It used to be that when you needed a mortgage the banks were your only option. But if your credit record was less than perfect, if you had only recently joined the workforce or perhaps just started at a new firm, your one and only mortgage option went out the window. Lucky for us, nowadays financial institutions like Home Trust Mortgage have adapted their lending policies to match individual borrowers needs. Many Canadian banks still expect the customer to meet their requirements. If they can’t, it’s often game over.
Retail banking services include pretty much any transaction that we as individuals undertake with a bank. Corporate transactions and arrangements with other agencies are not considered to be retail services. Mortgage brokers can help provide many of the same services as a retail bank. While they do not extend the mortgage themselves, they act as your agent, and shop around to find the financial institution with the mortgage policies best-suited to your borrowing needs.
Canadian banks are considered some of the most solid financial institutions in the world. Part of this is no doubt due to their conservative lending practices. Risk management in retail banking is something Canadian banks take seriously.
Our banks are also among the most profitable corporate entities in the country. Where are they making their money? A hefty percentage comes from the service charges, and interest fees applied to our mortgages and other consumer loans.
Considerable effort is being made by the big banks to change their image. Perhaps less energy is being put into changing their ways. There are some trends in retail banking that have emerged in recent years. Here are three of the most significant:
- More online services, fewer physical branches and less paper paperwork. That’s not to say that mortgage and other loan application processes have necessarily been simplified, or made accessible to more Canadians. It means that you will be typing in the answers to the many questions the bank will be asking on your PC. Back in the dinosaur days, you had to chisel your request out with a pen and paper. This has been coined the banks’ “drive to digital” by several observers.
- Another trend that is seeing Canadian banks change their strategies is the huge variety of payment options that consumers now have. If you are as old as I am (and I hope you’re not!) you’ll remember carrying around a chequebook or (reluctantly) pulling out the Visa charge card to make a purchase. And having to actually sign the receipt. The swipe/tap option had yet to be conceived. Nowadays, there are numerous companies that provide online and electronic banking services. Banks are losing money from service charges they used to receive when we wrote cheques or made cash withdrawals. They are having to look for ways to make up that lost revenue.
- I’ve saved the best for last. The Competition. Money-lenders have gone mainstream and it’s not just the banks that you can borrow from. If you are in the market for a mortgage, you now have the option of using a mortgage broker. Shop around to get yourself the best deal on a mortgage. First visit mymortgagebroker.com. What is retail banking? It’s a limited range of mortgage options geared on the bank’s needs, not yours. What is a mortgage broker? A doorway, with a professional gatekeeper, who can lead you to explore all the other lending options that are out there.