The introduction of a new wrinkle in the way guaranteed investment certificates are sold could have an impact on the businesses of traditional deposit brokers who focus on these fixed-term investments.

Toronto-based Finizi Corp. has launched a website that allows clients to buy GICs under an auction-style system, says Daniel Shain, the company’s founder and CEO.

On the website, investors enter information about where they live and how much they want to invest; lenders then bid for that investor’s money through live auctions that typically run for about six hours.

Shain, who had worked for one of the Big Five banks as a financial advisor, says Finizi’s free online system makes the process of buying GICs much less murky for clients. He recalls how, when working at the bank, he would give customers different rates on their GICs and mortgages, depending, in part, on how knowledgeable a client was.

“A product such as a GIC is really a commodity,” he says. “There shouldn’t be a difference, in terms of the rate that you offer to the customers. I figured, ‘Why can’t we put the power back into the hands of consumers? Why can’t we avoid this need to shop around and negotiate with institutions, which is very time-consuming?'”

Shain hit upon the idea of selling GICs in the same way that other commodities, such as airline seats, are sold — through specialized sellers on the web, on the basis of price. Finizi, which stands for “finance made easy,” will also offer personal finance tips and tutorials on its website.

Envisioned as a free service for consumers — Finizi gets a finder’s fee from lenders — the online platform currently has a small list of participating financial services institutions, including FirstOntario Credit Union, Luminus Financial, Peoples Trust Co., Outlook Financial and Teacher’s Credit Union.

Shain believes more financial services institutions will sign on with Finizi as they realize that they can attract GIC investors for a smaller commission than what they would pay a GIC broker. Shain also believes that financial services institutions have a better opportunity to develop a relationship with investors using his system than they would through a broker.

“I haven’t spoken to any of the brokers,” Shain says. “I can’t imagine that they would be too happy with what I am doing, [as Finizi] effectively replaces the GIC broker as the channel of choice [for buying GICs].”

So, should deposit brokers be worried? David Newman, founder of Oakville, Ont.-based brokerage Fiscal Agents Financial Services Group, doesn’t believe his channel has anything to fear from Finizi: “I’m not sure really how [Finizi] can find a marketplace for this.”

Newman has given Finizi’s website a trial run. “People can go on any of the big media sites and see lists and lists of who is offering what,” he says, “and they are no different than the rates that were shown on the [Finizi] site.”

Newman argues that the role for GIC brokers is not going to fade away anytime soon because dealing with brokers and paying them a commission makes sense for major lenders. “We, as a firm, raise hundreds of millions of dollars a year,” he says. “When we go to the issuers, we are bringing all of that money to the table, and they deal with us rather than a variety of individuals coming together. So, it is cheaper for us to do it; the rate advantage is always going to be with the broker.”

Newman believes Finizi will have more success by branching into brokering mortgages and car loans, for which consumers would welcome a third party between them and the lender.

Finizi’s platform could service any sector of the financial services market in which products utilize a discretionary pricing model, Shain says. Doing the same thing for mortgages and auto loans will be more difficult, he admits, as the selling cycle is longer and far more information has to be gathered from the customer.

“We are in the process of figuring out how that whole system is going to look,” Shain says. “Chances are we are going to roll out car loans before we roll out mortgages.” IE