35.170 --> 12:38.200 Rafael: I think it's gonna speed up a lot faster than you know, 12:38.200 --> 12:41.770 it was on pace to happen, right? I think now, we're seeing a ton 12:41.770 --> 12:45.010 of innovation and the insurance sector, in the loan sector in 12:45.010 --> 12:48.250 the financial space, where companies are moving much faster 12:48.250 --> 12:51.220 towards, you know, having a digital experience. I think part 12:51.220 --> 12:53.500 of that is because the consumers were already trending in that 12:53.560 --> 12:55.840 direction, right? There's an expectation from a consumer 12:55.840 --> 13:00.160 standpoint to be able to easily shop financial products online. 13:00.190 --> 13:02.650 Right. So I think that's going to continue, I think it's just 13:02.650 --> 13:05.560 gonna be done at a much faster rate now, 13:06.740 --> 13:11.300 Vlad: Exactly. When it comes to adoption of financial products 13:11.300 --> 13:14.540 in Canada. And if you look at the financial sector overall, 13:14.540 --> 13:18.080 over the past few years, a lot of the adoption has been 13:18.110 --> 13:21.290 encouraged and driven really by the big players, and the brands 13:21.290 --> 13:24.650 and the industries that have been able to bring good customer 13:24.650 --> 13:29.330 experiences, secure experiences in the digital rail. And they've 13:29.330 --> 13:32.600 been putting some money behind it as well to spread the word 13:32.630 --> 13:36.860 that this these types of services are available. So now 13:36.890 --> 13:39.800 within the financial sector, certain sub sectors have been 13:39.800 --> 13:44.060 more efficient at this than others as well. And there's been 13:44.510 --> 13:47.990 now thanks to some of that activity there is it's paved the 13:47.990 --> 13:52.370 way for other financial industries to catch up. And 13:52.520 --> 13:56.840 today, financial sectors, including the loans and 13:56.840 --> 14:03.230 financing, insurance, investing, money transfers, and currency 14:03.260 --> 14:06.800 exchanges, even cryptocurrency that's becoming slowly a more 14:06.800 --> 14:11.240 significant part of the financial world. All of those 14:11.270 --> 14:15.650 are very, very seriously focused on not just digital adoption as 14:15.650 --> 14:19.670 an option, but as a must. And as the standard way of doing 14:19.670 --> 14:25.130 business. And consumers, it's much easier for them now, for us 14:25.130 --> 14:27.710 as consumers really to adopt this kind of behavior because 14:27.710 --> 14:30.380 we're sitting at home for so much of the time. We've already 14:30.380 --> 14:34.310 been used to shopping online and using e-commerce for everyday 14:34.310 --> 14:38.990 household items. And digital financial items and products are 14:38.990 --> 14:41.660 really no different. And those lines are starting to be more 14:41.660 --> 14:44.720 blurred. So I think what we've started noticing over the past 14:44.720 --> 14:47.660 few years with digital adoption of financial products will 14:47.660 --> 14:54.590 continue to accelerate, like Raf said, and far beyond the impact 14:54.620 --> 14:56.330 that's been brought on as a result of COVID 14:57.380 --> 14:59.420 Rafael: Just to add to Vlad's point, you know, we sit in a 14:59.420 --> 15:02.540 pretty unique position because we do offer connects financing 15:02.540 --> 15:05.150 financing rounds with people in a variety of different 15:05.150 --> 15:08.780 industries. Certain industries, were pretty old school, you 15:08.780 --> 15:12.740 know, like equipment, truck financing boat financing, where 15:12.740 --> 15:15.380 traditionally everything was done to the dealership level are 15:15.380 --> 15:17.840 now becoming more and more digital as well, we're seeing an 15:17.840 --> 15:20.150 increase in demand for those products, we're seeing an 15:20.150 --> 15:24.410 increase in companies offering those products online. So we 15:24.410 --> 15:26.690 hope that's going to continue. And we definitely see it from a 15:26.690 --> 15:29.270 consumer standpoint, they're much more accustomed to going 15:29.270 --> 15:33.290 and purchasing large ticket items online nowadays. 15:34.470 --> 15:36.570 Vlad: And even if you look at the way that brands and 15:36.570 --> 15:39.840 companies are adapting and responding to what's happening, 15:40.350 --> 15:44.340 when we first started Smarter Loans in 2016, right, we were 15:44.340 --> 15:47.070 convincing companies to work with us to helping them bring 15:47.070 --> 15:50.760 their digital products online, and sharing them with the 15:50.790 --> 15:56.280 audiences in Canada. And now leading up to 2020, ee were 15:56.280 --> 15:59.760 working with over 50 different financial brands, okay, that are 15:59.760 --> 16:03.570 available in the country. And if you look at just what happened 16:03.570 --> 16:06.300 over the past three, four months, we were actually able to 16:06.300 --> 16:10.320 establish relationships with significantly more companies, 16:10.530 --> 16:14.760 right close to 40 companies just in the past few months, that 16:14.760 --> 16:19.290 suddenly became so much more active and said that we need to 16:19.440 --> 16:22.740 make digital accessibility a priority in order for us to 16:22.740 --> 16:26.550 survive not just in the short term, but in the long term. And 16:26.580 --> 16:30.420 we are happy to see this shift. We're encouraging it and we are 16:30.420 --> 16:32.880 actually encouraging companies to come in and work with us 16:32.880 --> 16:35.130 because this is what we do at Smarter Loans. 16:36.060 --> 16:38.490 Sean Murray: Well, that's very insightful stuff. Thank you very 16:38.490 --> 16:42.060 much, Vlad and Raf at Smarter Loans. Appreciate you being here 16:42.060 --> 16:42.690 and your time. 16:43.080 --> 16:45.180 Vlad: Sean, thanks so much for taking the time to speak with 16:45.180 --> 16:46.950 us. It was really a great pleasure. 16:47.610 --> 16:49.110 Rafael: Thank you, Sean. We're excited. 16:49.500 --> 16:49.920 Sean Murray: Thank you.