Digital banking in Canada in 2023

Digital banking in Canada is here to stay. In a recent January 2023 Finder survey, we asked more than 1,850 Canadians asked where they plan to open a bank account or banking product and almost 1 in 4 plan to open an account with a digital bank (24%).

Use our guide below to compare digital banking providers in Canada and see which traditional banks offer digital banking though their websites and banking apps. Plus, learn about new banks in Canada, challenger banks, mobile banking apps, and the best online banks in Canada.

What is digital banking?

Like the name suggests, digital banking (also called online banking) is the activity of dealing with your finances through the internet using a virtual bank account. A new bank or 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 (also called new banks, which we’ll explain below). And banking online has steadily been increasing in popularity.

What is a digital bank?

Digital banks—also known as challenger banks or direct banks—operate entirely online and are designed to be cheaper and more flexible than traditional banks.

Ultimately, the aim is to compete with the big banks like TD Bank, CIBC, RBC, Scotiabank and BMO. In response, some big banks have actually created their own digital banks to keep customers and profits from leaking away to competitors.

For example, Tangerine is owned by Scotiabank, CIBC owns Simplii Financial and Motusbank is a subsidiary of Meridian Credit Union.

Most digital banks were founded in the decade following the 2008 global financial crisis. The number of digital banks in Canada is small but growing, steadily gaining ground in a market dominated by financial industry giants.

Compare some of the best digital banks in Canada

Bank	Notable Features	Products	Learn more
Simplii Financial	Online banking arm of CIBC (used to be PC Financial) Uses CIBC’s network of over 3,400 ATMs across Canada No fees and $0 global money transfers Offers credit, mortgages and investments Moving to Canada? you can open an account online before you arrive	Chequing accounts Savings accounts GIC Cash-back Visa Global money transfers	Go to site
EQ Bank	Online banking arm of Equitable Bank High interest accounts No fees Unlimited transactions Lock in a 4.75% rate on a 1 year GIC	Savings account GIC TFSA RSP	Go to site
KOHO	No account fees Earn cash back on the money you spend Free Interac e-Transfers Manage your budget better Avoid NSF fees	Prepaid Mastercard Savings account Credit building	Go to site
Neo Financial	High interest rate No account fee Unlimited free transactions Unsecured and secured cashback credit cards available	HISA Credit Card Secured credit Card	Go to site
Tangerine	Subsidiary of Scotiabank Uses Soctiabank’s network of over 3,500 ATMs across Canada No fees for daily banking Offers credit, mortgages and investments	Chequing account Savings account GIC TFSA RRSP RIF US dollar account Line of credit Mortgage Cash-back Mastercard	Read Review
CI Direct Investing	Earn interest No account fee No restrictions	Savings account	Read Review
motusbank	Online banking arm of Meridian Credit Union Access to over 3,700 ATMs across Canada No fees Offers credit, investments, mortgages, personal loans	Chequing account Savings account GIC TFSA RRSP Mortgage Personal loan Line of credit	Read Review

Compare traditional banks and credit unions that offer online banking and digital banking

Bank	Can open an account online?	Account options	Popular account option
Scotiabank		Chequing accounts Savings accounts	Scotiabank Preferred PackageGo to site
TD Bank		Chequing accounts Savings accounts	TD Unlimited Chequing Account Read Review
BMO		Chequing accounts Savings accounts	BMO Performance Chequing Account Read ReviewGo to site
RBC		Chequing accounts Savings accounts	RBC Signature No Limit Banking Account Read Review
CIBC		Chequing accounts Savings accounts	CIBC Smart Account Learn more
HSBC		Chequing accounts Savings accounts	HSBC Premier Chequing Account Read Review

See more digital banks in Canada

There are more digital and online banking providers already operating in Canada or about to launch. Many of these new banks in Canada 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.

Full list of digital banks, financial apps, and new banks in Canada

A-Z list of virtual banks, digital banks, new banks and financial app reviews

Pros and cons of online banking and digital banking

What’s the difference between a digital bank and a challenger bank?

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:

Things to know about app-based banking from new banks

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.

• Some apps may require credit checks

  If you’re planning to apply for a new chequing account or credit card, your bank may pull your credit file in order to assess how likely you are to overdraw the account.

• Your money may not be protected the same way it is with big banks

  Most banks are insured by the CDIC, which means your deposit of up to $100,000 is backed by the Canadian government. Not all app-based banks have this same protection. You can view CDIC’s Members List to learn if your bank is CDIC insured.

• App-based banking doesn't always afford the same rewards as traditional banks

  App-based banks aren’t always able to offer the financial rewards, such as signup bonuses, that are common at many big banks. This varies by institution and is not always the case.

• If you forget your PIN or lose your card, most app-based banks won't panic

  A benefit of an app-based bank is having full access to your account at all times. Lots of app-based banks allow you to freeze your account if you lose your card, so if you find it again you can just unfreeze the card in the app. If you forget your PIN, you may even be able to answer security questions in the app.

• Some banking apps link to your pre-existing bank accounts and show you ways to spend better

  Not all app-based banks are banks in the traditional sense. Some banking apps work alongside your pre-existing accounts to gather all your spending data in one place, offer you insights into the way you spend your money and suggest ways to improve your finances.

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 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.

Is digital banking safe?

Digital banking providers need to have the same banking licences 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 a 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, compare the best digital banks in Canada 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.

Bottom line on digital 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.

Online banks, new banks and digital banks FAQs

• How can I tell if a digital bank is insured by the CDIC?

  You can view CDIC's Members List to learn if your bank is CDIC insured.

• Are new banks or digital banks cheaper than traditional banks?

  Challenger banks can afford to slash fees, because of financial technology (Fintech) that makes it possible to perform many everyday banking functions without leaving your home or dealing face-to-face with bank representatives.

  Usually, there are no physical branches. Instead, customers access accounts, manage their money and contact customer service representatives through mobile apps, online banking, phone, text messages and email.

  With very low overhead costs, many challenger banks are able to offer zero monthly account fees, low-cost international money transfers, free domestic transfers and low-fee investment options.

• How do I get help with my digital banking if there are no bank branches?

  Digital banks often have multiple ways to contact customer service, including via online chat, email and phone. Sometimes you can visit a traditionally bank's branch that is a partner with your digital bank. Check with the bank you're interested in to find out how they handle customer support before signing up.

• Why does the Canadian version of the bank I'm interested in offer less features?

  Overseas banks that come to Canada aren't always able to offer the same features to Canadian users because of regulation. In some cases the bank will roll out new features as it expands, but not always. Banking regulations vary from country to country, making it difficult to offer the same features in every country.

• Are digital banks safe?

  All banks operating in Canada must be licensed by the federal government. Such licensed banks are referred to as "chartered banks" and are subject to the following:

  • Bank Act. Chartered banks are subject to the federal Bank Act, which has 3 main goals: protect customers' savings, protect cash reserves and promote competition to reinforce the efficiency of Canada's financial system.
  • OSFI. All domestic and foreign banks operating in Canada are regulated by the federal Office of the Superintendent of Financial Institutions (OSFI), which supervises federally-regulated financial institutions and pension plans.
  • FCAC. The Financial Consumer Agency of Canada (FCAC) protects consumer interests by enforcing protective measures and educating consumers about their rights and how to manage money.
  • FINTRAC. Federally-regulated financial institutions must comply with policies outlined by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) that are designed to prevent money laundering, terrorist financing and fraud. Suspicious transactions must be reported, and, if necessary, relayed to the appropriate law enforcement body for further investigation.
  • CDIC. The Canada Deposit Insurance Corporation (CDIC) protects customer deposits up to $100,000 per customer per institution. In the event a bank fails, depositors won't lose all their savings. Coverage applies to chequing accounts, savings accounts, foreign currency accounts, GICs, mutual funds, ETFs and even cryptocurrency accounts.

  Non-chartered financial companies aren't necessarily bad or unsafe. However, you won't receive the same level of protection that you would with a federally regulated financial institution.

  Challenger banks know that security is a big concern for customers. Measures that are typically taken to protect customer data include data encryption, two-factor authentication, SSL certificates, strong password requirements and constant fraud monitoring. Before opening an account, check with your digital bank to see what security measures it has in place.

• Why should students choose digital banking?

  Challenger banks or digital banks were born with the aim of "challenging" the big traditional banks (like the Big Five), by offering better deals, bureaucracy-free accounts and better online banking services. Challenger banks don't usually offer dedicated student accounts, but their basic chequing account options come with a series of features that make quite a lot of sense for the typical student who doesn't know much about banking and whose monthly budget is a bit stretched.

  In general, young people seem to like digital banking. A lot, actually. There's a bunch of different reasons behind it, but mostly:

  • Accounts are fast to set up. Opening a bank account takes a few minutes and you'll get the card within a few days.
  • It's mobile-friendly. Digital banks come with an app that usually looks good, works well and does cool stuff. For example, most show you data about where and how you spend most of your money. Also, most apps give instant notifications when you use your card to help you keep track of what you spend.
  • You don't need to actually talk to someone to open an account. Don't shrug your shoulders, we know you like this. You can even set up your account while waiting for your take out order to arrive with that Netflix crime documentary on in the background.
  • Free to join and low fees. Most challenger banks offer a free basic account and in most cases won't charge you for basic banking services such as ATM withdrawals, bank transfers and card payments.
  • It can help you save money. When you're a student, budgeting is an art form – how many rum and cokes can you afford if you still want to eat three decent meals a day? Digital banking apps often have features that can help you budget, by gathering data on your spending habits and regrouping them in clear, colourful graphs.
  • Young brands. For many young people, traditional banks are the banks of their parents. Challenger banks have been able to establish themselves as cool brands. That kind of feeling, although subconscious, often plays a part when you're choosing a product.

• What are other names for digital banking?

  These three terms are often used as synonyms and usually refer to the same group of companies. However, there are some distinctions to make:

  • Challengers. It's a general word that refers to the idea that these companies are "challenging" traditional banks and their power in the market. Not all challengers are banks. Companies like KOHO, for example, provide services to help you save and spend your money in non-traditional ways.
  • Challenger banks. Challengers and digital banking apps are only entitled to call themselves a "bank" if they have a full banking licence, such as Monzo and N26.
  • Digital banking (apps). Challenger banks are usually digital-only, but there are exceptions. The term "digital banking apps" also encompasses budgeting apps such as Mint or Emma, which don't actually hold any funds, but use Open Banking to connect to your current account and help you manage your finances.

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