Game changer

Luc Bernard is a true visionary who has changed the Canadian mortgage industry landscape in less than four years. As chairman and CEO of the M3 Group, which he founded in 2015, Bernard’s uncanny ability to identify tailwinds has enabled a relative newcomer to the industry to grow into one of its largest networks.

“The intent from the beginning was to build the biggest, strongest and most relevant organization in the broker space,” Bernard says. “It was part of the plan from day one.”

After a financial services career that spanned everything from property & casualty and life insurance to banking and wealth management, Bernard cottoned on to the fact that the mortgage industry was going through some growing pains.

“It was clear from my period in the banking world that there was a window of opportunity because it was a very fragmented market,” he says. “Consumer behaviour was shifting quite rapidly. Five years ago, the banking industry still believed branches were relevant for consumers, and it’s still the case, but less and less. It was clear to me in 2014 that consumer behaviour was going in an interesting direction that would allow us to be relevant to brokers.”

Officially opening for business in January 2015, M3 made digitalization a high priority from the start, as Bernard believed it would allow both mortgage brokers and consumers to reap great benefits. He was convinced then, as he remains today, that data and technology would upend the industry and dictate the way it would evolve.

“First we defined a strategic plan, and then we started investing in technology massively, making sure we provide brokers with the best technology around,” Bernard says. “We’re not just competing with the best solutions in the broker space; we have to make sure that our brokers have access to the best technology in the financial services world. Our consumers, for instance, use Amazon and have standards that are quite high, so we have to please our consumers who are used to that level of IT integration.”

Ready, set, grow
Technology isn’t the sole factor behind M3’s accelerated growth trajectory, though. The company’s business plan is predicated upon four pillars, and digitalization is only one of these.

“The first horizontal pillar was operational excellence, which refers to data processes and technology,” Bernard explains. “Really, this is the foundation of our group. The first vertical pillar that sits on that horizontal pillar is getting scale. Scales really matter in our business because they provide us the capacity to invest in technology in branding and marketing.”

In just over three years in operation, the M3 Group has grown into one of the largest mortgage networks in the country, and its September 2017 acquisition of Verico, which grew its annual loan volumes from $25 billion to $44 billion, was a key piece.

“It was clear to us that we need to double, even triple, the size of our organization,” Bernard says. “We have been able to multiply by four, half of it through acquisition and the other half through organic growth. In 2016, we achieved the acquisition of Invis Mortgage Intelligence, and in 2017 it was the acquisition Verico. That means we have a network composed of over 6,000 brokers.”

As impressive as that is, Bernard says M3 isn’t done growing yet.

“Our next ambition is to double the size of this organization over the next three years, to grow from $44 billion to $80 billion,” he says. “Half of this growth will come from other acquisitions. We’re confident there’s still place for consolidation in the market, and based on our DNA, there will be more banners interested in joining our group.”

The timing couldn’t be better. The latest changes to Guideline B-20 have been unanimously regarded by the mortgage industry as a spanner in the works, and it’s smaller independent brokerages that are really feeling the squeeze. While the new stress test cooled the housing market almost overnight, it did provide networks with an inadvertent boost.

“What happened with the B-20 rules is that a lot of independents are looking to partner with us,” Bernard says. “Smaller players are looking to come in, and we can offer a lot of support. We’re obsessed with organic growth. Once the consolidation phase is over in the next two or three years, the organization that will emerge from this consolidation will support organic growth for the benefit of our brokers.”

The next step
That organic growth will be driven by M3’s understanding of the broker space and its efforts to get the word out to brokers about the benefits of joining the M3 network.

“Since day one, we’ve knocked on doors and met people in the broker space, showing our interest in buying their business, but most of it is giving them confidence in our team and strategic planning,” Bernard says. “That’s always been the most important thing for me – that people understand who we are, what we’re trying to achieve and what the DNA of our group is. That’s why we’ve been successful in our acquisitions, but organic growth is still important. While there’s still room for consolidation in our industry, once that phase is completed, what matters to us and our brokers is being well equipped to compete with other distribution networks within the financial services. That’s why we have a strategic plan focused on data and technology.”

More than anything, Bernard has unwavering confidence in the value system he’s helped create for brokers, as well as the business model that allows companies in the M3 family to retain their autonomy.

“The reason we exist is quite simple,” he says. “We believe in the ecosystem. We believe the broker is more essential than ever – this is why I left the banking industry and why we have strong value proposition for brokers.”