MOGO TOPS2 00,000-MEMBER MILESTONE
In April, Canadian financial technology company Mogo celebrated a milestone as it surpassed 200,000 sign-ups. That’s good news for Mogo and the rapidly expanding Canadian fintech sector. “This clearly highlights that banking is no different than any other industry being disrupted by technology,” says Dave Feller, chief executive officer of Mogo.
“At our core, we’re a technology company that happens to be very good at offering banking services,” he says. “Our in-house technology is what’s driving the way that we are disrupting traditional banks, and our growing customer base is attaching hard numbers to that disruption. To put it in perspective, the largest credit union in Ontario has 250,000 customers.”
Mogo’s primary market is millennials, who make up half its customers. The brand appeals to its core consumers by offering both convenience and transparency.
“More than 50 per cent of working Canadians already fall into the millennial demographic,” Feller says, “and the generation following them is growing up in a digital world where they’ve never even heard of a cheque. When this group adopts a new way of business, it can move very quickly, which is why fintech is poised to become a major disruptor.”
A report released last year by McKinsey states that banks could lose-up to 60 per cent of retail profits to tech startups over the next nine years. While online banker ING Direct was once positioned to take on traditional banks, the company was sold to Scotiabank in 2012.
“That was the last time we saw any real challenge to the Big Six banks, who took home $35 billion in net profits last year,” says Feller. “Collectively that puts them in the same league as Apple, Google and Amazon.”
But unlike nimble tech companies, traditional banks are saddled with massive infrastructure, legacy systems, brick and-locations and corporate cultures unaccustomed to competing with disruptive technologies. It’s a competition Feller likens to the epic battle between Netflix and Blockbuster Video. He notes that Mogo has devoted $100 million and a 100-person team to the development of mobile and online platforms that allow the company to deliver services without the dead weight of traditional business models.
“We’re currently offering loans, our Mogo Platinum Prepaid Visa Card and a free credit score to customers,” he says. “They can sign up as Mogo members in about three minutes and we can process loan applications almost as quickly — this isn’t something that should take days.”
Mogo will soon expand into mortgages, a traditional business that Feller says also deserves a hightech kick in the pants.
“I recently spoke to someone at one of the Big Six banks about their mortgage rate of 4.6 per cent,” he says. “The bank representative told me that this was only the posted rate but that you could negotiate a lower rate. Where’s the transparency in that? A Mogo mortgage would be presented as our best available rate up front. Our customers can decide.”
Mogo aims to continue biting off a large chunk of the expanding fintech sector, with a goal of one million members by the end of 2018.
“Even if you’re a traditional bank customer, this innovation is good for the banking industry,” says Feller. “By providing convenience with transparency we’re shining a light on what every bank should be offering.”