The Life of a Loan - Origination

  • First National Financial LP

First National is Canada’s largest commercial mortgage lender. But it is not just size that distinguishes our business. It is the comprehensive approach we take to serving every client over the lifecycle of their loan, from origination through funding and on to servicing. We chronicle our approach in this three-part series. In part one, we ask Dave Scapillati, Assistant Vice President, Sales Performance – Commercial Financing about the initial service clients can expect when they do business with First National. In parts two and three, we speak to Jean Maraj, Funding Manager – Commercial Mortgages and Lorene Bertoia, Senior Manager, Commercial Administration.

Dave, who are your customers?

We serve many different types of borrowers…from independent entrepreneurs with a single asset to publicly traded real estate companies that own dozens of properties across Canada and everything in between. 

Many lenders compete on price. Is that what First National does?

Our objective is to create value for borrowers. So while rate is important in value creation, and we are always competitive, it is only one component of value. What we find in the industry are competitors that focus solely on rate because it grabs attention and allows borrowers to do a quick, surface-level comparison of competing offerings.  In my experience, a low-cost provider is never a long-term value creator.

What does value creation look like for a First National customer then?

We define value as the ability to help customers make more money, save more money and mitigate risk.  Our value creation model is at the heart of everything we do in commercial lending and we are relentless in pursuing it for every commercial client we serve.

What do your clients need from you?

They need us to understand their goals, and understand their business and only then provide advice. That advice must be relevant to their circumstance to be valuable.  The experience gained from serving over 5,500 clients of all sizes means we have a strong starting point for meaningful customer collaboration.

What do you mean by advice?

Advice is a word we use to describe our consultative approach.  By that we mean, get to know each of our customers intimately, define their needs and understand their business as well as they do – if not better than they do – so that we can share ideas and advise them on potential solutions that they might not have thought of themselves. Proactively bringing our clients opportunities and identifying challenges that aren’t on their radar is a big part of adding value. Showing our clients that there is another perspective, another way to think and then designing and delivering solutions that overcome challenges and capture opportunities is the essence of what we do.

Sounds like you need to be well informed to add value.

Expertise in all commercial property assets classes and in all of First National’s products and solutions is fundamental to our sales process.  Without that expertise, we can’t begin the discussion on innovative and creative ways to help. 

First National lends on a variety of commercial properties. How do you go about educating yourself in the client’s business to the point that you can be a valuable resource?

We invest significant resources to educate our sales advisors. Given the nature of our business, some advisors will develop natural subject matter expertise, or specialization, in certain asset classes and products.  So it’s up to us to share that knowledge among all team members so that our clients always get the best collective expertise from First National.

How much are you willing to invest in a client relationship?

We have a high standard of delivery and execution for all of our clients. That said, we do prioritize to ensure we can go very deep to help our clients achieve success. Prioritization ensures we can make the right level of investment at the right time.

Your speciality is sales leadership. How do you help members of the commercial origination team to model the First National approach?

I operate with a core philosophy that it’s all about building trusting customer relationships. And based on that philosophy, I apply several principles. For example, I believe in the value of planning and preparation. I believe in listening as the first step in understanding and then advising. I believe that it’s important to challenge and teach as a means of breaking the client’s status quo to find a better way to do things. I believe in showing up, and getting face time. And I believe in doing the work!

Was First National always in the business of solving challenges for customers?

No, it wasn’t, so let me explain. In 2008 when Canada’s Big Banks basically curtailed their commercial lending activity in response to the credit crisis, demand for financing outpaced supply. As a result, we got out of the way and let our sales team sell. But when market conditions returned to normal, we decided that we should evolve to increase our competitiveness and enhance the customer experience. So we launched what we called Project Rethink. Rethink took us in a step-wise manner through basic planning, building teamwork across all Commercial business units, setting a big goal, and following on to engender the right behaviours.  It harnessed all of our best practices and added some new ones.

Borrowers don’t just work with your origination teams, they interact with various First National departments. Is there the same emphasis on finding solutions all the way through the life of a loan?

Absolutely. Project Rethink ushered in a new way forward, which starts with consultative advice but it also enabled us to really enhance the way each of the teams within Commercial including marketing, origination, legal, funding and administration pull together to deliver for customers. We don’t operate in departmental silos. Each team is integral to a customer’s experience and the level of coordination and professionalism we achieve through our processes and behaviours sets us apart.

Do you have any evidence of that?

We doubled our commercial business in five years and by our estimates, achieved the fastest rate of growth in our industry. So I would say the verdict is in…Project Rethink worked and the philosophy we adopted continues to pay dividends.  Overall, it definitely required a huge commitment from our senior management team, persistence, tough conversations and financial investments ahead of any payoff.

Does First National use a formula or a playbook to originate business like Canada’s Big Banks?

The big banks are formidable competitors, but they tend to be rigid in how they operate.  In contrast, we look for and seize opportunities to work outside their box.  For example, they have formulas that their sales people must stay within, whereas we take an entrepreneurial stance and look at each client and each deal based on its merits. We compete head to head and our consultative approach wins clients at the largest size and level of sophistication.

First National’s growth would appear to validate your process, but doesn’t being a trusted advisor sometimes result in not selling anything?

Absolutely. When you put the customer’s best interest at the forefront of every decision you make, you end up saying no more than you say yes.  We advise clients not to purchase or invest if we don’t think it’s the right thing for their businesses.  We would have even more loans on our books if we were just order takers, but we wouldn’t have life-long clients. 

If I choose to be a client, will I see and hear from my sales advisor after my mortgage closes?

Absolutely.  We like to say, ‘at First National we have clients for life.’ Our consultative approach means we’ve built processes and practices into our daily activities that endorse our ongoing commitment. It’s all about the relationship.  It doesn’t start when there is a deal and end on closing. Real trust and relationships are built between deals when no commissions are being earned and no sales are being completed, but the consultative advice is ongoing.  Like any good relationship, trust takes a lifetime to build.

Final thoughts?

At first, borrowers were skeptical about our intentions and I don’t blame them. Lenders aren’t generally thought of as purveyors of unbiased insight or advice. But then, we got the chance to prove our approach and we changed the channel. Borrowers who have experienced it tell us they really value what we’re doing because it supports them in making great decisions. When we hear that from the most important people in our business, it’s very inspiring and frankly, creates a special feeling for all members of our Commercial team that’s contagious. We can’t wait to share our approach with more borrowers and to build on the momentum we’ve created for them. So my final thought is to invite borrowers to give us a try. I think they will like what they experience.