Everything Newcomers Need to Know About the Canadian Banking System
If you are planning a move to Canada, one of the first steps is to set up your Canadian banking services. Many new residents can be hesitant on setting up a Canadian bank account, but banks in Canada are safe, provide resources for newcomers, and are extremely convenient to use.
We’ve put together some tips on why you should set up your Canadian bank account, and how to navigate the system.
Your Money is Safe in Canada
The first thing you should know before you set up your account is that your money will be safe in Canada. While European and North American banks nearly collapsed in the 2008 financial crisis, Canada was able to avoid the bank failures, bailouts, and indeed much of the recession that crippled other countries.
The reason has a lot to do with the tight regulations and controls in Canada. The Canadian Constitution guarantees that the federal government has sole jurisdiction for banks. This has given Canada a stable banking system that has escaped the worst of the recessions, even prior to 2008.
In the event that a bank does fail, a federal Crown corporation known as the Canada Deposit Insurance Corporation insures deposits to savings accounts, term deposits, and GICs free and automatically. It’s worthwhile noting that only 43 financial institutions have failed since 1967, and none of the insured deposits were lost.
Banking is one of Canada’s top industries, and several banks make the list of the most profitable companies in Canada. The industry is dominated by just 6 banks which hold 90% of the market share, which are known colloquially as the “Big Five”, plus the National Bank of Canada.
The five largest banks in Canada are Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CIBC). These banks are also among the world’s 100 largest banks.
There are a total of 82 additional banks of varying sizes that make up just 10% of the market share.
Convenient Services in a Tech-Focused Industry
While each major bank has its own version of a traditional branch where you can conduct business in-person, there are many alternatives available to allow you to manage your money conveniently from wherever you are.
Canada has the highest number of ATMs per capita in the world, with more than 200 ATMs per 100,000 adults, which means you have access to cash almost anywhere in Canada.
The six largest banks spent $14 billion on technology in 2018, amounting to over $100 billion in the past decade. This investment has allowed customers the freedom to process transfers, deposit checks, check their credit history, and even apply for loans or lines of credit with a laptop or smartphone. 76% of Canadians do most of their banking digitally, and there were over 574 million online banking transactions completed in 2017.
Opening a Bank Account in Canada
You can open a bank account in Canada even if you are not employed, or do not deposit money in the account at the time of opening. You do not have to be a Canadian citizen to open a bank account.
Each financial institution has its own requirements to open a bank account, but for most you will need a valid piece of identification and you will be asked to go in person to a branch to validate your ID.
You’re Always Protected
Canada has put in place an agency – the Financial Consumer Agency of Canada – to assist and protect consumers in their dealings with Canadian financial institutions. Therefore, if you have questions or if you encounter any problems, you will have access to information officers to assist you.
You can rest assured that your hard earned money will be safe in Canada, and easily accessible anytime you need it.