Conquering the fear of credit (and change) is what Borrowell does bestSam Elsley - March 10, 2020
“When I come home after a hard day at work, I like to pour myself a glass of wine, put my feet up and pay my bills for fun.”
That’s a sentence no one on Earth has ever said.
Right alongside food and water, finances represent one of life’s few constants. And like food and water, poor credit resulting from financial mismanagement can lead to all sorts of complications. Applying for a loan, getting a credit card, taking out a mortgage – these life-altering opportunities can suddenly become inaccessible as a result of having poor credit.
It’s no wonder, then, why finances represent one of the biggest sources of stress among Canadians. In 2019, Stats Canada found that nearly three-quarters of Canadians (73.2 per cent) have some type of outstanding debt and that almost one third (31 per cent) believe they have too much debt.
If you’ve ever dabbled in the world of credit, you know much of this stress is fuelled by the complexity embedded in many credit cards, loans and other financial services and products. Jargon-heavy language, unclear deadlines and user agreements that put Tolstoy novels to shame make credit seem too overwhelming to even approach in the first place, let alone use month-after-month, year-after-year without a hitch.
Before you go and ditch your credit cards, buy a bunch of gold blocks and bury them in your backyard, you’ll be happy to know that a Toronto-based company called Borrowell is making great strides to simplify the credit process and help Canadians more easily keep their finances in order.
A human approach to managing credit
“How can we make people more confident and less stressed about their finances?”
It was this single string of a question that Borrowell CEO and co-founder Andrew Graham began pulling on in 2014 while working at a mid-sized Toronto bank.
The first in his family to become an entrepreneur, Graham began seriously considering entrepreneurship while pursuing his MBA at Harvard.
“My parents both worked in the public sector for much of their career.” explains Graham. “A lot of my friends who I was in [the] MBA program with ended up starting businesses and were an inspiration, for sure.”
Before becoming an entrepreneur, however, Graham first put his schooling and natural gift for numbers to use in the corporate world. Over a ten-year span, he lent his abilities to telecom company Nortel, food processing company Global Weston and financial services company PC Financial in roles ranging from director of corporate development and global mergers and acquisitions to senior director of insurance. Graham also joined the Ontario Securities Commission as a member of their FinTech Advisory Committee, a role he still assumes today.
“I found it amazing that there was, at that point, $90 billion [of] credit card debt in Canada.”
– Andrew Graham, CEO and co-founder of Borrowell
Despite enjoying the work, however, Graham progressively found himself with more questions than answers.
“I was really amazed and interested in the challenges of consumer finance and consumer credit. I found it amazing that there was, at that point, $90 billion [of] credit card debt in Canada, much of it held at high interest rates.” he explains.
Knowing what challenges people faced on a daily basis and armed with an idea of how to overcome them, Graham eventually decided it was time to take things into his own hands.
“I was at a stage in my life where I was feeling confident to bet on myself. More than anything, I think I saw an opportunity… I thought there was an opportunity to help Canadians manage their debt more effectively. And so I left the job I was in and started work on what would become Borrowell. Along the way I brought on my co-founder, Eva Wong, and ultimately founded the company.” says Graham.
“More than anything, I think I saw an opportunity… I thought there was an opportunity to help Canadians manage their debt more effectively.”
– Andrew Graham
Borrowell isn’t the pair’s first foray into recognizing and filling cracks in the market. Graham had also worked with Wong on a nonprofit called Toronto Homecoming, a service Canadians living abroad wanting to return home could use to reenter the Toronto job market.
“We matched Canadians living abroad who wanted to come back with opportunities in the Toronto region. We would get paid by for-profit companies looking for talent and we would connect Canadians living abroad who wanted to move back home and find a great professional role.”
Having successfully worked together before, Graham knew who he wanted to work with for Borrowell. “It was a natural fit,” he says.
Pushing back the financial boogeyman
In its simplest form, your credit score represents how reliably you’ve paid back money that isn’t yours in the past. It tells financial bodies how trustworthy you are and affects everything from how much you can borrow and the interest rates you pay to what loans, credit cards and other financial products and services you can get in the first place.
Regardless of how good it is, the first step to improving your credit is understanding where you are on the financial spectrum. “We [Borrowell] can help you along that journey from good to great, or wherever you are your journey… by giving you your credit report and score for free,” says Graham.
In fact, while many companies charge to access credit scores, Borrowell is the first company in Canada to give unlimited access to your Equifax credit score for free.
“There’s something very powerful about free that attracts a lot of users”, which speaks to Graham’s dedication to helping as many people as possible throughout the development of Borrowell.
“We felt that everyone should have access to it [their credit score] for free.”
– Andrew Graham
Despite starting out as strictly a lending company offering very low-cost loans to people with good credit who wanted to refinance credit card debt, “Ultimately it wasn’t a product that worked for everybody. We were proud of the loan company we built, but we wanted a product that would work for everybody,” says Graham.
Part of that was offering people their credit score for free. The other part? Borrowell transitioned into a financial marketplace offering all sorts of different products and services. “What we’ve been able to do is use the information that people share with us to recommend the best financial products for them,” Graham says.
Today, through its marketplace, Borrowell recommends loans, credit cards, car loans, mortgages, bank accounts and insurance from 50-plus partners based on your credit score. Through this matching process, which you can narrow down with filters, Graham’s goal is to have consumers “pay as little as possible in interest and get the most possible return in [their] savings if [they] can.”
If you end up applying and being accepted for any of Borrowell’s recommendations, the partner providing it pays a referral fee to Borrowell.
“We wanted a product that would work for everybody.”
– Andrew Graham
Through this model, Borrowell kills two financial birds with one stone: they arm you with an understanding of your credit score, and they eliminate the hard and confusing work behind researching what financial products and services best serve your needs – all at no cost to customers.
A business model founded on education
Of course, anyone who has ever had a credit card or taken out a loan knows that the confusion doesn’t stop when you finally gain access to the funds.
How you manage your credit card once you have it is so much more important than choosing the right card in the first place. This is because how you use your credit card has a bigger impact on your credit.
Topping out your limit, not paying the required amount and mounting interest every month are swift paths to poor credit and a lifetime of headache. Those headaches aren’t just limited to credit cards either – missing payments on loans, phone bills and car payments can all contribute to a poor credit score as well.
This is why, in addition to setting customers up with the right financial products from day one, Borrowell also makes an effort to educate their customers about financial literacy. “Education is at the heart of what we do, both through the blog and other content like that. But really, also our product,” says Graham.
“Education is at the heart of what we do.”
– Andrew Graham
By “product,” Graham means Borrowell’s AI-powered credit coach, Molly, who helps customers better understand their credit score, gives them personalized tips and suggests articles that may help to improve where they stand financially.
“From there… you can learn about what makes your credit what it is and how to improve it,” says Graham.
Going against the grain
Breaking into an industry as established as the financial industry came with its fair share of challenges, says Graham. “Canada has had traditionally lower rates of fintech adoption than other countries.”
According to the 2019 EY Global FinTech Adoption Index, a survey in which more than 27,000 consumers in 27 markets around the world were questioned about their adoption of fintech, only 50 per cent of people surveyed in Canada said they were fintech consumers, compared to 64 per cent globally.
“Canada has had traditionally lower rates of fintech adoption than other countries.”
– Andrew Graham
Why is Canada trailing behind? According to the same survey, a lack of awareness and trust represent the most common reasons people continue to choose traditional institutions over fintech solutions like Borrowell. For people already familiar with the experience of their local bank, the largely-online experience of many fintech solutions may take some time getting used to.
Fortunately, despite still having one of the lowest adoption rates in the world, Canadian consumer fintech adoption is up 32 per cent in the last two years – a change that couldn’t be more welcomed by Graham.
“I think there’s a lot of interest now among Canadians in FinTech solutions,” says Graham. “I think consumers all around the world have growing expectations about really everything digital in their lives. There’s been so much innovation in the last decade around retail, transport, you name it. It’s natural that consumers are looking for innovation in financial services as well.”
A new era of stress-free personal finance
With the aim to double down on Borrowell’s proactive approach to helping consumers avoid poor credit in the first place, Graham soon plans to introduce a new product called Borrowell Boost.
“We know one of the main reasons that people have lower credit scores is because they miss bills,” explains Graham. “50 per cent of Canadians live from paycheque to paycheque. Boost is aimed at helping people understand their cash flow, when they’re paid [and] when bills are due so they don’t miss bill payments.”
Graham also understands that tough times happen. “I’ve had a number of people in my life struggle with finances. I can relate to that,” he says. “I don’t want to name names, but I’ve certainly experienced it.”
“50 per cent of Canadians live from paycheque to paycheque.”
– Andrew Graham
This is why through Boost, Graham plans to also offer people interest-free loans up to $100 that they can use as a bridge between paycheques.
On top of all of this, Boost will also automatically forecast bills, income and account balances based on past data, as well as send bill reminders, low-balance alerts and updates to help customers pay on time and avoid fees.
“I think it [finance] is such an important set of problems,” says Graham. “There was a survey that was done last summer by the Globe and Mail asking what keeps [people] up at most at night and the single biggest answer reported back was finances.”
“Finances are a huge source of stress, [a] huge reason for marital stress, stress between friends,” Graham says. “It has a huge impact on people’s [regular] lives and emotional lives… I’m most proud of the fact that over a million people have used Borrowell to learn about their finances and feel more confident about their finances.”
- Name: Borrowell
- Solution: Free credit score access and tracking, recommendations to improve credit, recommendation engine to make personalized financial product recommendations, and interest-free loans.
- Owners: Andrew Graham and Eva Wong
- Employees: 50+
- Headquarters: Toronto, Ont.
- Founded: 2014
- Contact: [email protected]