Competition in the Financial Services Sector
Fast facts
- Choice in providers: There are 77 domestic and foreign banks operating in Canada.
- Choice in products: There are more than 100 bank account packages on the market.
- Accessibility: 99.5% 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.
Intense Competition
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 UK which has almost double the population of Canada.
Choice and competition benefits Canadians
Canadians benefit from the high degree of competition and choice in the financial services marketplace.
The first bank opening in Canada in a rented house in Montreal in 1817. Today there are 77 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 department store, a hardware store and a grocery store,
- a bank owned by an insurance brokerage,
- four 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, Barclays Bank, headquartered in the U.K., established a bank in Canada in 1929.
Banks from all over the world, including China, the United States, India, Korea, the United Kingdom, Japan, the Netherlands and France have operations here. Currently there are 22 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 35 trust companies, 70 life insurance companies, about 200 finance companies, over 1,000 credit unions and caisses populaires and an array of federal and provincial financial agencies.2
When asked what they think about competition in banking, here’s what Canadians said:
- Two-thirds of Canadians (67 per cent) believe that there is good competition in the Canadian banking sector.3
- However, when they are told that there are about 70 banks in Canada as well as credit unions, 89 per cent agree that there is good choice for consumers when it comes to financial services.
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 – 99.5 per cent of Canadians have an account with a financial institution.
- 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.
- Thirty per cent of Canadians pay no service fees at all for their banking.
- Banks offer low-cost accounts, priced at $4 or less per month.
- Youth, students and seniors can access discounted or free accounts
- Not-for-profit organizations can also access community service accounts.
General inquiries
1-800-263-0231 or inform@cba.ca
Media inquiries
Rachel Swiednicki, Manager, Media Relations
(416) 362-6093, ext. 220 rswiednicki@cba.ca
