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.¹ – Up to 1% on everything else.¹ |
| Brim | Credit card | – $0: Brim Mastercard® – $89: Brim World Elite Mastercard® | 19.99% – 24.99% | – Brim Mastercard®: Earn 1point for every $2 spent – Brim World Elite Mastercard®: Earn 1 point for every $1 spent |
| STACK | Prepaid Mastercard® | $0 | 0% | – Earn instant cashback rewards – Discounts with various merchants |
| KOHO | Prepaid Mastercard® | – Essential: $48/annually – Extra:$144/annually – Everything: $177/annually | 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 else¹
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 else¹
- Earn extra cashback with 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.
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.
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 two 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.
Brim Mastercard® Features
- No annual fee
- Earn 1 point for every $2 dollars spent
- Installment Pay feature for purchases over $500
- Access to complimentary Boingo Wi-Fi
- Various types of insurance coverages, including mobile device coverage, extended warranty, and travel accident coverage
Brim World Elite Mastercard® Features
- Premium credit card offering
- Earn 1 point in rewards for every dollar spent
- Free Boingo Wi-Fi
- Comprehensive insurance package, including everything offered with the Brim Mastercard®, plus a few extras like emergency medical, rental car insurance and hotel burglary coverage
- $89 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 an annual fee of $48
- $0 if you…
- Set up a recurring direct deposit of your paycheque or government benefit
- Or, deposit $1000 per month to your account.
- $0 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 2.5% 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 an annual fee of $144
- 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 3% 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 an annual fee of $177
- 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 4% 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 |
| 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.
Challenger Bank Credit Cards FAQs
Is STACK or KOHO better?
Is Stack prepaid Mastercard® safe to use?
Which challenger banks offer no-fee credit cards?
¹Minimum balance in a Neo Everyday account required to earn the highest rate. Cashback earn subject to monthly maximum spend limits. Cashback may be limited and varies by perks, offer, and partner. There may be monthly limits for boosted cashback offers.
