Demystifying the economy | Are digital banks as “secure” as the big banks?

Every Saturday, one of our journalists answers, along with experts, one of your questions on the economy, finances, markets, etc.

Are digital banks, like EQ Bank, “secure” institutions and as regulated as large Canadian institutions like the Bank of Montreal, the National Bank and the Desjardins Movement? Should we instead remain cautious, not to say suspicious, by putting very little of our savings in this type of institution? The interest rates on simple deposits are very attractive!
– Mireille Bourbonnais

It’s a very good reflex to ask yourself this question, says financial analyst Maxime Robillard from the outset.

This banking expert from the Montreal firm Van Berkom Global Asset Management, also a shareholder of Equitable Bank for years, quickly adds that this virtual or digital bank (i.e. without branches) is safe and must respect strict regulations.

“It is regulated by the Office of the Superintendent of Financial Institutions, which supervises all financial institutions in the country,” says Maxime Robillard.

“This bank must maintain capital ratios and comply with standards. »

Equitable Bank, or EQ Bank, is indeed a member of the Canada Deposit Insurance Corporation (CDIC). “This means that deposits are protected up to $100,000. The deposits are therefore insured,” says Maxime Robillard.

When a person hears about a new bank – digital or traditional – and has questions, the first thing they can do is check on the SADC website if this institution is a member of the SADC. federal crown corporation.

The size of Bank EQ should also not be neglected. It is the seventh largest bank in Canada with a market capitalization of $3.4 billion. For comparison, the market value of the Laurentian Bank is approximately 1.2 billion.

EQ Bank’s assets have also been growing strongly over the past five years. The bank started in 2024 with assets under management and administration of over 100 billion.

The growth explains in particular why the shares of EQ Bank attract the attention of investors and recorded a strong stock market appreciation of more than 50% last year.

EQ Bank notably offers mortgage loans and commercial loans. For mortgage loans, Maxime Robillard explains that EQ Bank focuses on people with “less standard” files.

“The bank offers loans in particular to self-employed workers and newcomers to Canada who may not have the credit history that fits the profiles of large banks where you have to check several boxes to make it easier to obtain of a loan. »

The analyst specifies that this does not necessarily mean that the accepted files are more risky. However, the income of a self-employed worker can fluctuate more than that of a permanent employee, he notes.

As a result, the rates offered on mortgage loans by EQ Bank are generally a little higher than those of the big banks, says the financier, who himself has a personal account at EQ Bank.

On the other hand, emphasizes Maxime Robillard, the rates offered on certificates of deposit are competitive and the client does not have to maintain a minimum balance in his account to avoid transaction fees.

“A person who is comfortable online can do almost all their banking with EQ Bank. The only portion that is missing is perhaps more on the investment side. The bank does not yet offer a brokerage or robo-advisor service. This is a part of the equation that is missing at the moment, but which the bank will eventually have to offer. »

Consult our section “Demystifying the economy”

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