Borrowell founding team members, including co-founder Salim Naran, recently secured $3.1 million CAD for a startup they launched in 2017 to tackle the banking infrastructure side of digital lending.
Over the last five years, Naran and his team have created a platform they claim transforms banks into FinTechs, focused on modernizing loan processing. The startup, Savvyy, has developed automated, cloud-based software to underwrite and service loans. The goal is to replace a patchwork of legacy systems and manual processes, and improve the client experience.
“The backend infrastructure of financial institutions needs to be replaced for those front-end consumer products to work properly.”
While many FinTech startups, like Borrowell, are focused on the consumer side, Savvyy is taking on the bank side of the mortgage process.
Savvyy secured the seed financing (its first priced round) from a group of angel investors. The list includes Joe Canavan from Canavan Capital (formerly LOGiQ and Next Canada); Scotiabank’s former global head of fixed income, Michael Zych; Kevin Walton, part of the founding team of Real Matters; and Michael Vanderkaden, formerly of Filogix and Equifax, and currently serving as CFO of Savvyy. The startup is also backed by ScaleUp Ventures.
The recent round also includes previously secured SAFEs, which converted to make Savvyy’s total funding to date $5.7 million CAD.
Since launching in 2018, Savvyy has secured three Canadian Schedule I banks as customers, including Concentra Bank, which used Savvyy to power its re-entry into the residential mortgage lending space.
Without disclosing numbers, Savvyy co-founder Norm Cappell explained that the startup has positive revenue that allowed it to delay the need to raise capital. Now, Savvyy is looking to accelerate its roadmap with its newfound capital, with plans to add new loan payments features and expand beyond Canada.
The startup claimed it is poised for significant growth in 2022.
The idea for Savvyy came out of work Naran, Cappell, and other team members were doing at Borrowell, and, prior to that, Paradigm Quest, which operates in the digital mortgage underwriting space.
Naran served as CTO at Borrowell, which was originally launched to allow institutional lenders to fund consumer loans.
It was there that Naran and Cappell saw the need banks had for digitizing their lending processes, as well as their willingness to work with SaaS providers to build out core banking products.
After Borrowell shifted its focus (now offering credit monitoring and cards, personal loans, mortgages, investing, insurance, and bank accounts), Naran and Cappell decided to create Savvyy.
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“It’s through experience with these companies and seeing what’s broken [that Savvyy was created],” Naran said in an interview.
“There are a bunch of companies out there right now that are working on digital mortgage solutions: direct to consumer companies and digitizing brokers,” the CEO Savvyy added. “They’re very focused on the consumer, and what both Paradigm and Borrowell have helped myself and the team with is [understanding] the backend infrastructure of financial institutions needs to be replaced for those front-end consumer products to work properly.”
Savvyy as a Canadian mortgage FinTech startup stands out among a crowd that includes major player Nesto, which is consumer-focused, and the likes of Doorr, which offers a mortgage platform for brokers and financial institutions and was acquired by Filogix last year.
Research Savvyy had done through Deloitte found the banking end of mortgage lending has been overlooked by the financial services industry.
“In Canada, not much has happened in the last decade,” Naran said.
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“Traditional distribution of financial products is being accelerated towards digital … so traditional ways of originating mortgage products are being challenged,” he added.
Andrew Hamer, partner and Canadian lending leader at Deloitte, emphasized that “the first wave” of digital mortgage was focused on consumer-facing experiences. “Now, leading industry players are pushing further into the heart of the lending business, with a focus on innovating legacy credit operations and decisioning processes,” he said. “This emergence of modern, cloud-based lending infrastructure is a positive development for the Canadian lending industry, resulting in more efficient outcomes for both the consumer and the business.”
Naran emphasized that Savvyy’s ability to take on this task is possible only through a culmination of previous experience in the financial services space.
“Enterprise technology at banks is something that’s very hard for new companies to just jump into,” he said. “You need a certain domain expertise around it, you need to be on the right side of the moat, as we call it. And, if we look at the history of how Savvyy was born, it’s a company that’s been built for the last 10 years, through Paradigm, Borrowell, and now Savvyy.”