Digital banking refers to banks that operate online, whether it be through an emphasis on online services within a larger company, or a bank that operates completely online without any brick-and-mortar branches at all.
There are many reasons to love online banking, thanks to its unmatched convenience and practicality, not to mention 24/7 instant access to your funds. Who doesn’t want that? It’s your money. You should be able to access it whenever you want.
To help you decide which digital financial institution will work for your needs, we’ve got an overview of ten of the best online banks in Canada, with a special attention placed on the pros and cons of each to provide a balanced overview.
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The Best Digital Banks and Online Banks in Canada for 2021
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Tangerine garnered quite a bit of attention when it burst onto the scene in 2014. Previously known as ING Direct Canada, Tangerine stood out from the crowd by offering no-fee chequing and savings accounts with uniquely high interest rates, as well as low-fee investment opportunities designed for bankers with long-term goals.
Given their progressive approach to banking, it makes sense that Tangerine offers a robust array of online services. In fact, Tangerine advertises its lack of brick-and-mortar branches as a way that they can pass more savings along to their customers. In lieu of traditional bank branches, Tangerine instead offers what they call “cafes” in Toronto, Montreal, Vancouver, and Calgary, which are essentially spaces to learn more about Tangerine’s services or get financial advice (coffee included).
While this lack of a physical presence may leave some customers apprehensive, this is not the case with Tangerine since the quality of their customer service is impeccable.
High-interest rates that are unheard of elsewhere
Full banking services (including mortgages, TFSAs, lines of credit, etc.)
Award-winning customer support
Big city-centric location of the Tangerine cafes may have some folks feeling left out
While Tangerine customers can use ScotiaBank ATMs for free, these machines may be more spread out and harder to find
2. Simplii Financial
This list wouldn’t be complete without Simplii Financial, a direct bank founded by CIBC.
Before 2017, CIBC ran a joint venture with Canadian grocery store chain Loblaws, known as PC Financial.
While PC Financial still offers credit card and insurance services, all customers who previously had a PC Financial bank account (or mortgage, investment, or loan) saw their funds transferred to Simplii Financial.
Today, Simplii Financial offers its customers complete banking services, including a chequing account, GICs, RRSPs, mutual funds, and TFSAs.
Despite a bit of an initial shaky start — chronic call center delays and even a data hack plagued the company in its early days — today’s operations seem to offer smooth sailing.
In fact, Simplii Financial often ranks among the best banking options for frugal forward-thinking Canadians.
Customers tout its lack of monthly or annual fees, unlimited transactions and e-transfers, and wide-range account offerings as key satisfaction factors.
More ATM access than your average online bank (Simplii customers can use any CIBC-branded ATM)
Simplii Financial customers have griped about an inefficient international wire transfer system—if you regularly rely on international wire transfers, you may want to look elsewhere.
3. EQ Bank*
EQ Bank, or Equitable Bank, is a direct bank that has a history that dates back to 1970- way, way, way, back in the day. EQ Bank, like Tangerine, does not operate any in-person branches. Instead, they offer 24/7 online banking and customer service from 8 a.m. to midnight daily (EST).
Many money-savvy Canadians have primarily taken advantage of EQ Bank’s consistently high interest rates by using it as a place to stash money in a savings account. However, what’s unique about EQ Bank is that they let you use your savings account much like you would a chequing account, meaning that you can pay bills and send money without any fees, all the while earning interest on your money.
High interest rate savings account
Well-priced overseas money transfers
The ability to link your account to another “Big Five” bank account
EQ Bank does not offer a physical debit card or any ATM access
Customer service wait times may be longer than average due to a relatively small staff
If you haven’t yet heard of Wealthsimple, get ready to start seeing the name everywhere! WealthSimple is well known for its effective marketing campaign which features interviews with famous public figures on their favourite money tips and what their particular financial journey has looked like. These stories, often rag-to-riches, do a good job of outlining WealthSimple’s mission, which is essentially to make you wealthy as you sleep.
Although not a traditional banking account, Wealthsimple still deserves a place on a list of the best online banks in Canada. WealthSimple bills itself as an online investment management service. It uses artificial intelligence to make investments on behalf of the client that depend on the client’s specific goals and lifestyle. Although these automated investors, who are affectionately known as “robo-advisors”, do a great job of analyzing the financial risks associated with investing, customers also have the option to talk to a human advisor if they desire.
WealthSimple uses auto-deposits that are linked to an account type, and also offers round-up services where the spare change from your purchases are rounded up and sent to the account of your choice.
By setting up regular deposits into TFSA, RESP, or rainy day savings accounts, you can accumulate a balance without having to actively focus on doing the work. Also, because WealthSimple invests your money for you, you don’t need to worry about being a stock expert.
Unlike some of the other entries on this list, WealthSimple is not a one-stop-shop. Instead, it should be thought of as an accessory to your central banking needs. However, the company does have plans in the works to expand their services.
To complete our overview of the big banks, let’s have a look at Scotiabank’s online platform, Scotia Online.
Many Canadians are familiar with Scotiabank through their catchy “you’re richer than you think” marketing slogan, which has been used as a way to tout their financial advising services as well as their money-earning incentives that you may receive when you sign up for any account or service. However, as advantageous as these pull factors may be, does the convenience transfer over to ScotiaBank’s online service, known as Scotia Online?
To put it simply, yes. ScotiaBank offers both a chequing account with unlimited transactions as well as savings accounts with competitive interest rates. Most accounts are charged a monthly fee, though this is waived by exceeding the monthly required minimums. And let’s not forget about those SCENE points!
Scotiabank often has great promos — if you keep your eyes open for one of these, you could receive a cash incentive for opening a bank account, or an amazing interest rate.
If you are unable to maintain the monthly account minimum (it’s in the $3,000 range for most chequing accounts), the monthly fees can start to add up.
6. BMO Online
On the topic of the big five banks, it’s worth talking about BMO Online, which is the Bank of Montreal’s online banking platform. Like all other banks of this calibre, BMO Online offers you encrypted online banking services like 24/7 account access and e-transfers.
BMO Online proudly offers discounts for certain clientele such as students or seniors. Also, their list of online services is quite extensive, from mobile cheque depositing to even opening a new bank account or credit card.
the BMO mobile app has stellar reviews, with more than 13,000 users giving it an average of 4.5 stars. The app even allows you to sign in Touch ID or Face ID if you prefer.
Like most traditional banks, sometimes users find the monthly account fees for BMO Online a bit steep, going as high as $30 per month.
7. TD Bank
TD Online is the umbrella name for the online services offered by TD Canada Trust, or simply TD. TD Online offers the same services that you would expect from any other big bank, such as free online e-transfers and 24/7 mobile cheque depositing.
TD’s online platform, called EasyWeb, has been around quite a while, having launched in 2007. The benefit of this for you as a customer is that they have had some time to work out the kinks, and are one of the more experienced banks in Canada when it comes to online banking.
Users rave about the bank-specific app called TD MySpend, which helps you keep track of every transaction and notice patterns in your spending. TD customer service continually ranks highly in terms of efficiency and politeness.
TD bank in general doesn’t offer much in terms of enticing interest rates.
CIBC, or the Canadian Imperial Bank of Commerce, is one of the newer large Canadian financial institutions, dating back to 1961. Given its size, its interest rates and annual fees are in line from what you would expect from one of the big banks.
CIBC offers a comprehensive online banking platform, complete with real-time fraud alerts and mobile cheque depositing. For the budding travelers among us, CIBC also offers the ability to order foreign cash online and have it delivered to your home!
In 2019, CIBC’s banking app was rated as the #1 across Canada by independent advisory firm Forrest Research.
If you’re in the market for a credit card, CIBC has relatively fewer options than their counterparts.
No comprehensive list about the best online banks in Canada would be complete without an analysis of the so-called “Big Five” banks of Canada. If you’ve lived in Canada for some time, it’s inevitable that you have heard of RBC.
RBC, or the Royal Bank of Canada, was founded in 1864 in Halifax, Nova Scotia. Thankfully for us, though, it no longer runs its services as if it’s the 19th century. RBC Online is a great option for Canadians who feel the most comfortable banking with one of the big names, and who are looking to bundle a number of services in one place.
While RBC famously does not waive account fees for any balance (monthly account fees start at $4 and go up from there), it is possible to save when you combine two or more services together, such as credit cards or lines of credit.
Some customers simply feel more comfortable banking with a big name. RBC’s industry experience and large employee base can help give you the peace-of-mind that your money is safe in the ether of the internet.
Some users have reported that customer support leaves something to be desired, and that the online system can sometimes be buggy.
10. Alterna Bank
Alterna Bank is the online subsidiary of Alterna Savings, a popular Ontario-based credit union. It offers all of the full services that other banks offer from chequing and savings accounts to even mortgages. Aside from two physical locations in Gatineau, like most of the institutions on this list, Alterna Bank does not operate any branches.
Although admittedly no frills, Alterna Bank has a band of loyal followers who tout it as one of the best online banks in Canada. This is mostly because of their competitive saving account interest rates and hassle-free inter-bank transfers. They also proudly offer unlimited transactions and unlimited free e-transfers per month, as well as TFSAs, RRSPs, and GICs.
Alterna Bank is a great option for Quebec residents, who sometimes are excluded from other special bank offers due to provincial laws.
Some users have complained that Alterna Bank’s customer service can sometimes be lacking.
11. Outlook Financial
Another smaller player on the market, Outlook Financial is linked with Manitoba’s Assiniboine Credit Union.
Outlook Financial offers both GICs as well as saving accounts to its customers. Like many of the other institutions on this list, its main draw is its interest rates, which often fluctuate to be among the highest offered in the country.
Outlook’s GICs are another big pull, with no monthly account fee and a minimum deposit that is as low as $1,000. Not a traditional bank, Outlook operates more similarly to the aforementioned Tangerine or EQ Bank. It is a great option for young Canadians who have some cash to invest and sit on for a while at a favourable interest rate.
Outlook Financial offers great savings opportunities without all of the unnecessary bells and whistles of the bigger banks..
Outlook Financial’s services are admittedly quite limited compared to that of a fully-functional bank.
How to Choose an Online Bank
Pinpoint Your Financial Goals
Before you know what to look for in a bank, it’s a good idea to identify what’s important to you. Are you looking to plan for a long-term goal like retiring? Could you benefit from the short-term perks of a high-interest savings goal? Are you after a particular rewards credit card that an online bank is offering?
While there is no “wrong” choice per se, every online bank has a different reputation among consumers. It’s a good idea to read online reviews from existing customers before deciding on an online bank—this will help you learn insights about things like customer service quality and availability.
Examine Your Needs
As we’ve established, online banks can offer customers no-fee accounts and high interest rates because they lack brick-and-mortar services. While you will benefit from regular bank services like direct deposits or e-transfers, if you require more “complicated” services like international wire transfers or bank drafts, it might be best to stick with a traditional bank.
Choosing the right bank is personal, and only you can decide on the right fit for you. There is no buyer’s remorse here, though—all registered online banks in Canada are safe, reliable, and ready to help you make the most out of your financial goals.
Advantages of Online Banking
While still novel in their own right, online banks in Canada offer a myriad of options for those who prefer the tech-savvy approach to banking, rarely finding themselves using physical banking products or rarely, if ever, entering branches.
Below, you'll find some of the most prominent advantages to online banks and virtual banking.
We can perform most of our daily errands and activities via mobile apps, so it’s about time that the banking world caught up. Long gone are the days of waiting in long lines at a bank branch—you can accomplish every banking task, from transferring money between accounts to depositing a cheque, from the comfort of your computer or mobile phone. Many customers find the ability to check up on their bank accounts gives them an unparalleled sense of security and control—it can be pretty empowering for somebody looking to keep a closer eye on their finances.
Rates / Fees
Another major pulling factor for online banks is that they can offer very low (if any) banking fees. While most traditional brick and mortar banks will charge a monthly account fee of between $5 to $20, most online banks forgo this fee altogether. After all, they have no physical bank branches to maintain and no tellers to pay—it is beneficial for them to pass these savings along to the consumer!
Another way that consumers feel these savings is through the surprisingly high interest rates that online banks can offer. The lack of overhead fees is also responsible for the high-interest savings accounts for which online banks are famous. These interest rates, which tend to be in the neighbourhood of 1-2%, run laps around traditional bank offerings.
Fintech (or financial tech) services, an umbrella term that includes online banks, offer an excellent opportunity to make banking more accessible to everyone. Accessing a bank account online is convenient and can also be life-changing for individuals living with a disability. However, it’s worth noting that the existence of online services is simply not enough to be accessible—it’s important that websites are further developed to meet accessibility guidelines set out by the AODA and WCAG, which include things like font, color contrast, and language settings.
An online-only existence can make some people distrustful, but the fact is that online banks follow security measures just as ardently as traditional banks—if not more.
Online banks use industry-standard data encryption and fraud monitoring measures and perform regular internal audits of their systems to search for vulnerabilities. Users also have the option to set up additional security measures like two-step verification and activity alerts.
What’s more, any money deposited in an online bank is insured by the Canada Deposit Insurance Corporation (CDIC), which protects Canadian bank accounts for up to $100,000, at no additional cost. This means that if your financial institution were ever to close down, you would not lose a dime.
Are Online Banks Safe?
With the abovementioned security measures in mind, it can easily be said that yes, online banks are absolutely safe!
Online banks offer the same security measures as traditional banks. As long as your online bank has an established online presence (look for reputable reviews and endorsements), using it for your banking needs is virtually risk-free.
If you need reassurance, be sure to look for the CDIC's purple seal, which is typically found on any insured bank's website. Credit unions that operate online fall under provincial insurance, and are deemed just as safe.
Online Banks vs. Traditional Banks
There may be other reasons you decide to remain with a traditional bank (though safety concerns shouldn’t be one). Here is a breakdown of the main differences:
Types of Online Bank Accounts
Online bank accounts are as versatile as traditional bank accounts. Learn more about the types of online bank accounts that are available in Canada below.
The savings accounts offered by online banks function in virtually the same way as conventional banks — i.e., they act as a reserve for funds that you want to stash away for the future.
A high-interest savings account offers customers an above-average interest rate in exchange for keeping a balance in their savings account at all times.
Online banks in Canada offer the best high-interest savings accounts in the country, with rates as high as 2.30%. This leaves the customer with a much higher annual percentage yield potential than you would find in traditional banks.
A chequing account is where you keep your everyday money, such as the funds you will spend on bills, food, or leisurely items. Online bank chequing accounts and conventional bank chequing accounts are identical.
Many online banks in Canada offer a Tax-Free Savings Account (TFSA). A TFSA is a government-sponsored savings account that allows Canadians to invest a set amount of money every year to withdraw without tax penalty. This differs from a high-interest savings account, where the interest that you earn is taxable.
A hybrid bank account is a unique high-interest savings account and chequing account rolled into one. Rare in Canada, the only high-interest rate savings account in the country are offered through online banks. Hybrid bank accounts are beneficial because they allow you to use your bank account as a placeholder for your money and accumulate interest in it while using it for your everyday needs.
Some online banks offer savings account for youth or students. In most cases, the youth’s legal guardian will need to have an account at the bank already. Online bank accounts for youth and students offer the perks that you would expect from any big five banks (no monthly fees and no minimum balance), as well as a savings account.
Senior bank accounts offer discounts and incentives for retired bankers who have specific needs. This includes no-fee chequing accounts, unlimited transactions, and free cheques. While many online banks have not caught up to offering senior-specific accounts, many traditional banks offer online banking options for seniors.
Our Final Thoughts
Online banks are exceptional personal finance tools for those seeking to save money on their daily banking needs, especially for Canadians who rarely find themselves needed branches and have minimal banking needs.
For the newer, more tech-savvy generation, online banks serve as an excellent way to save more money. After all, the average bank account costs around $180 per year. That's money better spent on things that matter!
Frequently Asked Questions
Looking for more answers about online banks? No problem! Here are some frequently asked questions about digital banks.
Certainly! Online banking has come a long way since the early days of the internet, which means that it is now more risk-free than ever.
Similar to the way that your payments are protected in a traditional bank in the case of a security breach, your money is equally safe in a digital bank. This is because online banks are associated with the Canada Deposit Insurance Corporation (CDIC), which ensures the funds of Canadians up to $100,000 per person.
It depends. As per the Income Tax Act (ITA), any bank account that collects interest on your behalf requires a SIN to activate. Otherwise, for a regular chequing account or savings account, a SIN will not be required. Two pieces of I.D. will be sufficient in most cases.
Sometimes! As we mentioned before, many online-only banks are able to offer more financial incentives to their customers as they save on other costs such as the maintenance of a storefront. However, as interest rates are always subject to change, it is recommended that you shop around between online banks until you find the highest rate for you.