From acorn to oak: Scott McKenzie recounts First National’s first 30 years of growth
On March 31st, 2018, First National began a year of celebrations to mark its 30th anniversary. To commemorate this important milestone, we asked key leaders to share their personal perspectives on the company’s long history of service, innovation and performance. In this interview, Scott McKenzie, Senior Vice President, Residential Mortgages offers his thoughts on the key drivers of success.
Scott, you are one of the first employees, having joined in 1989.
Correct, I’m employee number five and now there are over 950 of us here, which attests to the significant growth we have achieved together.
When you started, the company was small.
Yes, very small and very careful in how we spent money. Whatever needed to be done, we did it ourselves. As entrepreneurs in a start-up business, we were frugal and didn’t spend money until we could afford it. When we spent money, we spent on developing the processes and infrastructure that would enable great customer service.
So spending money was targeted.
Yes, we economized but not when it came to our talent pool or technology. If I thought we needed to add three underwriters, Stephen and Moray would say, why not hire five? I have never been told not to hire more people if business volumes supported it. Our focus then and now is to make the right investment decisions in people and in technology because these are our most critical assets.
There are many. The first time we originated $100 million in a single month is memorable, partly because Moray gave everyone on staff a $100 bill. Since there were only six or seven of us at the time, it wasn’t that costly but it was a cherished gesture. The first time we originated $1 billion in a year and the first time we originated $1 billion in a month are standout occasions. The start-up of our third-party underwriting and fulfilment business in 2015 was another great achievement for First National. To be chosen to underwrite mortgages for one of Canada’s biggest banks and to get the chance to be part of another start up that saw us hire 125 people across Canada was pretty special. But I think what I’m most proud of is watching my colleagues progress over the years. We’ve had many employees start here in junior capacities and grow into leadership roles over 10 or 15 years. It’s gratifying to know that they have felt comfortable and challenged enough to make First National their career destination.
What has changed the most in the mortgage industry in the past three decades?
The importance of the mortgage broker channel. When we started, mortgage brokers had a very small share of the market, in the single digits. Back then, a big brokerage had five or 10 agents. Now, the channel commands somewhere between 30 and 35% market share and large firms employ over a thousand brokers each, which demonstrates how vital the channel has become to borrowers in Canada. Along with that growth, mortgage brokers have continued to advance their knowledge so that their ability to offer value as professional subject matter experts has increased exponentially. First National has always tried to support the channel as a reliable partner so I like to think we’ve been part of their success. I certainly know they are a big part of ours.
Why did you choose to do all of your business through mortgage brokers?
It was by design. We trusted brokers to be our salesforce from coast to coast and we thought, rightly, that by working in partnership, we would be a better, more customer-aware business. It was a great decision and over time, as we’ve introduced more products and funded more deals, we’ve managed to become one of the top lenders in the channel.
Regulations have changed as well.
Absolutely. It’s more complicated than it’s ever been and the adoption of anti-money laundering policies, changes to B-20 underwriting rules and a host of other regulatory changes have certainly altered the market and of course forced all players in the industry – lenders and mortgage brokers – to become that much more sophisticated around compliance. Securitization has been another game changer and a positive one that enabled our mutual growth.
What has changed most for you personally?
Well I’ve always run the residential underwriting shop here. But in the beginning, I worked with two people and now I’m responsible for close to 500 people. With this growth, and regional expansion across the country, my job has become even more interesting because we have so much more depth and market reach. I've always been surrounded by smart and motivated individuals, but we just have so many more resources now. So for me personally, the scale and sophistication of our service efforts and the resources we have to move great ideas forward represent the most significant changes.
What hasn’t changed since you started?
Our focus on service is an absolute constant. I think if you asked a mortgage broker who dealt with us 25 years ago if they got good service way back then, I think they would say yes and they would cite some of the same reasons they like our service today. The other thing that hasn’t changed is the work ethic at First National. When mortgage brokers and borrowers choose us, they know every member of our team is going to work extremely hard to achieve their objectives.
With the Merlin online mortgage tracking system, First National is an industry pioneer in the use of technology. Why has technology featured so prominently in your business?
Service. We’ve always been looking for ways to make our service and responsiveness better. In Merlin, First National became the first lender to offer our broker partners real-time insights into the status of their deals, which in turn meant they could provide better, more responsive service to borrowers. Technology is a great enabler of our objectives and by launching a mobile version of Merlin late last year and constantly upgrading our web-based version with new features and functionality, we have become a more efficient and effective service provider.
How has your technology has evolved?
When First National launched in 1988, the big banks used typewriters to create mortgage commitment letters. Every time the offering interest rate changed, typists in large typing pools would recreate mortgage commitments from scratch. It was incredibly inefficient and as a result, borrowers waited an interminable amount of time to see their deals close. Stephen and Moray thought there was a better way and so from day one, First National produced mortgage commitments on computers and printed them on dot-matrix printers. It was a transformative change in the industry and it gave First National a significant advantage that we passed on to our mortgage broker partners to make them more competitive.
How did Merlin come about?
Our underwriting directors and senior staff got together at Langdon Hall in Cambridge years ago for a retreat and we talked about ways in which we could make our service offering best in class. Stephen thought about that overnight and came back to the meeting with a web-based concept to serve mortgage brokers and make their job better by making it easier to deal with First National, and that’s how it started. Merlin is the outcome of entrepreneurial thinking applied to our most important business objective: customer service excellence.
What does the 30th anniversary mean to you?
It’s gone so fast that it seems incredible to me that we’ve been in business for three decades. It’s been such a fabulous experience, a really great place to work and to build a career. First National is a family so I guess what it means to me is that our family is growing up and getting bigger. It’s amazing to watch our evolution.
What motivates you now that First National is a success?
Competition, the challenge of staying on top, of maintaining great service, of building our volumes. I get motivated by coming to work and seeing our team striving to exceed expectations. I want First National to always be the best in class and to have the best reputation for underwriting quality.
Industry data suggest First National is the gold standard in those categories.
Correct, but being at the top is difficult because you have to stay there and that means getting better. We try to do that by constantly listening to mortgage brokers and paying attention to the type of mortgages they recommend for borrowers. That influences the types of products and product features we introduce. By being attentive, we can help them grow and that helps us grow. I think one of the most flattering things that has happened over time is that other lenders have started to benchmark themselves against First National. That means what we do is relevant.
Is that attentiveness the reason First National introduced Excalibur?
Definitely. We wanted to equip brokers with an Alt-A product from First National so that they could come to us rather than looking to a competitor. We can’t be all things to all people, but when we spot a niche that we can serve effectively, and we know that brokers want the product, we take action to get bigger, better and stronger and that’s the thinking behind Excalibur.
Why should a mortgage broker choose to send business to First National over other lenders?
We’re consistent, we’re reliable, we answer all inquiries quickly and expertly and when you come here, you can have confidence that your deal is going to close. That's because our sales and underwriting teams are on the same page. Sales knows exactly what underwriting needs to close deals, and underwriting respects the needs of brokers and borrowers who deserve and receive quick decisions. As a team, we're focused on finding the best solutions. For brokers who want no surprises, just consistent, high-quality support every time out, First National is the right choice.
What would you like mortgage broker partners to know about First National’s future?
That we are absolutely going to be here to serve them for the long run and that we are going to do our best to support them as housing and mortgage market regulations continue to evolve. B-20 and other regulatory changes have made things more difficult for all participants in the market in recent years, lenders, brokers and borrowers. As a lender, we believe that by collaborating with brokers and their industry associations, we can ensure that these changes are embraced effectively so that we capture all of the informational requirements from borrowers in an efficient manner. Efficiency is critical to the delivery of great customer service.
You mentioned that First National has seen sizable growth in its workforce. How else has the workforce changed?
Today, a large part of our team is comprised of millennials. That word didn’t even register in our vocabulary 30 years ago. We have worked hard to understand the characteristics and workplace needs of this generation. They are well educated, smart and they are systems and technology savvy. What’s great about having millennials onboard is that they also make up a growing part of our customer base so by better understanding our workforce, we can better understand our customers. What hasn’t changed is our culture. We’re very consistent in putting people and service first.
How would you describe the residential team today?
Personable and caring. They want to create a great customer experience every time.
What role do your regional teams play in First National’s success?
They are extremely important. When we expanded to Vancouver in 1991, Calgary in 2000 and Montreal in 2008, it was transformational. It allowed us to get much more deeply involved in local broker communities and to employ local leaders who have a keen understanding of underwriting in their markets. Without this expansion, I don’t think First National would be Canada’s largest non-bank mortgage lender.
What is your guiding philosophy as an employer and business leader?
Make it easy to do business with First National and rewarding to build a career here. In principle, it’s simple but it takes constant effort and great consistency to live that philosophy.
What would you like people to know about First National’s future?
This is a strong business and we are going to do everything we can to stay at the top of our game and at the top of our industry.