In this episode, Len Lane, founder of Brokers for Life Inc., chats with Wayne Kainu from Neo Financial about Neo's impressive journey and innovative approach to financial services. Wayne shares his personal story, moving to Calgary in the 1990s as a speed skater, and how he eventually joined Neo Financial, founded by the creators of Skip the Dishes.

Neo has seen incredible growth, expanding from 100 to 800 employees in just three years. With cutting-edge technology, including a credit card application process that boasts 12-second approvals, Neo is reshaping banking and mortgage experiences in Canada. The company is focused on insured mortgages, offering competitive rates and a six-month term product, while setting its sights on the uninsured mortgage market using its deposits to improve efficiency and rates for brokers.

Wayne highlights Neo's plans to build proprietary mortgage technology by 2025 and their commitment to integrating platforms like Velocity to streamline processes further. He also discusses industry trends, including the need for professional advice, the evolving broker mindset, and Neo's dedication to supporting brokers through innovative tools like a trailer model to build equity in their business. Tune in for an insightful discussion on how Neo Financial is transforming Canadian banking and what’s next in its mission to enhance broker and client experiences.

As the Head of Mortgages for Neo Financial, Wayne Kainu is an accomplished finance professional with extensive experience in the mortgage and lending sectors. Currently serving as the Head of Mortgages at Neo Financial since November 2021, Wayne previously founded and led Finevo Lending Group as President & CEO from February 2008 to November 2021. Prior to this, Wayne held managerial responsibilities in real estate secured lending at TD Bank from January 2003 to February 2008 and worked as a financial advisor at Scotiabank between May 1997 and January 2003. Wayne Kainu is also a graduate of the University of Calgary and holds a PFP® designation from the Canadian Securities Institute.

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Len  00:02

Welcome. My name is Len Lane, and I am the founder and president of Brokers for Life Inc, and we are Dominion Lending Centers in Western Canada. The topic of our podcast will be about what we consider to be Real Life Mortgage Solutions.

 

Len  00:17

Welcome back today. Our guest is Wayne chainu with a challenger, with a challenger bank called Neo. So we're going to talk a little bit about the different things that they've been doing and how they came to be. So first off, welcome. And Wayne, we'll start with a little bit of your background and how you got to Calgary. I thought that was an interesting story.

 

Wayne  00:39

Yeah. Awesome. Thanks, Len. I appreciate you having me on here. First of all, yeah, came, came to Calgary early 1990s I was a, was a speed skater. And so one of the things that you know Calgary has is the fastest ice, still today, the fastest ice in the world. I was, you know, several years after the 88 Olympics. And, you know, so a lot of people from all over, a lot of kids at that point in time, moving from all over Canada to Calgary to train and in hopes of making the Olympics. Right? So, so that's what brought me to Calgary, and never went back. I came from Ontario, by the way. It was Kitchener Waterloo Ontario.

 

Len  01:20

Yeah. Whereabouts in Ontario?

 

Wayne  01:21

In Kitchener Waterloo, KW.

 

Len  01:22

That's, that's how it happened for me. I've been here since I was 18, so if I hitchhiked across Canada, I never really went back a couple times for short stints. But okay, so Neo Financial, let's, let's talk about that. Uh, interesting start to it, where, what was, what was the beginning?

 

Wayne  01:41

Yeah, so, you know, start with, you know, our founders are the same founders who started Skip the Dishes. They sold Skip in 2018 and I always say, you know, they could have lived this lavish lifestyle these, these young folks, but instead they put their money into better banking for Canadians. And so they, you know, obviously had a great track record. They were able to build some incredible technology. And so when they started Neo, it is about five years ago, they started Neo, and I was approached by them three years ago, almost exactly, and came on board three years ago. There at that point, the core business was credit cards. They were just getting into bank accounts at that time, and they had signed a, you know, a big partnership with HBC, probably a year and a half before that I came on board, and so things were going really well, you know, they when I came on board, there was about a, but just over 100 employees. And today, you know, three years later, we're sitting at over 800 employees. So we've grown quite rapidly. And, you know, again, the mission is really, once again, is to make banking better for Canadians and finding ways to put money in the pockets of Canadians, and making things much more efficient for those who you know, through the app, our Neo app, and being able to do things a little bit quicker than you would see at the banks.

 

Len  03:01

Well, and that's a good segue into that kind of technology that Neo has developed that. I'm told that applications are done rather quickly through your through your direct system.

 

Wayne  03:11

Yeah, so you know, if you take a look at, you know, a lot of things, that most of the technology that we have today at Neo has been built from scratch. And so if you look at our credit cards, bank accounts, etc, all of that is technology that was again created from scratch and proprietary, obviously. And so one of the things that they did when we first started is just evolving that credit card application to make it one of the like today, one of the fastest applications in the entire world. So I always say that if you look at the technology that they've built back in the Skip days, that technology, when they sold that technology, is used, you know, for food delivery service all over the UK, you know, all over Europe. And so what's under the hood is extremely important to our founders and the technology that they build here. And the reason why we have so many employees is the fact that, you know, there's the computer engineers, the designers, the architects and everything that goes in to build some incredible technology. And I remember, you know, quickly. You know, it was one of these, when they they had the the world record for submission on their credit card submission to to approval was less than 12 seconds, and that was lot of high fives in the office. And they're just, you know, obviously, very proud of the technology that they're building here,

 

Len  04:28

Right, and that's including a credit check and everything, all of that pulls up?

 

Wayne  04:32

Yeah, it did everything, all in, you know, that quick analysis on a credit obviously, credit card being a lot easier to adjudicate, as opposed to a mortgage, right? And, as you know, and I think that was something that they could do pretty quick with, you know, the technology that they built now on the mortgage side today, we do use third party technology, so we haven't actually built too much tech on the mortgage side yet, right? You know, and that's, that's something that's coming in 2025. Once again, our founders, you know, they don't really like building tech and just throwing it at anybody they they really want to build the best tech. And you know, it's very expensive to build the technology when you have that many employees, of course. And so, you know, if you're looking at millions of dollars every month on certain projects, we want to make sure that it's the best of the best. So they've scoped out, our teams have scoped out all the technology in the mortgage space, pretty much all over North America, and trying to see where we can actually improve. They do feel that the bar is relatively low overall, which you know, a lot of the technology, especially in Canada, hasn't been around that long, right? And so our hope is to start to build some tech and start displacing the third party technology that we're using today.

 

Len  05:46

And that's probably the biggest thing in the mortgage world. It's like we have a lot of stuff to them here, 25 years, it's hasn't changed much. I won't name any names and and on the other end of it for us anyway, it's Velocity, right? That is streamlined the process so much for us, it's unbelievable there. In many years, in the beginning, when I did 40 million by myself without an assistant, it was all paper driven but it had Velocity, that 100 million mark wouldn't have been.

 

Wayne  06:16

Absolutely, you know, you look at even when I first came on, you know, into the scene. You know, it was about 15 years ago. You know, it was all not paper based. Obviously, we're using most of the technology that, you know, still brokers use today, but faxing lots of documents. You know, it was faxing documents, faxing applications to, in some cases, to some of the lenders. You know, it was just one of those things that things have evolved, obviously, quite a bit, I think, too. And you know this, and I know you've spoken about this in the past, is that, you know, once COVID hits, then all of a sudden, you know, we're using DocuSign, which was a huge jump into the 2000s right? You know, so in technology, it was just, it was one of those things that, and it made a big difference. You know, we could be a lot more efficient by getting, you know, documents signed that we wish we would have had sooner, obviously.

 

Len  07:05

Yeah, I think the biggest change there came within the banks themselves, because here, TD, Scotia, I mean, not doesn't, doesn't make this to them as far as they need it, but signatures on everything, and even though it's just needed it at the lawyers, but still only have one lender that actually asks for the DocuSign certificates to prove it and right? But you know, still that that that's come a long way just in that short period of time. Yeah, COVID really would have pushed technology. I think it had that much quicker for us, because collection of documents now for us is it's all virtual, right? Uploads into, into the storage as well as into, you know, where we send now, for from, you know, from Velocity directly to lenders. Speaking of that, you think that is something that Neo is considering to have happen, or?

 

Wayne  07:55

Absolutely, you know. And I think that, first of all, you know, Velocity, you know, is state of the art for sure. You know, there's the you hear over and over again from brokers, and I used it briefly before I came over to Neo and my old brokerage, the, you know, obviously adopted that 100% and I think that you look at those efficiencies, I think there's an incredible opportunity to integrate with, you know, with Velocity, obviously, we are integrated today, obviously to receive applications from them, but to have further integrations and further efficiencies, this is something that we're looking at for sure. Because, again, you know, that's it's better technology that you know than others in the market today.

 

Len  08:37

That's become more and more important to us as brokers, I think as well that I'm a little hesitant that has to pull everything out of Velocity to upload it sometimes into some of the other I can push it there directly from Velocity. That one more level encryption is as well as security for the client's documents, right? So at this point in time, you're on the startup side of the mortgages even, what is this? Two two years?

 

Wayne  09:02

No. So, we, as a company, we're five years old. As a lender, we're only a year old, right? So we've been in the broker channel for exactly a year. Going through that journey was, was a lot of fun, I'll be honest. You know, becoming a lender and trying to understand as a broker mindset, why lenders do the things they do. So I did learn a lot, starting from, you know, the under underwriting guidelines, getting our accreditation set up with Sage in Canada Guarantee and and started the recently with CMHC. So these types of things, you know, you certainly learn a lot. Because as a broker, you wonder why lenders do certain things, right? And so I think that was a bit of a, you know, incredible learning experience for me. And now, like I said, is, you know, once we become lender, which we have for a year now, getting to the broker channel, which, again, is, is critical for for us as a lender and for our future growth into the broker channel, we. We realized really quickly, you know, at the beginning, when I first came on board, that Canadians really want to talk to professionals. They want to talk to mortgage professionals. You know that this transaction, very emotional, stressful transaction that you know, even at the retail branch and the banks, they still don't get that level of support that they get from from a professional mortgage broker who, that's all they do all day long. So I think more and more you know that the reason why I feel very strongly that, you know, the broker channel has been able to take more and more market share, and they will continue to do that, as you know, as you know, these, these rules aren't getting any easier, uh, for mortgages, if anything, they're just getting more difficult.

 

Len  10:39

Yeah, and lots of new twists and turns coming in the next three or four months. Yeah, no, break.

 

Wayne  10:40

Yeah. Non stop.

 

Len  10:45

That is one of the things I've always said about the industry. It's like, I'm still here after 18 years, because there's not a week goes by that we don't learn something new or something new comes out, and you have to be on top of that. So it's a constant learning curve for brokers that are engaged. That's what that was.

 

Wayne  11:02

Yeah. And I think that was a learning curve, you know, knowing the mortgage business myself, you know, under our founders didn't, you know, obviously, and, and I think that they knew the credit card space, because they had some great experience with that. But Canadians to go online to do an application for a mortgage, sorry, mortgage application, doing a credit card application all day long, right? You know, it's whether, you know, they don't go through a lot of stress going through that application, whether they get approved or not. It's not a big deal. But when it comes to a mortgage, it's a huge deal. You know, again, the biggest transaction for majority of Canadians. So that stress is there. You know, there was an interesting stat I heard last year that over 50% of mortgage applications in the United States involved crying by the clients, maybe sometimes by the brokers. But you know, it's come, you know, like I said, I think Canadians still want to continue to have that professional advice, those options and understand, get this across the finish line. Make me feel comfortable and, you know, and I'll use you.

 

Len  12:01

Right, yeah. And I'm sure when the mortgages in the States for over 7% there's a lot of crying.

 

Wayne  12:07

Yeah, for sure.

 

Len  12:09

So what does the ideal deal client look like? But what is, who is it these days that are using your services? I guess,

 

Wayne  12:17

Yeah, we love all clients. No, I think our sweet spot certainly is the insured, insurable right now. You know, we we continue to have competitive rates and comp to the broker channel. And I think those are just two  of the fundamentals. Obviously, you know, service is critical, as you know, providing you know, continuous updates, knowing where your deals at, having conversations, immediate conversations with with the underwriter, and having access to underwriters, all that is extremely important. And I know that as we grow, obviously, our team is is growing quite rapidly as well. So as long as the initial fundamentals are going to be there, we're always going to have good rates, especially on the insured insurable, because it is the aggregator model that that we have today. I think the biggest opportunity for us in the future is the uninsured. We do have deposits, so that's a space that we do have uninsured today. Maybe the rates may not be as competitive as as the Big Five, or what you may have access to today, but I think that, you know, as we start to grow, have great with technology, create better efficiencies for brokers, path of least resistance and and then, of course, at some point, if we use our our own deposits, as we continue to grow, that that's that's going to be a big game changer in the future.

 

Len  13:39

Yeah, no question that we're seeing at right now as an advantage for the banks themselves and their credit unions, because now they're not as tied to the bond market as as everybody else is, right? So.

 

Wayne  13:53

Right. Absolutely.

 

Len  13:53

Very large, very large lenders in our space that are having no choice but but to move their rates because of the bond markets, right?

 

Wayne  14:02

Yeah, and you've heard, you know, recently, Stephen Smith talking about First National, for example, against the big banks, and that they just have so much power and reduce costs. And you know, the capital that they have access to is very cheap, right? So they can provide these incredible rates on the uninsured space, but that, and that's, you know, obviously been going on for a couple years now,

 

Len  14:28

Yeah, and that's, that's something we kind of watch, because this, this time of year, is also the different ends for the for the lenders, right? So the banks, end of October, they're into a new year. Little bit more aggressive. The MCAP group ends at the end of November, so maybe a little more aggressive after after that, in December, of course. First National, I lump them all into one, I guess, First National, Home Trust and Equitable, which are all part of Mr. Smith's portfolio, personal portfolio, right? Deals at the end of the end of December, you know, looking at kind of gaging, what they're going to do going into January. So is there a niche product that you guys have had some great success with? Or,

 

Wayne  15:13

You know, I think we don't really have anything niche quite yet, you know, I'll be honest with you, I wish we did, you know, I think right now, out of the gate, because it's been a year where we're pretty vanilla today, although, you know, I think that, like I said, as we start to build some incredible technology to create some efficiencies, there's also the ability to create technology for innovative product as well. And I think that that's going to be, once again, something that's very exciting, going into 2025. Recently, we've launched a six month recently, right? And actually just last week, and we've already, we're seeing a lot of success from that product. You know, there's only a few that that have that product today. It's really about affordability. Getting people that are kind of on that, you know, the debt servicing piece, they just need to get under there. Obviously, using a six month with a lower rate will help that. We do have a trailer model that's going to be launched, hopefully by the end of the year. And so that's, I know the end of the year is coming up here pretty soon. But again, you know, providing more options for for those brokers that, you know, been around for some time that they want to build some, you know, some, some value and equity in their book currently.

 

Len  16:28

That's good to hear, because I, I had done a lot of that years ago. And with Merricks, when first championed right, we hit the still receiving trailer fees on on from clients, from some of them are on their third term with them. So,

 

Wayne  16:43

Amazing.

 

Len  16:43

Yeah. So, yeah, it's viable. They take make sure that they get a decent deal when they're resigned. So there are some things that have to happen with that to make it work. So, but that, yeah, Oh, excellent. Okay, so lots going on with with Neo Financial. I know you're a busy gentleman, so I would keep you longer today, but I thank you for taking the time to do this with us, and we will see you in January for a cane? meeting as well.

 

Wayne  17:08

Great. Okay. Len, thanks a lot for having me.

 

Len  17:12

Thanks for listening today. I hope you found the information that we provided to be useful in your mortgage journey, and remember you can always find our associates at www.brokersforlife.ca/associates. Have a great day.