- Choice in providers: There are 80 domestic and foreign banks operating in Canada.
- Choice in products: There are more than 100 account packages on the market.
- Accessibility: 99 per cent of Canadians have an account with a financial institution.1
The bottom line
Canadian consumers enjoy a wide choice of banking services and providers, as well as affordable and accessible services.
Canada’s competitive banking system provides good value, ready access and wide choice for Canadian consumers and small businesses. Whether it’s a bank account, a mortgage, insurance, financing for a business opportunity or help in managing their money, banks are actively competing with each other to provide financial products and services to Canadians -- meeting their needs every day and in every way.
- Competition is intense: in fact, Canada has more large banks actively competing against each other for customers than practically any country in Europe, including the United Kingdom (U.K.) which has almost double the population of Canada.
Today there are 80 domestic and foreign banks currently operating in Canada.
Choice and competition benefits Canadians
Canadians benefit from the high degree of competition and choice in the financial services marketplace.
The first bank opened in Canada in a rented house in Montreal in 1817. Today there are 80 domestic and foreign banks currently operating in Canada and of those more than 40 offer financial products and services – including bank accounts, credit cards, loans and investments – to Canadian consumers.
And that competition isn’t just among traditional deposit-taking institutions. Legislative and regulatory changes beginning in 1980 made in easier for foreign banks to compete in Canada and the new rules allowed for different players to enter the marketplace. This has resulted in change and innovation and there are now:
- banks owned by commercial companies such as a discount retailer, a hardware store chain, a communications company and a grocery store chain,
- a bank owned by an insurance company,
- five Alberta-based banks – one owned by auto dealers and one owned by a motor club, and
- virtual banks offering customers traditional banking services in addition to retirement savings products, mortgages and lines of credit.
Foreign banks in Canada
As a result of regulatory changes made to the Bank Act over the past thirty years, many more foreign-owned banks have entered the market in recent years to compete with the domestic banks as well as the other foreign banks that have operated in Canada for years. For example, HSBC, headquartered in the U.K., established a bank in Canada in 1981.
Banks from all over the world, including China, the United States, India, Korea, the U.K., Japan, the Netherlands and France have operations here. Currently there are more than 21 foreign bank subsidiaries operating in Canada and it’s just as easy to do business through one of these subsidiaries as it is at one of Canada’s domestic banks.
Consumers have even more choice
Banks compete not only with each other, but also with a variety of other financial services providers, including trust companies, life insurance companies, finance companies, credit unions and caisses populaires and an array of federal and provincial financial agencies.
When asked what they think about competition in banking, here’s what Canadians said:
- 88 per cent of Canadians believe that there is enough choice in the Canadian banking sector.2
Accessible and affordable
The high degree of competition is good news for Canadians. In fact:
- Canada has one of the most accessible banking systems in the world – 99 per cent of Canadians have an account with a financial institution, including 98 per cent of adults in low income households,3 so the accessibility of banking services in Canada is incredibly high.
- Whether it’s a savings, chequing, low-fee, student, senior, or a plain vanilla account, there is a lot of choice for Canadians with over 100 account packages to choose from in the marketplace. And Canadians have access to one of the most efficient, secure and low-cost banking systems in the world with many affordable options.
- In fact, over four million Canadians switched their primary bank in the last five years, and 79 per cent of those who did say switching was easy.4 This is a clear indication that there is plenty of choice and competition in the banking sector.
- 30 per cent of Canadians pay no service fees at all for their banking.5
- Banks offer low-fee accounts, priced at $4 or less per month.
- Youth, students, seniors, Registered Disability Savings Plan beneficiaries and newcomers to Canada can access discounted or free accounts
- Not-for-profit organizations can also access community service accounts.
1 World Bank, Global Findex Database 2014: http://ow.ly/SfkaL
2 Abacus Data research findings for the CBA, December 2015
3 World Bank, Global Findex Database 2014: http://ow.ly/SfkaL
4 Canadian Consumer Banking Survey 2013, Ernst and Young
5 Abacus Data research findings for the CBA, December 2015