The five largest banks in Canada have an estimated 90% of the total market share. Challenger banks are looking to change that. Challenger banks based outside of Canada, like Revolut, are finding success, and the traditional banks are taking notice.
With an already thriving fintech scene in Canada, traditional Canadian banks are establishing partnerships with fintechs to provide more digital banking capabilities to their customer base. This has also spurred a rise in challenger banks being created throughout Canada.
Banking as a Service in Canada
True Banking as a Service (like that in the United States and Europe), where fintechs can sub-license under a regulated bank to offer interest bearing checking and savings, does not yet exist in Canada. Most of the banking startups in the Canadian market have instead offered prepaid debit cards, through issuers such as Peoples Trust. There are a few reasons for this: (a) there isn’t the same level of competition in banking as in the US, (b) there is greater legal and regulatory requirements that makes it harder to offer fully white labeled banking as a service, (c) open banking does not yet exist in Canada, making it costly for banks to expose developer APIs to fintechs.
Challenger Banks in Canada
Below are some of the more popular challenger bank startups headquartered in Canada that have been created on top of banking infrastructure.
KOHO: Based in Toronto, Canada. They have raised $57.5M in funding. They offer a prepaid card, goals savings, PFM, and more.
MOGO: Based in Vancouver, CA. They have raised $201M in funding and have gone public. They offer a prepaid card, credit score monitoring, goals saving, budgeting, and more.
Motusbank: Based in Toronto, Canada. The parent company is Meridian Credit Union. They offer savings and checking accounts, loans, and more.
Neo Financial: Based in Alberta, Canada. They offer a credit card, savings, budgeting, and other products.
Wealthsimple: Based in Toronto, Canada. They were acquired by Power Financial. They started as a robo-advisor but now offer savings and other banking features.
Stack: Based in Toronto, Canada. They were recently acquired by Credit Sesame. They offer prepaid cards, PFM, savings, and more.
Create a Challenger Bank or Banking Components with Hydrogen
Hydrogen provides a configurable API platform and no-code solutions with all of the data storage, analytics, business logic, and UI needed to add a cutting edge prepaid card, challenger bank application, budgeting, or banking component in Canada and globally.
Building these types of solutions can be difficult, frustrating, and extremely time-consuming. Through our numerous middleware integrations, we’ve done all the heavy lifting for you. Start building banking apps in Canada with Hydrogen!