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Compare digital banks in Canada
Learn how digital banking could benefit you and how you can get started today.
Compare digital banks in Canada
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There are more digital and online banking providers already operating in Canada or about to launch. Many are not actual banks. Instead, they are private financial companies partnered with banks, credit unions and other financial institutions to bring similar products and services. Learn about them below.
- KOHO. Full-service digital banking provider based in Toronto. it also offers a prepaid VISA card with its individual and joint banking accounts. Read our review of Koho here.
- Oaken Financial. This digital bank that was launched in 2013 as the direct “deposits” arm of Home Bank. Read our review here.
- Outlook Financial. This digital banking provider was launched in 2000 as a division of the Assiniboine Credit Union, one of the most respected financial co-operatives in Canada. Read our review here.
- AcceleRate Financial. This digital banking provider that was launched in 2010 as a division of the Crosstown Civic Credit Union, which is a well-established financial institution in Manitoba. Read our review here.
- Achieva Financial. This is one of the oldest digital banking providers in the country (launched in 1998). It was opened as a division of the Cambrian Credit Union, based out of Manitoba. Read our review here.
- Implicity Financial. This is a digital banking provider that was created by Entegra Credit Union. Read our review here.
- Alterna Bank. This is a digital banking provider Alterna Bank was launched in 2000 to act as the digital banking arm of Alterna Savings. Read our review here.
- Motive Financial. This is a reputable digital bank that was launched by Canadian Western Bank. Read our review here.
- Hubert Financial. This is a well-known digital bank that was launched by Sunova Credit Union (which is one of the top 100 credit unions in Canada). Read our review here.
- Impak Finance. Based in Quebec, this digital banking provider’s focus is on ethical banking and social responsibility.
- Quest Bank. Based in Toronto, Quest Bank is the banking division of online brokerage Questrade. Their application for a banking license is currently being reviewed.
- NorthOne Business Banking. This challenger bank is based in the US but is headquartered in Toronto. Its focus is small businesses and startups.
- Neo Financial. This digital banking app offers a cash back Mastercard and savings account with a focus to streamline your finances.
Like the name suggests, online banking is the activity of dealing with your finances through the internet using virtual accounts. An online banking provider operates digitally, usually from an app or website, rather than from a physical branch or office. Digital banking is a fairly loose, umbrella term that includes online banking, mobile banking, budgeting apps, and challenger banks (which we’ll explain below).
Pros and cons of online banking
- Higher interest rates. Most online banks offer higher interest rates because of their low overhead costs.
- Low to no fees. Most online banks don’t charge monthly fees or require you to carry a minimum balance.
- Convenience. You can access all your accounts and investments through a banking app on any device 24/7. Make transfers, pay pills and track your spending and savings goals easily.
- No physical locations. Online banks usually don’t offer face-to-face customer service because they don’t have physical branches.
- Limited product offerings. Online banks have yet to match traditional banks with their range of product offerings which is sometimes still limited to basic accounts and investments.
- Limited ATM access. Although this isn’t so bad if an online bank is a subsidiary of a traditional bank and uses their ATM network, this could still be a limitation if you want quick access to cash.
Online banks, like Tangerine or EQ Bank, are digital banks that usually don’t have physical branches (or they rely on the branches of other physical banks) and customers use mobile banking apps to control their money. These online-only banks are built on existing infrastructure and closely mimic traditional banks.
A challenger bank, like Revolut or N26, is a completely digital bank that doesn’t use any existing legacy systems to operate. Unlike regular online banks, challenger banks don’t use any physical infrastructure or digital operating systems that are already being used by existing financial institutions. The technology used by these fully digital banking providers is developed from scratch. They get their name from their roles as challengers to traditional banks, like the big 5 Canadian banks.
What is app-based banking?
App-based banking is any sort of financial management that you do primarily through an app. It’s basically another name for digital banking but based solely through an app. Banking apps are popular tools in the online banking world and can help you save, budget and manage your spending. There are several advantages to app-based banking:
- Banking access in your pocket
- Many companies offer 24/7 access to banking support
- Instant spending notifications
- Many banking apps offer ways to automatically save money
Things to know about app-based banking
Using your phone as your main point of contact with your bank can save you time and give you more control over your finances, but there are a few things to be aware of.
Different types of app-based banking
- Traditional bank apps. App-based online banking doesn’t only apply to challenger banks. It has also become increasingly possible to bank on your smartphone with traditional banks like the big 5. Check out the top 5 banking apps in Canada here.
- Apps that help you save. One of the most common reasons for people heading away from traditional banks and towards app-based online banking is how easy app-based banking makes it for people to track, save and manage your money at a glance. Budgeting apps like Emma and Mint are examples.
- Prepaid card apps. Some companies, like KOHO and Stack, let you control a prepaid debit card from an app so you can track your transactions and see exactly how much money you have left.
- Investment apps. Some apps help you save and let you invest in stocks from your phone so that you have more control over your finances, like Wealthsimple.
Compare apps offering rewards
Digital banking providers need to have the same banking licenses and approvals as existing Canadian banks before they’re able to offer products and services to consumers. These new banks will be regulated by the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC) in the same way that existing banks are regulated.
Your deposit of up to $100,000 with an Canadian Deposit Insurance Corporation (CDIC)-insured bank is protected by the Canadian government. This means if something were to happen to the bank, your money (up to this amount) would be safe. Note that some of the digital banks mentioned in this guide are not yet considered banks and haven’t yet been licensed or CDIC-insured.
How to get started with digital banking
If you’re interested in digital banking, simply visit their website and sign up. If you want to join one of the new digital bank providers that have yet to open in Canada, you can join their waitlist by visiting their website. When they launch products, those on the waitlist will be the first to know and the first to receive access to these new products.
Compare digital savings accounts in Canada
Interested in opening your first online savings account? Compare the products below from some of the best online banks in Canada.
Online banking is becoming more and more popular – and for good reason. Besides the convenience they provide, digital banks often cater to specific niches and groups and they’re known for offering innovative apps. But before you ditch your current traditionally bank, take the time to read through all of the fine print to make sure the bank you’re interested in is as good as it sounds then compare digital banking providers to find the right one for you.
Frequently asked questions
More on digital banking
Earn cash back when you link your bank account and make eligible purchases with this innovative mobile app.Read more…
Sign up for a bank account or GIC with this online bank to earn high interest rates and pay no monthly fees.Read more…
Saving for a holiday? A house? Retirement? Budgeting apps could help you get a hold of your finances.Read more…
Planning a trip abroad? Make sure you have a banking app set up and ready to use abroad. Check out our guide to find the best one for you!Read more…
Open Banking can pave the way to new products and services for Canadians. Find out all you need to know from APIs to regulations with our guide.Read more…
Wallet helps you organize your money and personalize budgets and goals. We take a look at its features, pros, cons and premium options.Read more…
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Ampli cash back app review
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What is Open Banking?
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Revolut vs Monzo
We take a closer look at two leading challenger banks. While lumped together, Revolut and Monzo offer distinct features. Take a closer look here.
Starling Bank review
Is this app-only challenger bank available to Canadians? Read our review to get the low down on all of Starling’s features and benefits.
Digital banking for students
Revolut, Monzo, N26… their names have been around for a while and loads of young people are opening accounts with them. Should you do the same?
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