In a tough economy, many people put their money into safer investments like GICs. But how do you know which financial institution will give you the best rate? Today, Toronto startup Finizi.com announced the launch of a new online system that effectively replaces the GIC broker as the preferred channel-of-choice for acquiring the fixed term instrument at a lower cost.
Finizi is free to use and stands for “finance made easy.” The rate comparison platform will “save institutions significant acquisition costs and save consumers time, hassle and often the embarrassment associated with negotiating a better than posted rate with their bank branches,” says Daniel Shain, Founder and CEO at Finizi.
Shain, whose company is currently working out of the Ryerson Digital Media Zone, has experience working in the banking industry as a financial advisor. He left his job in January of this year to help consumers find the best rates possible for their investments.
He told me that Finizi is “like a reverse eBay for financial products.” In this case, it’s the sellers who bid for business, just like Lending Tree. “Any customer in Canada is invited to compare rates and start an auction for their money,” says Shain.
Consumers can instantly identify the rates and terms related to the amount of their desired GICs. “Banks, Trusts and Credit Unions have the option of “bidding” against each other for business in live auctions. It’s a true win-win situation for the consumer and the financial institution.”
Virtual GICs can be purchased from any of Finizi’s participating partners. Several institutions in the Toronto Greater Area (GTA), the Golden Horseshoe and Central and Western Canada locations have signed-up to try out Finizi’s preferred e-World channel. The list of initial participants includes First Ontario Credit Union, Outlook Financial, Teacher’s Credit Union, Peoples Trust, and Luminus Financial.
You’ll notice that none of the big five Canadian banks are listed in the trial. Shain says that “the challenge is that the big five banks are only interested in large volume deals at this time.” Nonetheless, Finizi will still display the posted GIC rates from website listings of the big five banks alongside the rates that come up from the participating financial institutions. That way, you can compare all of the rates in one place.
At the end of an auction, customers can choose from their top three preferred rates. “In many cases, bank customers can conduct the entire account opening online, depending upon the rules and regulations of the partnering financial institutions,” says Shain. The company makes money from the winning financial institutions, which pay a finder’s fee for a closed sale.
Finizi enables financial institutions to retain control of customer relationships for cross-selling at less cost than that offered by brokers. The company makes sure that all partner GICs are covered by deposit insurance up to the stipulated limits, depending on their province of operation.
According to Shain, Finizi expects many more banking institutions to offer virtual account opening options within the next year, enabling organizations both large and small to participate fully. “And, while Finizi’s platform today spotlights only GICs, we are preparing to introduce mortgages and car loans, too.”