Canada's banking system is world renowned for safety. The Canada Deposit Insurance Corporation (CDIC) makes Canadian banks safe. This protects your deposits up to $100,000, meaning if a CDIC-insured bank in Canada ever fails while holding your money, the federal crown corporation will refund you up to $100,000. Over the past five decades, the CDIC has saved over 2 million Canadians from losing a collective $26 billion in deposits.
While Canadian banks are amongst the best worldwide, what is the best bank in Canada? This article will empower you to compare the big-six banks with the emerging fin-tech competitors in Canada. Additionally, it will explain the specific services offered by each type of bank. Continue reading to learn more.
Source: World Economic Forum 2020 Annual Report
RBC, BMO, Scotiabank, CIBC, TD, and NBC are the six largest banks in Canada. Each bank has a different focus, but all offer similar products and services, such as chequing accounts, savings accounts, credit cards, loans, lines of credit, and foreign currency exchange. The following table will help you compare them.
|Specialty||Capital Markets||Retail Banking||Event Sponsorships||Travel Credit Cards||Canadian Focused||Quebec Focused|
|5-Year Stock Return||31.08%||27.73%||-5.13%||28.09%||16.65%||52.93%|
|Insurance Products||Home, Health, Car, Leisure, Life, Travel, Credit Protection, Annuities||Home, Car, Travel, Life, Health, Credit Protection||Home, Car, Life, Health, Travel, Credit Protection||Life, Health, Travel, Annuities||Travel, Credit Protection||Home, Car, Life, Travel, Credit Protection|
|Global Offices||North America, Europe, Asia-Pacific, Caribbean, South America||North America, Europe, Asia-Pacific||North America, Europe, Caribbean, Asia-Pacific, South America||North America, Asia-Pacific, Caribbean||North America, Europe, Asia-Pacific, South America||North America, Europe, Asia|
Market Cap as of July 5th, 2022. Branches/ ATMs as of March 1, 2022.
RBC is Canada's largest bank in terms of market Capitalization. Founded in Halifax in 1884, RBC now has a market cap of $196.5 billion. As of March 1, 2022, the bank has 1,210 branches and 4,200 ATMs. RBC trades on the Toronto Stock Exchange under the ticker $RY.
RBC offers many services to clients, including credit cards and chequing accounts with monthly fees ranging from $4 to $30. Additionally, RBC clients can receive mortgages, savings, insurance, and investment accounts. RBC has comprehensive insurance options such as home, car, health, life, travel, and more.
Although RBC operates across North America, Europe, Asia-Pacific, Caribbean, and South America - these are mainly administrative offices. RBC's retail branches are primarily in North America. Aside from retail banking, RBC is the premier investment bank in Canada.
TD is Canada's second largest bank, with a market cap of $180.6 billion. It was founded in 1855 and trades on the Toronto Stock Exchange under the ticker $TD. As of March 1, 2022, TD has 1,091 branches and 2,800 ATMs
TD specializes in retail banking, with the largest branch network in Canada and the United States. The bank offers similar services to the other Canadian banks, focusing on products for students and new Canadians. For example, TD has a "TD First Class Travel Visa Infinite Card," which is an excellent option for Canadians that frequently travel. Additionally, TD branches have extended hours to make banking more convenient for clients.
In addition to retail banking, TD is also a significant provider of commercial banking services. This is helpful for businesses looking for products such as loans, lines of credit, and treasury management.
Scotiabank is Canada's third largest bank by market capitalization, with a market cap of $110.5 billion. It was founded in Halifax in 1832 and trades on the Toronto Stock Exchange under the ticker $BNS. As of March 1, 2022, Scotiabank has 953 branches and 3,600 ATMs.
Scotiabank focuses retail operations across Canada, Latin America, and the Caribbean. The bank offers similar services to RBC and BMO with a few unique twists. For example, the Scotiabank StartRight Program is great for newcomers to Canada. The program is designed to provide you with personalized credit cards, auto loans, and mortgages to simplify your landing in Canada.
Additionally, Scotiabank is known for its extensive foreign exchange services. This is helpful for Canadians that frequently travel or do business internationally.
BMO was founded in 1817, making it Canada's oldest bank. It is headquartered in Montreal and is Canada's fourth largest bank in market capitalization. The bank has a market cap of $93.5 billion and trades on the Toronto Stock Exchange under the ticker $BMO. As of March 1, 2022, BMO has 900 branches and 2,200 ATMs
BMO offers similar services to RBC, including chequing accounts, mortgages, investments, savings accounts, and insurance. However, BMO shines for their student cashback credit card. The no-fee card offers a 3% cashback on grocery purchases making it amongst the highest in Canada. BMO’s Eclipse Visa Infinite is also one of Canada's best travel rewards credit cards.
BMO is also unique in extending its reach to the United States. BMO Harris has 600 branches in 9 states.
CIBC is Canada's fifth largest bank, with a market cap of $71.3 billion. It was founded in Halifax in 1867 and trades on the Toronto Stock Exchange under the ticker $CM. As of March 1, 2022, CIBC has 1,024 branches and 3,075 ATMs.
CIBC's focus is mainly in Canada, with retail branches across the country. The bank offers similar services to the other Canadian banks with a few unique features. For example, CIBC has a "CIBC Aventura Visa Infinite Card" which offers 2 points per $1 spent on travel, four complimentary lounge visits (annually), and a rebate on NEXUS application fees.
Additionally, CIBC has an extensive small business banking program with products such as loans, lines of credit, and merchant services. This is helpful for Canadians looking to start or grow their business.
National Bank of Canada is the sixth largest bank in Canada, with a market cap of $33.9 billion. It was founded in 1859 and trades on the Toronto Stock Exchange under the ticker $NA. As of March 1, 2022, NBC has 422 branches and 939 ATMs.
NB's operations are focused in Canada, with a significant presence in the province of Quebec. The bank offers similar services to the other Canadian banks with a few unique products. For example, National Bank has a "Youth Program" designed for Canadians aged 18-25. The program offers no monthly fees on select chequing accounts and reduced fees on other products.
Additionally, National Bank is the only big bank in Canada that offers commission-free trading when you buy stocks on their trading platform. They are also known for extensive foreign currency exchange services. This is helpful for Canadians that frequently travel or do business internationally.
Canada's chartered banks offer many services to their clients. While you may be familiar with your bank's retail banking services like taking deposits and transferring money, they provide additional benefits to corporate clients and investors. Interestingly, banks in Canada operate as umbrella companies owning multiple business segments. This section will explain the different segments and the services/ products offered.
|Business Segment||Services Offered|
When you walk into a bank branch, you are walking into a retail banking location. Retail banking is the most visible and well-known segment for banks in Canada. It is also the most important segment for the big-six banks, making up most of their profits. Typical retail products include mortgages, line of credits, credit cards, and saving/ chequing accounts. Corporate banking is a similar segment that provides the same services to corporations.
The wealth management segment is responsible for advising clients on how to grow and protect their money. Usually, banks have in-house investments to offer you. These range from mutual funds to Guaranteed Investment Certificates (GICs). You can open a TFSA or RRSP at your bank to invest in these products.
Many banks also have a private wealth management division. For example, BMO Nesbitt Burns and CIBC Wood Gundy. The private banking segment is a specialized service offered to high-net-worth individuals. It provides clients with a personal representative to help them navigate the bank's different components. For example, they will help you receive business lines of credit, personal mortgages and even access the capital markets team to help you make corporate acquisitions.
Capital markets can be defined as the spaces where financial instruments are traded. For example, an entrepreneur may access capital markets to find investors. Those investors may eventually want to exit their investment so that they will sell their ownership within the capital market. As a result, the capital markets segment is responsible for funding and trading securities on behalf of clients.
Interestingly, investment banks are divided into two sections that aren't legally allowed to communicate. The buy-side is responsible for making investment decisions on behalf of their clients (e.g. pension funds, endowments, insurance companies). The sell-side is responsible for helping companies, and governments raise money by issuing securities (e.g. stocks, bonds) in the capital markets.
|Deposit Accounts||Credit Cards||Investments||Mortgages|
Online banks are emerging as the new method for Canadians to bank. Many citizens prefer online banks due to the lower fees they charge. While the big-six banks charge account fees up to $30 monthly, online banks don't. The savings result from the economics of online banks. For example, online banks don't need to pay rent for branches, teller fees, and more. As a result, they can pass on the savings to their customers.
However, online banks don't provide the variety of services the larger banks do. For example, online banks are generally retail focused and don't partake extensively in wealth management, commercial banking, and capital markets. If they offer wealth management services, it will generally be through a robo-advisor.
There are even products missing within the retail banking segment. Today, most online banks offer deposit accounts and credit cards. Most offer mortgages and are beginning to provide investment products. While the suite of services will change with time, it's essential to be aware of them now.
Additionally, online banks have no branches. This means customer service will be limited to online chats, phone or email. Depending on the bank, you may be limited to different options. For example, Tangerine removed live chat support last year.
Some online banks have ATM partnerships which enable you to deposit and withdraw cash. For instance, Simplii is owned by CIBC, which lets customers perform free banking with any CIBC ATM across Canada. However, Simplii customers aren't able to speak with CIBC tellers. Below you can find more information on the top online banks in Canada.
Tangerine is one of the most popular online banks in Canada. They are owned by Scotiabank but operate independently. Tangerine offers no-fee bank accounts, chequing, and savings. They also provide GICs, mortgages, and loans. Customers can open an account with as little as $0.
Tangerine was founded in 1997 under the name ING Direct. The Dutch bank sold the Canadian subsidiary to Scotiabank in 2012 for $3.1 billion. By 2016, Tangerine grew to over 2 million clients with $39 billion in assets.
Simplii Financial is the direct banking subsidiary of CIBC. They offer no-fee bank accounts, chequing, and savings. All of these accounts have no minimum balance requirements. Additionally, Simplii offers investment and lending products. For example, you can choose between secured, and personal line of credits.
Simplii Financial was founded in 2017 when CIBC and Loblaw Companies announced they would be exiting the 20-year PC Financial partnership. Shortly after, all mortgages, deposits, and investments were transferred to CIBC, while Loblaw Companies retained the credit card portfolio.
NEO Financial is a new entrant into the Canadian market. They offer no-fee bank accounts and Mastercard credit cards. NEO also recently included mortgage and investment services. Customers can open an account with as little as $0.
NEO was created in 2019 by Andrew Chau and Justin Ferrer - the founders of SkipTheDishes. The company started with the launch of NEO Mastercard, which provided cash back and points. In 2022, NEO received unicorn status, meaning the business valuation surpassed $1 billion.
EQ Bank is a subsidiary of Equitable Bank. They offer no-fee bank accounts, chequing, and savings. EQ Bank is renowned for their high-interest savings account, which typically features the highest rates in Canada. Customers can open an account with as little as $0. Additionally, EQ Bank offers GICs, RRSPs, TFSAs, and mortgages.
EQ Bank was launched in 2016 as a digital subsidiary of Equitable Bank. The goal was to provide Canadians with a simplified banking experience. Since then, EQ Bank has seen rapid growth with over $7 billion in deposits.
Wealthsimple is a new entrant into the Canadian market. They offer no-fee bank accounts and prepaid Visa cards. Customers can open an account with as little as $0. Wealthsimple is also a robo-advisor that offers investment products. In 2020, they launched Wealthsimple Cash, a no-fee bank account. The account comes with a Wealthsimple Visa, which offers cash back on purchases.
When choosing a bank, there are a few factors to consider:
Many online banks in Canada offer no-fee bank accounts. When choosing a bank, it's essential to consider your needs and compare the different options. Consider factors like fees, location, products and services, customer service, and ease of use. With so many great options available, you're sure to find the perfect bank for you!