The advent of digital technology has opened the doors for a slew of innovative products and services, including in the banking industry. These days, Canadians can do much of their banking completely online thanks to the Internet. And now, several banking companies operate entirely online with no physical branches to visit.
These ‘challenger banks’ have revolutionized the way people do their banking thanks to the convenience of online access to finances from laptops or mobile devices. These online-only banks are giving traditional financial institutions a run for their money, prompting legacy banks to come up with digital offerings that make banking quick and easy without compromising quality.
What Is A Challenger Bank: KOHO vs. Neo vs. Brim vs. STACK
A challenger bank is a smaller independent bank, as opposed to traditional financial institutions, that focuses predominantly on online banking products and services. They’re called “challenger” banks because they’re established to challenge the way consumers typically manage their money. Rather than having physical branches, challenger banks have an online presence only.
Challenger banks are helping to revolutionize the banking industry and are giving conventional banks some competition. Those who are looking for more convenience are increasingly finding challenger banks a more attractive option when it comes to banking.
Clients can not only stash their money away in a bank account, but they can have pretty much all their other financial needs addressed as well.
What Kind Of Banking Services Do Challenger Banks Offer?
Just because challenger banks are smaller and are strictly online doesn’t mean their offerings are limited. Instead, challenger banks offer a host of products and services that rival traditional banks, including the following:
- Chequing accounts
- Savings accounts
- Loans, including mortgages
- Credit cards
- Investment vehicles
- Rewards programs
KOHO vs. Neo vs. Brim vs. STACK
| Card Type | Annual Fee | Purchase Rate | Rewards | |
| Neo | Credit card | $0 | – 19.99% – 29.99% – 19.99% – 24.99% (QC residents) | – Up to 4% on gas and groceries. – Up to 1% on everything else. – Up to 15% with Neo partners. |
| Brim | Credit card | – $0: Brim Mastercard® – $99: Brim World Mastercard® – $199: Brim World Elite Mastercard® | 19.99% | – Brim Mastercard®: Earn 1% for every $1 spent on all purchases. – The Brim World Mastercard®: Earn 1.5% for every $1 spent on the first $25,000, then 1 point after that. – Brim World Elite Mastercard®: Earn 2% for every $1 spent on any purchase on the first $25,000, then 1 point after that. |
| STACK | Prepaid Mastercard® | $0 | 0% | – Earn instant cashback rewards – Discounts with various merchants |
| KOHO | Prepaid Mastercard® | – Essential: $4/monthly or $48/annually – Extra: $9/monthly or $84/annually – Everything: $19/monthly | 0% | – Earn 1% – 2% cash back depending on account type and purchase. – Earn up to 50% extra cashback from select merchants. |
Neo Financial
One of the newer players on the scene is Neo Financial, an online financial institution that was founded by two of the individuals behind SkipTheDishes. Neo Financial offers two products: a hybrid savings and chequing account and a rewards-based credit card. Their goal is to redesign the way Canadians currently spend and save their money. They intend to simplify personal finance through their products by creating a community and rewards system that lets Canadians do more with their money.
Neo Everyday Account
Unlike traditional savings accounts from big banks, Neo Financial offers a no-annual fee high-interest hybrid account that lets users, save, spend, and earn interest all from the same account. Users can use their Neo Everyday Account to send or receive e-transfers, pay bills and make deposits.
- No annual fee
- No minimum balance
- 0.1% interest rate on account balances
- Free e-transfers and everyday transactions
- Free Neo Money card that links to your account
- Up to 3% cashback on gas and groceries; up to 1% everywhere else
Neo Mastercard®
Neo Mastercard® is a no annual fee credit card with cashback rewards. It comes in two forms, secured and unsecured. Regardless, of which one you get, you can earn:
- Up to 4% on gas and groceries and up to 1% on everything else
- Up to 15% cashback with select Neo partners
Neo Credit Premium Plan
Neo Credit holders can earn extra cash back by upgrading their card to their premium plan for $9.99 a month. Users who do will earn 3% on gas and groceries, 0.5% monthly minimum cashback and 1% more on all other categories mentioned above.
When you use Neo, you’ll also have access to Neo’s app which provides details on your rewards and spending with a single touch of a button. Moreover, never miss a payment and get alerted when a purchase is made with your card in real-time with Neo’s notifications.
It only takes three minutes to sign up in 3 minutes. Once you’re approved you can use your Neo Credit card instantly via Apple Play or Google Play.
Welcome Bonus
Neo is offering new customers the opportunity to try Premium free for 1 month. Apply for a Neo Credit card, upgrade to Premium, and get your first month free.
Neo Perks
Users can customize their cards by adding perks. Neo perks are stackable and reward you for spending by boosting cashback offers for different categories. They are flexible and come with no commitment. You can easily add a perk to your card via the Neo app and cancel it at any time.
Available Perks
- Travel perks: $7.99 a month (not available in QC).
- Mind & Body perks: $9.99 a month.
- Food & Drink perks: $1.99 a month.
- Mobile & Personal Protection perks: $9.99 a month.
Brim Financial
Headquartered in Toronto, Ontario, Brim Financial is an online credit card issuer licensed by Mastercard®. Brim offers three unique credit cards that help Canadians save more and earn more rewards. They also have a flexible rewards system that allows users to redeem their points on any purchase, there are no black-out periods or restrictions like many other traditional credit cards. Moreover, the fintech firm charges no foreign transaction fees on any of its credit cards, while most banks typically charge an average of 2.5%.
Brim Mastercard® Features
- No annual fee
- Earn between 3% to 30% cashback on purchases at specific retailers
- Earn 1% cashback for every dollar spent on all purchases
- Installment Pay feature for purchases over $500
- Access to complimentary Boingo Wi-Fi
- 5 types of insurance coverages, including mobile device coverage, extended warranty, and travel accident coverage
Features Of Brim World Mastercard®
- All features that come with the Brim Mastercard®
- Earn 1.5% cashback for every dollar spent on the first $25,000 in expenditure a year, then 1 point for every dollar spent after that
- Earn a welcome bonus of up to $300 worth of rewards after your first expenditure
- No foreign exchange fees
- Free Boingo Wi-Fi
- Complimentary LoungeKey membership
- Comprehensive insurance package, including travel insurance, rental car insurance, flight and baggage delay, mobile device coverage, and extended warranty
- $99 annual fee
Brim World Elite Mastercard® Features
- Premium credit card offering
- 0% foreign exchange fees
- Earn 2% in rewards for every dollar spent on any purchase on the first $25,000 in the initial year, then 1 point after that
- Earn a welcome bonus of up to $500 worth of rewards after your first purchase with participating retailers
- Free Boingo Wi-Fi
- Complimentary LoungeKey membership
- Comprehensive insurance package, including everything offered with the Brim World Mastercard®, plus a few extras like emergency medical over 65 coverage and hotel burglary coverage
- $199 annual fee
STACK
STACK is another online credit card issuer that is centralized on its app, which is where clients can access their banking products and manage their money without having to visit a brick-and-mortar branch or even have to log in on a computer. Instead, everything can be done directly on the STACK app. STACK’s prepaid Mastercard® was invented with the goal of providing users with better control of their finances. Their Mastercard offers instant rewards along with no fees and advanced tools that can help you track and manage your spending.
Stack Prepaid Mastercard® Features
- No annual fees
- Reloadable
- Earn instant cash-back on purchases from participating merchants
- Discounts from partner brands
- Purchases can be automatically rounded up to the next $1, $2, $5, or $10, with the difference saved
- Earn a welcome bonus when you refer a friend/family member
KOHO
Founded in 2014 and based in Toronto, KOHO is a Fintech platform that believes that there are better financial solutions available. Through the power of financial technology, KOHO offers three full-service accounts to help Canadians better manage their money while earning rewards.
Users will earn interest on the balances they hold with their KOHO accounts and receive a prepaid credit card.
The KOHO prepaid credit card offers the best of both worlds, a debit card connected to your KOHO account and a credit card. You can use your prepaid card to make purchases, pay bills, and send e-transfers all the while earning cash back on eligible purchases. Moreover, the KOHO prepaid Mastercard comes with additional money management features such as automatic savings, financial coaching, and instant notifications.
Essential Account Features
- Has a monthly fee of $4 or an annual fee of $48
- $0 per month if you…
- Set up a recurring direct deposit of your paycheque or government benefit
- Or, deposit $1000 per month to your account.
- $0 per month if you…
- 1% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- Up to 50% extra cashback from select merchants.
- Earn 3.5% saving interest on the entire balance in your KOHO account
- Free e-transfers
- No NSF fees
- Credit Building for $10/month
- Check your credit score for free in-app
Extra Account Features
- Has a monthly fee of $9 or an annual fee of $84
- 1.5% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- 0.25% cash back on all other categories
- Up to 50% extra cashback from select merchants.
- Earn 4% saving interest on the entire balance in your KOHO account
- No foreign transaction fees
- 1 Free International ATM withdrawal each month
- Credit Building for $7/month
- Check your credit score for free in-app
Everything Account Features
- Has a monthly fee of $19
- 2% cash back on groceries, transportation (gas, parking, rideshare apps, etc.), and eating and drinking
- 0.50% cash back on all other categories
- Up to 50% extra cashback from select merchants.
- Earn 5% interest on the entire balance of your KOHO account
- No foreign transaction fees
- 1 Free International ATM withdrawal each month
- Discounted Credit Building for $5/month
- Check your credit score for free in-app
Use code LOANSCANADA when you sign up for a KOHO account and get $40 FREE when you add funds to your account.
Other Challenger Banks In Canada
Digital banks, which are also known as challenger banks, exist all across Canada. Currently, the most famously known challenger banks in Canada are KOHO, STACK, Brim and Neo. Other challenger banks include:
| Challenger Bank | Owned by |
| EQ Bank | Equitable Group |
| motusbank | Meridian |
| Tangerine | Scotiabank |
| Oaken Financial | Home Trust |
| Simplii Financial | CIBC |
| Alterna Bank | Alterna Savings and Credit Union |
| Motive Financial | Canadian Western Bank |
| Mogo | Privately owned |
| Mydoh | RBC |
| Ampli | RBC |
Final Thoughts On Challenger Banks: KOHO vs. Neo vs. Brim vs. STACK
Challenger banks have been a game-changer in the world of banking. Clients who appreciate the convenience of banking through computers and smartphones will find challenger banks much more advantageous than conventional banks.
