What is mortgage and financial company | banking

What is mortgage and financial companyToronto-based Wood Gundy Inc. is one of Canada’s largest investment dealers with a capital base of about $250 million and 1,900 employees.

Four hundred sales representatives service more than 60,000 Wood Gundy clients, offering a full range of investment banking services, including government and corporate underwriting and distribution; merger, acquisition and divestiture services; globally oriented investment and economic research, and professional money management; and international capability in stock, bond and money market transactions.

Company operations span offices in London, Tokyo, Paris, New York, Boston, Hong Kong, Shanghai and Barbados, as well as an integrated network of 45 domestic offices across Canada. A wholly-owned subsidiary of the CIBC Wood Gundy Corporation and, as such, owned by the Canadian Imperial Bank of Commerce, the company is a member of all major North American stock exchanges and the London Stock Exchange.

Another Canadian financial company, Wood Gundy Inc., captured a share of the cautious investor market with a different product offering — “Mortgage-Backed Securities.” The decision to introduce Mortgage-Backed Securities, which allow investors to buy a piece of a large pool of first mortgages backed by the Government of Canada, was prompted by the thriving sale of similar securities south of the border. “We felt comfortable that the success in the United States could easily be duplicated in Canada,” recalls Mark Landau, vice president of Fixed Income.

To add grist to the wheel, Gundy’s 400 sales representatives had expressed a growing frustration with being able to offer little to those Canadians whose investment comfort zones necessitated a solid guarantee against loss. And those staunch citizens represent a substantial chunk of the marketplace — nearly 80% of the Canadian population, according to a 1986 study by the Toronto Stock Exchange.3 Mortgage-Backed Securities fill this void, offering an easily understood product that pays a regular monthly income and is guaranteed by the Government of Canada.

Gundy’s promotion of this new product centered on its sales force. Each broker received a comprehensive marketing kit that included product background material, tips on prospecting, and three client presentation pieces — a one-page summary, a brief brochure, and a detailed booklet (Fig. 2-4). But the education of the sales staff on Mortgage-Backed Securities didn’t stop there. The product developers crisscrossed Canada on a ‘road-show’ tour for reps and invited customers, ensuring that all the ins and outs of the new product were well understood. An attractive 90-day commission rate was provided as a further sales enticement.

Ads in the national print media formed the mainstay of Gundy’s promotional campaign, with a sprinking of local newspaper ads and a 15-second tag to the front end of Environment Canada’s weather line. An 800 number figured prominently in all the company’s advertising. Leads here were fulfilled through the marketing department and passed on to individual salespeople for follow-up. Conservative Canadians obviously found the Mortgage-Backed Security product to their liking, purchasing over $117 from million from Wood Gundy reps in less than three months.

Sometimes a product idea can work well in filling an immediate customer need, that is until the competition wakes up and offers clients a new, and possibly better, option. But if you are ready to back out at the first sign of this retaliation, it is possible to make significant short-term gains under such a scenario. The following story illustrates how a $1.4-billion Canadian credit union successfully pit itself (for a brief time only) against its massive banking foes.

Two years ago, Vancouver City Savings Credit Union had a problem. Senior vice president of Marketing and Member Services, Wayne McKay, recalls, “We had surplus liquidity on our hands and our mortgage business wasn’t going gang-busters.” Traditionally only a mortgage lender, VanCity saw a solution to this dilemma in the retail consumer loan business.

A telephone survey of credit union members and non-members brought to light the following fact. Consumers who are looking for personal loans tend to opt for familiar surroundings. McKay elaborates, “The large majority (68% of survey respondents) have dealt with their financial institutions before getting a loan and most are likely to go back to the same institution for their next loan.”
VanCity’s marketing strategy was twofold. First, concentrate on getting personal loans from its own mortgage base (with these people, the familiarity preference worked in VanCity’s favor).

And second, tempt other consumers away from their usual watering holes with an excellent first-year rate — prime plus one percent. A personal loan stuffer cum application was mailed to all credit union members, with mortgage clients receiving a special promotion. Branch managers persuaded local merchants to leave pamphlets about and to spread the news. One hundred and eight thousand dollars of print advertising touted the slogan, “Swing a loan with VanCity for Prime Plus One,” and a special loan hotline gave customers access after normal business hours.

Things looked pretty rosy the first year of the VanCity loan campaign. Its loan portfolio grew during that period to over $160 million, a 77% increase over the previous year. Then, says McKay, “The banks hit back,” and within weeks, the “Prime Plus One” campaign had derailed, with the number of loan applications dropping drastically as the banks moved in with competitive offerings. “We simply couldn’t afford to compete in the final analysis,” admits McKay. Yet, in spite of this, there is a happy ending to the story. Awareness among consumers of the credit union as a viable option for personal loans increased significantly.

The examples in this chapter provide strong evidence that the financial marketing war will be won in the field of service, not on product lines alone. Nowhere have we seen customers clamoring for specific financial products; instead, we find that certain service needs top the list, such as convenience, advice, security, professionalism, information, and courtesy.

Consumers do not appear to differentiate among financial products (or even among financial institutions). They are blissfully unaware that the last special feature added to your product makes it much better than the one offered by the firm down the street. Bank of Boston’s Linda Kanner summarizes, “Financial products are really all commodities — you have no proprietary ownership.

You may get to the market first; but within six weeks, the guy across the street is there. So you aren’t going to end up with market leadership based just on the best products.”

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