Schedule 1 Canadian bank now offers chequing-and-savings accounts and GICs.
Canadian consumer FinTechs have a new competitor as alternative mortgage lender Haventree launches a digital bank.
The news: Toronto-based Haventree Bank, a Schedule 1 Canadian bank, announced on Tuesday morning that it’s launching a direct-to-consumer online banking product and app, expanding on its existing mortgage-lending solutions for customers who may not meet traditional banks’ eligibility criteria.
Haventree’s first deposit product is a “hybrid” chequing-and-savings account with no monthly fees or minimum balance, as well as joint accounts, Interac e-transfer functionality, bill payments, and direct deposit. It also continues to offer fixed-term investments through GICs, but these will be available directly to customers rather than through a broker.
From the source: “We think that our interest in meeting clients where they are on their financial journey is going to resonate,” Haventree president and CEO Fern Glowinsky said in an interview on Monday. “We’re also not trying to be everything and offer every single banking product that’s out there. That’s not our mission.”
Following the thread: Originally known as Equity Financial Trust, Haventree Bank rebranded in 2018 when it obtained its Schedule I banking license, providing both mortgage B-lending and GIC investments. B-lenders, or alternative lenders like Haventree, typically serve customers with lower credit or who otherwise have trouble securing loans from A-lenders, like Canada’s Big Six banks. Glowinsky added that their customers are not necessarily underbanked, and may instead have complex financial histories or use Haventree as a secondary lender.
Demand for B-lenders has been climbing in Canada, BNN Bloomberg has reported, in part due to decreased home affordability and tighter lending rules. At the same time, entrepreneurs and other self-employed people often look to alternative solutions because they don’t receive T-4 slips reporting income, which some lenders require.
Final thought: With this product launch, Haventree is showing it wants to serve a wider customer segment than those looking for alternative loans, as it puts itself in more direct competition with Canadian FinTechs such as EQ Bank and Wealthsimple. Glowinsky said she sees Haventree as an attractive alternative with good rates, as she said more Canadians are spreading their money across more than one financial institution (in part because CDIC deposit insurance is capped at $100,000 CAD per individual, per institution).
Feature image courtesy Haventree Bank.
