Transformation and re-branding of CIBC Mortgage Brokerage business
Business Problem
Changes in the regulatory and compliance environment made it increasingly difficult for CIBC to operate businesses and channels outside of banking OSFI regulation and under brands other than the core CIBC brand. Mortgage brokerage activities contributed over 55% of CIBC’s annual mortgage origination volume but were provincially (vs federally) regulated and operated outside of the traditional retail branch network. At the same time, mortgage origination volume from traditional retail branches was on decline due to branch staff turnover, inconvenient hours and the specialty subject matter expertise required to properly assess the wide variety of mortgage financing options.
The decision of senior bank management was to shut down the mortgage brokerage businesses, attempting to mitigate the reduced volume but asking the branch network to step up mortgage originations. Another consideration was that much of the business originated by the brokerage businesses was a single product acquisition and the rate of cross sell and customer entrenchment was low (average 1.1 products per customer vs 3.1 for retail branch acquired customers).
Solution
We proposed an alternative approach. Rather than shut down the mortgage broker businesses, we proposed leveraging the assets and human capital to re-purpose their contacts, network and mortgage expertise to create a new, CIBC branded, OSFI regulated mobile mortgage advisor capability that would work collaboratively with the retail branch network, provide a better client experience (mobile, in-home consultation, deep expertise, personal service) and leverage the branch network for client on-boarding, entrenchment and cross sell.
Initially, senior bank management was not supportive and preferred the full shut-down approach as they did not see the strategic benefit of a mobile mortgage sales force and did not understand how the mobile team could work effectively with the branch network. Ultimately, with the support of the head of the mortgage division we were empowered to proceed with our proposed strategy provided no additional funding was required.
Three separate, provincial licensed businesses had to be wound down and sold. Over 600 employees had to be terminated and then offered positions in the new, federally regulated bank entity. The business had to be re-branded in collaboration with CIBC Corporate Marketing to be consistent with the core brand but also uniquely identify the capabilities of the team. Given regulatory restrictions, branding options were limited, and two new brands were created:
CIBC Mobile Mortgage Advisors (for the team and channel)
CIBC Alternate Channels (for the business)
The team faces significant resistance to the implementation of the strategy from senior management, branch management, operations and marketing. However, to manage the resistance the team communicated frequently and extensively from the front line to senior management with a specific focus on how the new strategy was creating value for customers, the branch network and the bank.
Education sessions and outreach meetings were conducted across the country and an effort was made to identify potential “champion” branches that would act as reference points. A concerted effort was to leverage the strategy to help improve the performance of those reference branches so that their success would encourage stronger engagement.
Results
The wind down of the brokerage businesses and the initial launch of the new function took approximately 8 months. Significant HR and regulatory issues had to be overcome along with identifying and leveraging the technology required to support a fully mobile national team (with full compliance to bank data and IT security challenges)
In the first 12 months post launch, the team grew to over 350 people nationally and had first year production of over $1.5 billion in mortgages, accounting for 12% of annual bank mortgage origination volume. Cross sell rates (products per customer) were 2.2 and key reference branches were moved from bottom quartile in mortgage performance to top quartile.
After 3 years, the program grew to over 1,000 advisors nationally and over $8 billion in national origination volume accounting for over 40% of national origination volume. Senior bank management announced that the mobile advisor was now a key element of its branch strategy and the concept has been further expanded to include wealth advisors.
Today, mobile mortgage advisors account for over 60% of retail mortgage origination volume and the concept continues to be enhanced.