In the Eye of the Storm

The credit crisis is posing big challenges for financial services providers, for sure. But it’s also opening up big opportunities

by Ryan Smith

Bill Graham maintains a confident and relaxed attitude in his tidy corner office on the top floor of the Scotiabank building in downtown Red Deer. He may seem far removed from the angry seas of the global economic storm, but the former high school teacher is right in the thick of it. He admits the situation has him navigating through “uncharted waters,” but the founder, president and CEO of Rifco Inc. (that stands for Repair Industry Finance Corporation) remains buoyant.

“We’re in the midst of a generational economic downturn, and I don’t think you’ll find any manager of a financial services company who doesn’t wish the sailing was smoother than it is, but at the same time, if you’re a true entrepreneur, you’re probably enjoying the challenge,” he says.

From bankers to stockbrokers to insurers, everyone in the finance business has been pulled into a money-sucking whirlpool, and what little cash lenders are now willing to part with is only available at premium prices. Nonetheless, Alberta has been on high economic ground for some time, and the current monetary drain is offering many locally based financial services companies a chance to come out of the crisis in better shape than before it started.

With strong growth in the recent past – Rifco ranked on Alberta Venture’s Fast Growth 50 list as recently as 2008 – and a healthy outlook for the future, Graham’s not worried his car loan company will sink anytime soon. In fact, the current global credit crisis is presenting opportunities along with the challenges, and his toughest decision is whether or not to proceed with caution or power full steam ahead. The dilemma is creating conflict in his company’s boardroom, he allows. Rifco’s growth-focused management team wants to increase market share and develop new customer relationships, while its external board members are inclined toward a more conservative course.

“There is some tension, but I think it’s healthy and appropriate, and a balance is being met,” he says.

As Graham describes it, Rifco is a small player in a big automotive finance market that is shrinking due to fewer auto sales, which is the result of diminished consumer confidence and more stringent requirements to qualify for loans. However, even as credit tightens and the market contracts, Rifco, which loaned nearly $40 million to car buyers last year, has an opportunity to increase its share of the market, mainly because some larger multinational players, including HSBC and Wells Fargo, are pulling up anchor and leaving Canada – along with hundreds of millions in business for others to haul in.

“We have more opportunity in the next 24 months than we could possibly take advantage of…. We’re a niche player and our niche is getting bigger,” Graham says. “For us, the limiting factor to growth is access to capital. We have good funding relationships, but no one is interested in backing unlimited growth rates right now.”

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