Saving money may never be a walk in the park. But Oaken Financial wants it to feel like a walk in the woods.
Step into its new retail space in downtown Toronto and you’ll be surrounded by green leaf motifs, and images of mighty oak trees and Oaken’s cartoon mascot, Foster the Squirrel (he’s saving his acorns).
The images are meant to invoke strength, stability, and security – three qualities that speak to consumers who want to save their money, said Benjy Katchen, vice president of deposits.
Oaken bills itself as an independent alternative for Canadians looking to get the highest interest rates on their savings accounts and GICs.
“Financial services in Canada are very concentrated and Canadian consumers often have trouble differentiating between the competitors. One offering is quite similar to the next,” Katchen said.
“We wanted to build a great consumer friendly brand that is quite different.”
Oaken Financial is the brand name for the direct-to-consumer deposit business of Home Trust, Canada’s largest independent trust company. It launched the Oaken Financial brand name in November, 2013.
The retail store, which opens Monday on the concourse level at 145 King St. W., is also just one example of the upstart competition that is facing Canada’s Big Banks.
The banks are staring down challenges from rivals that provide specialized savings and lending products, as well as investment management and mobile payments services.
The competition, delivered high-speed via the Internet, is coming from all corners, from established financial services players such as Home Trust to niche start-ups and technology giants like Apple, which is reportedly set to launch its Apple Pay service in Canada in November.
“The coming of age of the Internet has allowed companies like mine to take off,” said Steven Uster, co-founder of FundThrough.
“People are always going to need a bank to hold their money but in the next five or 10 years they’re going to look elsewhere for other products that can be provided more efficiently.”
It’s been nearly 20 years since ING Direct first disrupted Canada’s banking scene with its no-branch deposit taking business, given consumers their first taste of the alternatives we see today, said banking industry consultant David McVay.
“There is less of a barrier to switching today,” McVay said. “People are much more comfortable with Internet use, they’re not as reliant on the bank branches anymore. They’re getting used to different brands.”
“We may be seeing the time is right for more and more direct banks to appear in competition with the mainstream model, especially competition that focuses on niche areas. Stay tuned. I think you’re going to see more.”
That said, Canada’s Big Banks have a big upper-hand.
“You don’t see big share shifts in this business like you do in any other retail product. It’s a low-interest category and most people still trust their financial institution will give them the service that they want,” McVay said.
Still, the banks’ initial response will be to stay the course and – carefully – watch their market share, McVay said.
“If these competitors get traction and start to be material in eroding their position, they will start to respond. They’ll change when the pain of not changing is greater than the pain of changing. Right now it’s the other way around.”