Types of Financial Institutions in Canada

In Canada, many financial institutions accept and safeguard your cash deposits while also facilitating a secure way to transfer and withdraw funds whenever you need. They also provide investment products, mortgages and other forms of credit for both individuals and businesses.

Why are financial institutions important?

Banks, credit unions and other types of financial institutions are more than just places for you to park your money. They offer products and services that help Canadians save for future goals and secure loans to pursue homeownership or entrepreneurship — ultimately boosting the economy.

Types of financial institutions in Canada

1. Big Six Banks

Perhaps the most well-known financial institutions in Canada — and also the largest — are the “Big Six.” TD Bank and RBC top the chart with over 2 Trillion in assets at the end of 2024.

These six banks, along with a number of other mid-sized financial institutions, are known as Schedule I banks — Canadian-incorporated domestic banks, governed by the Bank Act and regulated by the Office of the Superintendent of Financial Institutions (OSFI).

All these major banks are Canada Deposit Insurance Corporation (CDIC) members. That means, in the unlikely event of banks’ failure, your eligible bank accounts, guaranteed investment certificates (GICs) and registered savings accounts are covered by CDIC’s deposit insurance.

2. Credit unions

Credit unions are financial co-operatives that provide many of the same services as traditional banks, including savings and chequing accounts, mortgages, investments and insurance. Unlike banks, though, they operate on a not-for-profit basis and distribute any profits or dividends back to their customers — who are also known as credit union members.

Many credit unions across Canada are involved in their communities via initiatives like scholarships and donations. Saskatchewan-based Innovation Credit Union and Conexus Credit Union are known for providing community support through grants, scholarships and sponsorships.

3. Caisses populaires

Operating on a not-for-profit basis like credit unions, caisses populaires offer members a variety of personal and business banking, investment, lending and insurance products. The members get to vote in their annual general meetings and elect the board of directors and officers.

Caisses populaires are located in francophone jurisdictions of Canada and, along with credit unions, are often regulated under provincial legislation. In Ontario, for example, they are governed by the Financial Services Regulatory Authority (FSRA) under the Credit Unions and Caisses Populaires Act.

4. Online banks

Online banks, also known as digital banks, have become more popular in Canada in recent years. Many of them provide services similar to bricks-and-mortar banks, such as chequing and savings accounts, registered accounts, and, in some cases, mortgages and investments. Some also offer low or no-fee account options.

In Canada, many digital banks are affiliated with more traditional banks, credit unions or financial institutions. Canadian online banks include:

Additionally, the online-only space includes “neo banks” — which are completely virtual financial institutions like Wealthsimple and Neo Financial. These fintech companies offer access to e-transfers, savings accounts, bill payments and credit cards exclusively through mobile apps or websites.

Although these providers are not regulated as banks by OSFI, deposits held with many of them — such as EQ Bank and Tangerine — are covered by CDIC member institutions.

How to choose a financial institution

When choosing a financial institution, look for the following traits and features to ensure your money is protected and you have the best solutions to meet your goals.

Proper accreditation

Because they’re governed by OSFI, federally regulated financial institutions must follow specific guidelines, which include:

Credit unions and caisses populaires regulated by the FSRA must also uphold a statutory standard of conduct, maintain adequate liquidity and strong capital reserves.

Verify if your chosen financial institution meets these governance criteria by reading objective reviews, annual reports and relevant news articles. You can also seek feedback from friends and family about their banking experience.

Deposit insurance

Eligible deposits at more than 80 CDIC member institutions are insured up to $100,000 in the event of bank failure.

However, coverage from FSRA for credit unions and caisse populaires varies by account type. Members’ non-registered deposits are insured for up to $250,000, and registered deposits have unlimited coverage.

If you choose a financial institution that holds customer funds in trust with a CDIC member institution, be sure to read the fine print before signing up to confirm your savings are protected.

Convenience

About 77% Canadians bank virtually and among them 30% use app banking, according to the Canadian Bankers Association (CBA)

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While banking preferences are individual — some people may prefer meeting with a financial advisor, while others may favour entirely online services. So, check if your chosen financial institution offers the services you need, be it digital experiences like virtual cheque deposit and contactless pay, or convenient branch and ATM access.

Features, accounts and services

While the number of services or account types a bank provides doesn’t reflect the level of quality it offers, having more options can be beneficial when new financial needs arise.

Some financial institutions specialize in serving certain groups, such as small businesses or regional communities. When reviewing your options, make sure that your chosen financial institution provides the services and account types that match your needs.

Fees

Before signing up with a bank, review the banking fees associated with your account — and if possible, see how you might avoid them. Look for bank accounts that include the type of transaction you’re likely to use, ideally for low or no fees.

Most major financial institutions provide basic account options for around $4 per month, as well as discounted or free accounts for youth, international and domestic students, senior citizens and newcomers to Canada, among others.