Maximizing Strata Returns: The Cutting-Edge Investment Platform

0:00 – Yield Exchange and Idle Strata Cash

0:00 Yvette Wu: Morning everyone. So again, my name is Yvette Wu, I'm the CEO and co-founder of Yield Exchange. I'm here to share more about our digital platform, Yield Exchange. We're essentially here to help companies and stratas like yourself make more money on your idle cash. I just want to give a bit of background to how we came about, this technology platform. So I actually come from banking. I worked at Vancity Credit Union for almost a decade and I was their head of enterprise risk.

0:32 And so you can imagine, being the enterprise risk leader I had to really engage with all the departments across the credit union, and it was through this journey that I ended up connecting a lot with our treasury teams, and I saw firsthand just how much friction and just wasted money through all the middle people that go through, like, the money goes through many hands. And GIC deposits are a part of any financial institution's book of business.

1:07 When you think of a financial institution and they need liquidity, cash on hand, GICs is a great option for them. And so that's when they might go out into market and try to get either personal folks to invest in GICs, or companies or even municipalities. But when you think about a financial institution, they all have different liquidity positions. At one particular moment a financial institution might have a surplus of liquidity, and when they're in that type of situation they're not really going to be giving you the most competitive rates, because they don't actually need that cash.

1:45 And then in other instances the financial institution, maybe a month passes and they actually really need more liquidity in their bank or credit union, and at that point they will be more competitive with their rates because they need this cash injection into their financial institution. And when they are in this position, sometimes the banks or credit unions will actually leverage a middle person like a deposit broker to go out and get this cash in for them.

2:15 When they use these middle people, what happens is a big chunk of the commission goes towards these firms, because they are going out doing these deals and bringing in business, so it makes sense.

2:26 – How the GIC Marketplace Works

2:30 Yvette Wu: But how Yield Exchange was really born was seeing how there's a new way of doing this type of business, and leveraging technology actually makes a lot of sense. Yield Exchange essentially is kind of like, if you like, a Facebook marketplace, where we're connecting people who have cash, or organizations with cash, directly with the financial institutions who want to buy this cash. And we're removing the middle person to do these deals, because now there's this platform that's completely free to you to leverage, to go on and share with the financial institutions, hey, I've got $100,000, what's the best rate you can offer me?

3:15 And then all the financial institutions on the other side of our platform then compete for your business. So gone is the middle person needed in this process, and you as the strata corp in this case can be assured that you're really going out and getting hopefully the most competitive rate out there. So that's really the premise of Yield Exchange. I just want to reiterate, this platform is completely free for you folks to use.

3:46 Very transparently, how we make money, because obviously we need to be financially sustainable, is we actually charge the financial institutions. We charge them a subscription fee to leverage our platform. There's no tech integration involved, so think of it as almost like a Gmail account. So if you were to sign up for an account it takes roughly maybe one minute to get your account up and running. No personal information is recorded through Yield Exchange, it's all public information that we request.

4:22 And no funds, no money actually is held via Yield Exchange, we don't touch the money at any point in the process.

4:31 – Rate Comparison Case Study and Track Record

4:31 Yvette Wu: We're really there again to connect the strata corps, or any organization, directly with the financial institutions with the best rates possible. Just want to share a couple of use cases. Recently one of our BC First Nations clients leveraged our platform. They received, I believe it was 4.9 percent, from one of the big five banks that they were working with, and when they went through our platform they ended up getting 5.7 percent on their GIC opportunity.

5:04 It just goes to show how important it is to shop your investment with multiple different financial institutions. The other great thing about this platform is there's no commitment, so you can use it purely to shop and see, is my primary bank actually offering me the best rate, and use it as a double check. We really are here to add more transparency into this GIC market. What have I missed?

5:37 Let's see. Oh, and just, I know Yield Exchange, maybe you have not heard of us and you're like, how legit are these people or this organization? So we've been around for about four years now. Last year we hit over 1 billion in transactional volume. We have close to 500 organizations signed on to Yield Exchange, and roughly 150 of those organizations are actually municipalities across Canada. So I share that because, with municipalities, as you can imagine, these folks don't sign on to any type of technology readily.

6:20 They're quite risk averse, because obviously they're holding public funds. And the fact that they are leveraging this new technology and this new tool hopefully gives you some reassurance that this is definitely something that perhaps your strata should look into. Again, to try to get the best and most competitive rate for your strata, because every dollar counts in this environment.

6:40 – Platform Demo: Signup and Dashboard

6:47 Yvette Wu: Okay, so with that I'm now going to share my screen and do a demo, so you can actually see what the platform looks like. I won't be able to share with you all the different nuances, so this is more of a teaser if you will. If this does interest you, definitely sign up for an account and set up some time with someone on my team and we can walk you through the platform and share more information.

7:12 But let me just present one of my screens right now, and you'll get to see for yourself what this is all about. So first off, when you go to sign in you just go to yieldexchange.ca, put in your email and your password, and that's it. The other thing is, when you sign up for an account for your strata corp you can have multiple users. So Strata Corp XYZ, maybe you have five members that need to have access to the Yield Exchange platform to see what everyone is doing.

8:17 We can set up five different user logins for Strata Corp XYZ. And then once you sign in, you put in your email and your password, it'll take you to this dashboard view. This is a test site, so this is all made up, nothing about this is real. Resort Municipality of Whistler is in fact one of our deposit clients, but this is not their actual dashboard site, this is just to give you a sense of what it would look like for you.

8:50 So this dashboard gives you a summary of all the different things that are happening: review your offers, any pending deposits, or any active deposits that you might have.

9:00 – Posting a GIC Deposit Request

9:00 Yvette Wu: How you would use Yield Exchange in this instance is, you go to post request here, and it'll take you to this page where you get to fill out a very easy and short form. So here you can see, under product, a drop-down menu where you can choose between non-redeemable, cashable, notice deposit, high interest savings, or redeemable. So for this demo I chose a non-redeemable. Then you select the term length, so it can be months or days, it really is tailored to whatever your cash flow needs are.

9:37 So I had picked out months and put in 12 months. Deposit amount, it can be Canadian or US, and here you just throw in how much you want to invest, or how much money you are looking to throw into a GIC. Closing date and time: a calendar and a time stamp pops up. This is just to signal to the financial institutions, when do you want all their rates in to you by.

10:05 So this is kind of like the closing date and time for when they have to submit their rates to get in on this $100,000 GIC opportunity that you're looking for. And then date of deposit: this is approximate, but just a signal to the financial institutions when you plan on transferring the funds over to this GIC account. And then that's it. So this really takes about 10 seconds to fill out.

10:32 How other folks are leveraging this tool: as you can see there's an add additional request function here. When you press on this, another form pops up, it's the exact same one. Some of our municipality clients for example will put in the same information, so non-redeemable, put in again $100,000, but the only thing that changes is the term length. Because maybe they want to actually be more informed on, do I want it to be locked in for a 12 month term, or maybe 9 months, depending on what the rates are.

11:07 And then here you can fill out the exact same information in terms of closing date and time and the date of deposit. So some of our clients will fill in multiple of these additional requests to see the difference again in term length. So on that 100,000, what would a rate look like on a 12, 9 and six month term? This way you get all those rates in in one fell swoop, in a very clean summary table which I'll show you in a second.

11:37 The other way that folks are using these add additional request functions on our site is for laddering.

11:43 – Laddering Multiple Investment Requests

11:43 Yvette Wu: So maybe for example you do have 100,000 that you want to lock in for 12 months, but perhaps you have another 100,000 that you want to be a bit more liquid and you throw it in for a cashable instead. And so you can add multiple different investments all in one go. For the sake of this demo I just set up for one product, so I'm just going to remove this.

12:10 But again, hopefully this highlights just how easy it is to put in a request. And again, just to reiterate, just because you put in a request it doesn't mean you have to commit to any of the rates that you receive from the financial institutions. Okay, this is purely at this point just shopping. Once you fill this out you press next here, and it takes you to the screen where it shows you all the financial institution partners that we have on board.

12:40 We recommend to just pick invite all, because why not see what all the rates are that are available to you. And then press next, and then this gives you a summary of what you've requested, so 100,000 12 month term. And then you press submit, and that's all you do. So the closing date and time here is for May 16th, so while we wait for May 16th to happen, any time a financial institution submits a new rate you don't have to keep logging into the platform, you'll actually get email notifications that, you know, Lenin just sent you 5 point whatever percent on this 12 month 100K.

13:25 So you'll get these email notifications on an ongoing basis.

13:29 – Reviewing and Comparing Bank Offers

13:32 Yvette Wu: And when the closing date and time is due you can log into the platform and go to review offers. So let's go to review offers, and we'll see here. So here's the non-redeemable $100,000 12 month post request that we did. We got five offers on it. The highest was 6 percent and the lowest was 5.1 percent. So imagine if, in the previous screen in the post request, if I had put out multiple requests, you could see each of these line items below.

14:07 So if I had properly set up this demo I should have done this and had a 9 month 100K. You could see how many offers, and again you could compare what the highest and lowest rates are based on a 9 month versus a 12 month, really easily in this table alone. But let's double click into this $100,000 12 month term GIC. You go to view offers, and here you can see all the specific details.

14:37 So you'll see what institution gave you what rate, their minimum and maximum. So what this means is, Vancity here is offering 5.5 percent, the minimum amount they'd want you to invest is 50,000 and the max they would take is the full 100K amount that you've requested. The reason we have this is, sometimes if the financial institution wants to offer you a really exceptional rate, they might put the minimum as $100,000 because they don't want you to share this 100K with any of the other financial institutions.

15:17 The other way that this works is, some of our municipality clients, when they throw in like a $50 million deal, sometimes the financial institutions don't actually want the full 50 million, so they might put a maximum of $10 million on that 50 million. So that's why we give more flexibility for the financial institutions to signal to our deposit clients what their needs are. Anyway, so here what's really cool is, when you put in the actual amount, the platform will calculate the interest for you.

15:52 So say if you're contemplating, okay, maybe I'll do Vancity, and I also want to go with Prospera for the other 50K, so here it shows you the interest. And then up top it calculates the total interest earned, and also the weighted average interest up here. So it does all that math for you. The other really cool thing about this platform is you can have a counter offer functionality.

16:17 So perhaps you don't want to go with Prospera, or actually you see Lenin here is giving you 6 percent but you maybe want to do the deal with Vancity for whatever reason.

16:21 – Counter Offers and Rate Negotiation

16:29 Yvette Wu: You go to the counter offer button here and you can type in the six percent, and then press submit. In this scenario Vancity has three options. They can either accept your counter offer of 6 percent and it'll show 6 percent now. They can counter your counter offer, maybe they give you 5.75, and that's actually the absolute highest that they can offer you.

16:57 Because remember, at the very beginning of this presentation I was sharing with you, each financial institution has a different position, some of them really need liquidity, some of them don't, so this is why you see these differences in rates between all these financial institutions. So perhaps in this case Vancity, they can actually even decline your counter offer altogether, because they don't actually really want more money at this point, so 5.5 is the best rate that they'll offer you and they won't give you 6 percent.

17:30 But this function at least gives you that opportunity to negotiate with certain financial institutions that maybe you have an affinity towards. Once you decide on who you want to go with, so let's maybe pick Lenin in this case because they're offering the best rate, you throw in the dollar amount and then you press confirm, and that is it. From there a few more steps will happen, depending on if they are an existing financial institution of yours.

18:04 So if they are, then Lenin in this case will get a notification and the funds will get wired over to the GIC account. If they are a new bank account, there's a few more screens that will pop up, but the first thing is, we will send you wire information so that you can send the wire detail over to your primary bank to wire over to Lenin in this case, and we will start the account opening process.

18:30 – Account Opening and TSX Custodian

18:36 Yvette Wu: Sorry, I'm just going to cancel here. And in the demo with one of my team members, they can walk you through all those specifics. We have a couple of different channels. So if you know you will be investing pretty frequently into different GICs, you can actually fill in a Yield Exchange profile where we collect roughly 80 percent of what is required to open a new account.

19:08 And you can even upload all your documents, the corporate documents that are required for account opening, onto the Yield Exchange platform, and from there the financial institution can then come and collect that information to help expedite the account opening process. The other channel that we are launching in a couple of months is, we've actually formed a partnership with Toronto Stock Exchange. They would act as your custodian.

19:42 So again, Yield Exchange doesn't hold any of the funds, but in this case Toronto Stock Exchange being your custodian, they can then transfer the money to any of the financial institutions that are partnered with Yield Exchange. So this way you don't have to open any new accounts with anyone, it's just you go through Toronto Stock Exchange and they will send the funds over to the right financial institution.

20:09 Again, those details, happy to share more in a separate meeting if that is of interest. One more thing that I do want to share with you folks is… sorry, for some reason it seems to be stuck in limbo. Okay, there we go. I'm going to share my screen one more time and then we'll go to questions, because I know I've shared quite a bit of information with you folks.

20:36 – Scanning the Live Rate Board

20:41 Yvette Wu: Okay, so the other really cool thing that we have is, maybe you just want to scan the market. We've added this new feature, so when you have a free Yield Exchange account you can log in, go to my offers, and here, similar to RateHub, you'll see all the different available rates. So here ABC Bank is offering 4.99 percent on a non-redeemable, the minimum investment is 25K, the maximum is 100 million.

21:13 And then here's a 90 day cashable that's at 4.98. Again, these are all fake, these are not the real ones. We do have the real rates on our platform right now, so if you do sign up for an account you'll be able to see all that information. But this is a great way to just again scan the market and see what's available.

21:31 But we definitely urge you to, once you scan, it gives you a sense of where are the redeemables, non-redeemables sitting at at this current moment, and then you can go to post request and fill in this form to get the treasurers to send you a direct quote directly from them. Okay, I feel like I've talked enough, there's a lot of information. I will stop sharing and see if there are any questions.

21:56 – Q&A: Trust Accounts and Platform Fees

21:56 Ryan Grant: That was great, love to see the changes, and yeah, I think people are going to find that to be a really good experience when they give it a try. We do have some questions for sure. For a property management company arranging investments to be held in trust, does the agent need to set up a separate profile for each client which is the trustee for whom they are opening investments?

22:21 So would they have to set up a separate account for each of their clients, or can they have a management account and add clients in through Yield Exchange?

22:31 Yvette Wu: I believe you're asking, yes, perfect. We have that functionality, because similar to a property manager, sometimes we work with fractional CFOs and they manage multiple clients. So if that is your situation, send us an email, we'll set you up with a special account where you can nest all your different properties within your Yield Exchange login. So it's definitely doable, and you can then just log in and go with whichever property management or strata corp that you're managing at that moment.

23:11 Ryan Grant: Perfect. Another question is, do the financial institutions build your fee into their rates?

23:18 Yvette Wu: Yes, they do.

23:18 Ryan Grant: Perfect.

23:18 Yvette Wu: Yeah, and just to highlight the difference: with a deposit broker they charge 25 basis points for every completed deal, so that's 0.25 percent. Yield Exchange, we charge up to 0.05 percent on every completed deal. So, one, it's completely free for you to shop around regardless, and no commitment. Two, if you do end up doing a deal it's a fifth of… like, really truly such a nominal cost to the financial institution.

23:58 For them, if you think about it, it's less of a sales team to go out and grab these new deposits. They get access to new clients, and also on their end it's way more efficient. So the operational efficiency really improves on their end, and they're able to centralize a lot of their wholesale deposit operations. So for them, the five basis points is really a drop in the bucket.

24:27 And because we are so much lower than a deposit broker, we see on average 20 basis points higher in rates than market, because they're transferring over those savings directly to the client, instead of going through the deposit broker channel.

24:44 – Q&A: Deposit Insurance and Council Authority

24:49 Ryan Grant: Perfect. Another one is, is the credit rating of the institution shown anywhere?

24:54 Yvette Wu: Yes it is. You'll be able to filter, even, if you have certain criteria. And then also deposit insurance will also be there. So just so you folks know, BC credit unions actually are under what's called CUDIC, and it's unlimited, 100 percent insured. Not a lot of folks know about that. This is actually why a lot of our BC municipalities leverage credit unions a fair bit in their investment portfolio, and that's how they diversify.

25:26 And of course diversification is always a good thing. So again, this platform makes it a lot easier for you folks to not have to figure out who do I call to get a rate from, and how do I expedite the account opening process and all that great stuff.

25:43 Ryan Grant: Let's see: are strata councils able to invest on behalf of their strata?

25:49 Yvette Wu: I believe so. Yeah, if you have the proper governance. Maybe reach out, when you do open an account we can double confirm. I'm not as in the details, I have someone on my team who facilitates all these transactions, but I'm pretty sure it's fine.

26:10 Ryan Grant: Yeah, I'm not a licensed property manager so I can't really comment too much, but in my experience I believe it is doable by the councils. I think you need the multiple signatures, right?

26:24 Yvette Wu: Exactly, right.

26:24 Ryan Grant: Something like that, to be able to move funds around and all that type of stuff. But definitely something for them to look into with your team.

26:34 Yvette Wu: Okay, exactly. And a lot of the FIs, financial institutions, have e-signature capability, so on our platform we'll actually share with you who requires a wet signature versus a digital signature. So maybe that's the deciding factor for you, because perhaps it's the same rate, or maybe it's slightly higher with the ones who require a wet signature, but you'd rather go with a digital signature because it's so hard to get everyone to a bank.

27:01 So we have all that baked into the platform as well.

27:07 Ryan Grant: Perfect. Let's see: will the platform provide a monthly statement with current balances for all investments opened through it?

27:14 Yvette Wu: Yeah, so there is a summary. I didn't show you folks, but there's a summary table and it has a record of every action that you've taken: what was your request, how many bids did you get in. And then anything that is completed, it'll show you all those details. If you need a monthly report generated, we don't have that automatic, but we can do that for you as a side add-on, it's no problem.

27:48 Ryan Grant: Seems that's answered everyone's questions, I believe. That's it.

27:50 Yvette Wu: Awesome, well thank you again for having me.

27:54 Ryan Grant: Yeah, it was really great. And again everyone, please sign up on Yield Exchange and you'll be automatically entered into the raffle where you can win a $25 gift card. There's five gift cards that we'll be giving out. So thanks again for that contribution, Yvette.

28:16 Yvette Wu: Yeah, no problem. Thank you again, have a great day everyone.