Fintech firm Mogo expands into mortgage services
Move to serve as broker, offer online platform aims for transparency
Mogo Finance Technology Inc. has taken a step into the world of mortgages, registering as a broker in three provinces and launching an online and mobile interface where users can compare rates, apply for a mortgage and track their payment progress.
The Vancouver-based fintech company, which also offers online personal loans, unveiled MogoMortgage this week. The platform includes an interactive dashboard to walk users through the mortgage process, the company said.
Mogo will receive a commission on mortgages completed through the service. (Postmedia Network, which owns the National Post, has a revenue sharing agreement with Mogo.)
MogoMortgage’s fee-based model, which gives Mogo upfront revenue without capital requirements or credit risk, helps de-risk the company, said Steven Salz, research analyst at M Capital Partners in Toronto.
The Street has historically been concerned about Mogo’s cash burn and liquidity, he added.
“It’s good for the company in the sense that they are trying to diversify into more fee-based, off-balance sheet products ... I think it will be interesting for them,” said Salz.
According to Mogo, the product aims to make the process of acquiring a mortgage more transparent.
“If you look at a typical mortgage experience, and go to any bank website, everything is a black box,” said founder and chief executive Dave Feller. “We really outline the whole process.”
MogoMortgage also doles out perks such as dinner for meeting payment milestones to encourage its users.
Mogo has a half-dozen licensed brokers on staff and has obtained a mortgage broker licence in British Columbia, Alberta and Ontario, with plans to expand throughout Canada.
It is working with a half-dozen mortgage lenders as well.
Mogo had spoken in the past about moving into mortgage lending directly.
Feller said Friday that it is something the company is still considering, though there are no immediate plans.
“Really, our goal is to effectively become a full offering, just like a digital bank but without becoming a bank,” he said.
Salz said it was unclear whether MogoMortgage was the first of its kind in Canada, but the format is “leading edge.”
This comes as Canada’s biggest banks invest heavily in fintech, as technology transforms all aspects of how banking is done, from dealing with customers and processes inside the institutions themselves.
Just this week, Royal Bank of Canada said it hired a pioneering artificial intelligence professor as an adviser for its new research lab in Edmonton, Reuters reported.
Meanwhile, regulators are giving the many fintech upstarts popping up in Canada, as well as incumbents, some space to innovate.
In October, the Ontario Securities Commission created LaunchPad, an innovation hub that allows firms with new business models to get started with close supervision and time-limited exemptions from regulation.