The Canadian market shows Australian mortgage brokers that they do not need to accept major bank dominance even in a post-GFC environment, according to ING Direct's Lisa Claes.
Head of delivery at ING Direct, Claes said Canada is a good example of a market where industry players have innovated to build a more competitive environment.
"In Canada, where the economy and levels of home ownership are similar to Australia, five major banks dominate the financial scene.
"However, these five account for only 65% of the total market - versus 75% in Australia - and non-bank lenders have a 25% stake. And more importantly smaller banks in Canada are growing whereas in Australia the reverse is true."
Claes said the post-GFC rise in market share of banks outside the big five that is especially noteworthy.
"Despite challenging trading conditions, Canada’s smaller banks have grown market share from 8% in 2007 to 10% today." she said.
"Yes, there has been government support in terms of access to funding, but that alone doesn’t build market share. Their growth was achieved by viewing the market for what it is – a composite of different segments requiring quite diverse approaches, rather than one catering to a single homogenous mass market."
Claes said niche players have emerged to service a number of previously under-serviced portions of the market.
"As a guide, one Canadian bank is focusing on the aboriginal segment. Another is pitched at the “emerging high net worth individual” market. Other banks are focusing on Canada’s burgeoning East-Asian migrant population," she said.