1. Don’t trust automation
Home Trust Company’s president, Martin Reid, has been in the financial-services industry for more than 20 years, and he has seen firsthand just how dependent financial institutions have become on automation. Banks spend big bucks on the technology needed to streamline business, but there’s a price to taking people out of the process: an entire customer base can fall through the cracks.
Home Trust takes the time to meet with clients face-to-face and pore over their financial statements in order to obtain an accurate picture of their assets and income potential. “Big banks don’t do this,” Reid says. “They leave it all up to a computer-generated model.”
2. Perform due diligence
Toronto-based Home Trust assists customers who don’t have traditional credit backgrounds and whose specific needs are not met by larger financial institutions. According to Reid, 50 percent of the firm’s client base comprises hard-working people who happen to be self-employed, and 30 percent are new immigrants to Canada who have steady incomes but no credit history.
“These are the people who get denied for loans despite their ability to pay, because their financial statements are driven for tax reasons, and it takes a greater level of due diligence that the larger banks are not prepared to do,” Reid says. “It’s impossible for automated systems to perform the due diligence that’s needed to give this customer base a fair shot.”
3. Understand that one size doesn’t fit all
Unlike other financial institutions, Home Trust refuses to take a cookie-cutter approach with its clients. It realizes that the products and services that work best for a self-employed person won’t be ideal for someone whose credit is situationally bruised because of a recent layoff.
At other banks, this latter client base has been dismissed as subprime, but Reid says that when given the right services, these clients outperform what the big banks would consider prime customers. After due diligence is performed, the challenge is tailoring an approach to the client, an approach that takes their particular circumstances into account.
Taking it a step further, Home Trust has even developed educational opportunities for its brokers and clients. From workshops to webinars, the company wants to help its brokers and clients grow their businesses, make the most of their hard-earned money, or just develop a better understanding of different investment vehicles.
4. Be consistent
So much about big banks isn’t consistent, from their branch managers being on two- to three-year rotations to when, how much, and to whom these financial institutions are willing to lend. According to Reid, there seems to be no rhyme or reason to it: sometimes big banks lend freely, and then they’ll pull back and turn reluctant.
“Our clients want consistency, and that’s what we provide them,” Reid says. “We honour our commitments to them, and we will always lend to clients who have proven themselves creditworthy. It’s important to us to remain transparent. If changes do occur internally, we want our brokers to understand why and understand specifically what it means for them. I’ve learned that if you are transparent, your customers will trust you, and that positive relationship will be reflected in the business. In 2012, we experienced our 15th consecutive year of a return on equity over 20 percent.”
5. Think about who you hire
When you’re taking the time to personally speak to and vet a majority of the clients walking in your door, you’re likely to be just as meticulous with hiring. While working for Deutsche Bank, Reid learned that the success of everything you do depends on the people you surround yourself with. The Home Trust president says he works for his employees, not the other way around.
“The people we hire constantly remind me of the bigger picture because of their commitment to our clients—clients who feel dejected and have been rejected by other financial institutions,” Reid says. “By the time they’re walking in our door, they’ve lost a lot of hope, and it’s important that we always remember that for many of these people, we’re the only ones willing to provide them with solutions to their challenges. Nobody at Home Trust gets paid on volume. It’s not about volume here; it’s about quality. Our employees understand that, and that’s illustrated in our results.”