How can I tell if an online bank or app is CDIC insured?

Check whether your deposits are held at a CDIC member institution, which you can look up on CDIC's website. Coverage follows the member that holds your money, not the app's brand, so a fintech may be covered through a partner bank rather than under its own name.

Can an online-only bank be my only bank account?

For most people, yes. You can get paid by direct deposit, pay bills, send Interac e-Transfers, and withdraw cash at partner ATMs. The main tradeoff is depositing physical cash, since there are no branches, so heavy cash users sometimes keep a second account.

Do online banks pay higher interest than the Big Five?

Usually. Online banks like EQ Bank and Tangerine have long paid higher savings rates than the Big Five, which often set rates well below the Bank of Canada's. Lower overhead lets them pass more back to customers, though rates change, so it is worth comparing current numbers.

Is my money safe if a fintech app shuts down?

Eligible deposits are protected by CDIC at the member institution that actually holds them, up to the coverage limits, whether or not the app keeps operating. That protection sits with the regulated institution, which is why it helps to know who is holding your money.

Why young adults are choosing online-only banks

Managing money can almost entirely be done on a cellphone for most young people today. It’s no surprise that online-only banks and fintech platforms have seen such rapid growth in recent years. Global fintech adoption jumped from just 16% of consumers in 2015 to 64% by 2019, according to EY’s Global FinTech Adoption Index (opens in a new tab). For a generation that was raised doing everything else on a screen, banking was never going to be the exception.

Why has banking become mobile-first?

Gen Z has mostly grown up during COVID, ordering food, shopping and communicating through apps. It’s only natural we expect banking to follow suit. Rather than waiting in line or calling customer service, users can open an account in minutes, deposit cheques with a simple image, freeze cards instantly, receive spending notifications and transfer money amongst each other in seconds. This allows for financial services that fit naturally into our daily lives.

Interestingly, research from Deloitte’s Center for Financial Services (opens in a new tab) found that despite connecting their accounts to more apps and services than any other generation, Gen Z and millennial survey respondents actually reported feeling more in control of their financial data than baby boomers or Gen X. This might be because they grew up navigating permission screens and privacy settings as a normal part of using technology.

Why are online banks often cheaper?

One of the reasons young adults choose online-only banks is cost. Here is how the everyday fees compare:

Everyday fee	Big Five banks	No-fee online banks
Monthly chequing fee	$10.95 to $16.95 (waived at a high minimum balance)	$0, no minimum balance
NSF fee (bounced payment)	Was $45 to $48, now capped at $10	Often lower; the same $10 cap applies
Out-of-network ATM	About $2 to $9 per withdrawal	Free at a partner network (e.g. Tangerine at Scotiabank ABMs)

Without expensive branch networks that physical banks require, digital banks can reduce operating costs. This gets passed on to customers in the form of lower or nonexistent fees. Many online banks offer:

Monthly account fees: Big Five banks typically charge $10.95 to $16.95 a month for a chequing account ($131 to $203 a year) unless you maintain a minimum balance, often in the thousands of dollars. Online banks like Tangerine, Simplii Financial, EQ Bank, Wealthsimple, and Neo Financial all offer no-fee chequing accounts with no minimum balance and unlimited transactions, including Interac e-Transfers.

NSF fees: Non-sufficient funds fees at Canada’s largest banks have historically run $45 to $48 per bounced payment. As of March 12, 2026, new federal regulations (opens in a new tab) cap NSF fees at $10 and bar banks from charging more than one NSF fee within a two-business-day period on the same account. This is a change the Credit Counselling Society estimates will save Canadians more than $600 million a year. Online and no-fee banks have generally kept these fees lower even before the cap took effect.

ATM fees: using an out-of-network ATM in Canada typically costs $2 to $9 in combined charges. Tangerine customers get free access to more than 3,500 Scotiabank ATMs, while Simplii customers use CIBC’s network of over 3,400 machines, sidestepping the fee entirely for most everyday cash needs.

Even legacy banks are feeling the pressure to catch up. As of December 1, 2025, 14 federally regulated institutions, including Canada’s six largest banks, signed onto a modernized commitment on low-cost and no-cost accounts (opens in a new tab), capping basic account fees at $4 a month. This may be a sign that the pricing online banks have offered for years is becoming the benchmark for the whole industry.

Fee transparency itself has become a competitive weapon. EY’s Global FinTech Adoption Index has noted fee transparency as one of the leading reasons consumers cite for switching to a fintech provider over an incumbent bank. For young adults balancing rent, student loans, and the rising cost of groceries, saving even small banking fees can add up to something meaningful over the course of a year. At $13.95 a month, near the middle of the Big Five range, that’s about $167 a year, or roughly a week’s groceries for a lot of people.

What makes the experience better?

Experience itself has become a differentiator. The Accenture Banking Consumer Study and Deloitte Digital Banking Consumer Survey have found that consumers increasingly value:

instant spending notifications
budgeting tools
savings goals
automated transfers
intuitive interfaces

It’s instinctive that these features would encourage more frequent engagement with personal finances. They also help satisfy the increasing demand for apps to actually help consumers build better financial habits. Today’s banking apps have let people actively manage their money rather than simply storing it.

This generational change is also showing up in how people move and access money on a daily basis. More than a third of Gen Z say they use a digital wallet like Apple Pay or Google Pay regularly and millennials aren’t far behind, while the majority of baby boomers say they’ve never used a mobile wallet at all (Deloitte (opens in a new tab)).

Are online-only banks safe?

A prominent myth is that online-only banks aren’t regulated, and therefore aren’t safe.

In Canada, deposit insurance itself is handled by the Canada Deposit Insurance Corporation (CDIC) (opens in a new tab), and most fintech companies partner with CDIC-member institutions to actually hold customer funds behind the scenes. This distinction matters: CDIC coverage attaches to the institution holding the deposit, not necessarily to the fintech app you’re using. Some digital banking products, such as EQ Bank (through Equitable Bank) or Simplii Financial (through CIBC), are themselves offered by CDIC member institutions. Others partner with a separate CDIC member to hold deposits behind the scenes. Either way, eligible deposits are generally protected under the same CDIC rules that apply at traditional banks.

The Financial Consumer Agency of Canada (FCAC) (opens in a new tab) handles the oversight side: it supervises federally regulated banks and other financial entities to make sure they’re complying with consumer protection rules, codes of conduct, and public commitments. This includes the NSF fee cap and low-cost account commitment we mentioned above. Most digital banking platforms also layer on additional protection of their own such as encryption, multifactor authentication, fraud monitoring, biometric login, and instant account alerts.

Fintechs actually operate within the regulated banking environment, but may be regulated in different ways depending on what they do. Examples include:

payment regulation
anti-money laundering (AML) requirements
Know Your Customer (KYC) identity verification
privacy laws
securities regulation
consumer protection laws

People tend to remember cryptocurrency exchange failures and fraud cases and generalize that anxiety to fintech as a whole, disregarding the fact that payment apps, investment platforms and digital banking platforms operate under very different regulatory frameworks. Many of these are actually stricter, not looser than what applies to unregulated corners of crypto.

Is the future banks vs fintech?

Rather than replacing traditional banks, fintech companies are reshaping what people expect from financial services as a whole. Young people have begun to require lower fees, faster service, personalized experiences or recommendations, and a tool that will help them build good habits with low effort. As these expectations continue to evolve and become standardized, both banks and fintech companies can continue to innovate.

Fintech builds the experience, while the bank provides the regulated infrastructure. Take the example we explained above, where a customer might interact exclusively with a savings app, while their money is actually held at a CDIC-member institution behind the scenes. This partnership allows consumers to benefit from both innovation and stability.

This is also the thinking behind Lodavo, though it takes the idea one step further. Instead of moving your money into a new app, Lodavo connects to the bank account you already have, so your money never leaves your own bank. It’s always free to use, and rather than holding your money or paying you interest itself (it isn’t a bank), Lodavo simply helps you track your savings progress and gives you a chance at winning a weekly cash prize for the money you’re already putting away. It’s an example of how fintech can complement traditional banking rather than replace it: no new account, no money in transit, just a fun incentive to save.

Traditional banks are actually learning from fintech too, which has brought many benefits to the consumer. Legacy banks have introduced better mobile apps, faster account opening, digital wallets and AI customer support for instance. Ten years ago, these features were rare, today they are expected. Deloitte’s research on digital transformation in banking (opens in a new tab) has tracked this convergence directly, noting that digital and mobile channels are now used more frequently than branches and ATMs across every generation and every country surveyed, not just Gen Z. The competitive pressure fintech has applied is arguably the most prominent reason traditional banking has started to feel modern.

As traditional and online banks continue to learn from each other, Canadians stand to benefit from a financial system that’s more accessible, transparent, and user-friendly than ever before.

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