Opening an account with one of the Big Six banks made sense for Neil George when he first arrived in Canada as an international student about a decade ago.

He used a student program offered by a lender to wire a portion of his tuition fee into a Canadian investment account while he was still in his home country and then used those funds to support his study visa application.

“It just made the entire application process easier,” he said. “Naturally, I was going to stick to the bank after coming to Canada.”

A decade later, however, George’s financial setup has changed. The 30-year-old, who works as a project manager in Vancouver and earns about $100,000 annually, relies on Vancouver City Savings Credit Union (better known as Vancity) and

Wealthsimple Inc. for his banking and investment needs instead of the Big Six banks that dominate Canada’s financial sector.

“It was the fees I was charged at every step that triggered me to make the change a few years back,” he said. “Why would I need to hold $6,000 in my chequing account just to not pay a monthly fee? I wasn’t earning any interest either. That’s insane.”

George now deposits his paycheque at Vancity and invests through Wealthsimple, a financial setup that he said allows him to earn more through interest and prevents “unnecessary charges,” such as a non-sufficient funds fee.

Canadians don’t tend to switch banks, but recent surveys suggest that people below the age of 40, such as George, are more likely to do so, giving credit unions, smaller banks and fintechs a demographic target to focus on as they try to compete with the Big Six, which have dominated for decades.

Millennials and gen-Zers have been switching their financial institutions at twice the rate of older customers in the past four years, according to an annual J.D. Power study that has been following banking trends in Canada since 2022.

A survey of 3,550 Canadians by Abacus Data said 25 per cent of those aged between 18 and 44 expressed an interest in switching their financial organizations by 2026, compared to five per cent of people aged above 60 and 15 per cent of those between 45 and 59.

The number of consumers opening primary chequing accounts, which they use to receive their payroll deposits and pay bills, in branchless or online-only banks has increased to 21 per cent in 2025 from 11 per cent in 2022.

These results suggest established financial institutions need to build better connections with their younger customers, Paul McAdam, a senior director at JD Power, said, pointing out that certain financial companies in the United States share information on how to find jobs or how to get gig work to supplement a younger person’s income.

“They have real content and information and … you just don’t see the Big Five doing that right kind of appealing,” he said.

Filling in these personal finance gaps is how many of Canada’s alternative lenders are trying to fuel their growth and, to some extent, compete with the Big Six.

One such lender is Toronto-based Wealthsimple, a fintech that has gained more than three million clients since its inception about a decade ago, with one in five customers being under the age of 40, according to company disclosures.

Wealthsimple isn’t technically a bank, but it offers similar services, many of which founder Michael Katchen said are better than those offered by the Big Six, such as a chequing account without monthly fees and a relatively high interest rate of 2.75 per cent.

Trying to look and act different than the big banks is something Wealthsimple tries to do. For example, Katchen, perhaps on purpose, didn’t suit up like a buttoned-down banker at one of Wealthsimple’s most important events in early June, which launched the company’s first credit card, a line of credit and an expanded chequing account. He didn’t mince his words either.

Clad in a black, zippered jacket, a pair of jeans and white sneakers, he compared the country’s banking sector to a “steam engine” operating in a world moving “at the speed of light.” Ratcheting up the challenge at the event that was provocatively called The End of Banking, he said the biggest banks were a tax on Canadians because of the high fees they charge.

With more than $70 billion in assets, Wealthsimple said it is the largest financial institution to emerge in Canada in the past 25 years and its founder has even bigger dreams.

“We are trying to build the largest financial institution in Canada and reinvent the way financial services are done,” he said. “If we are successful, and all signs point to us being on the right track, there won’t be just the Big Five or Big Six banks anymore; there will be Wealthsimple redefining what the industry looks like.”

Considering that the Big Six hold more than 90 per cent of the market in a sector that Royal Bank of Canada chief executive Dave McKay recently described as a “ruthless oligopoly,” Katchen’s statement may seem far-fetched.

But it also reflects the opinion of many lenders outside the Big Six, who, like Katchen, say they are growing at a faster pace than before due to the uncertain economy and a growing openness to try non-traditional banks or digital platforms for their financial needs.

Wellington Holbrook, who heads Vancity, one of the largest credit unions, compared Wealthsimple’s event last month to an “Apple reveal from 2008,” as the fintech revealed relatively different approaches to banking, such as allowing customers to access their paycheque a day earlier than usual or approving a high daily e-transfer limit of $25,000 as opposed to $5,000 or $10,000.

“Canadians don’t know what they’re missing,” he said. “What was really exciting about Wealthsimple’s reveal is that they’re showing different ways that banking could be done. You’re going to see more of that from organizations like Vancity.”

For now, Vancity is focused on upgrading its technology platforms at a cost of “tens of millions” of dollars. That’s because it wants to hold onto its “significantly younger” membership than other financial institutions have, he said.

“Attracting younger folks” isn’t difficult for Vancity, Holbrook said, because of its commitments to climate action and underserved people.

“This is very appealing to them,” he said. “Our challenge has been meeting them with digital and technology experiences they’re looking for.”

Vancity, which relies a lot on residential mortgages, reported a significant amount of growth during the pandemic when interest rates were low. But that fell flat when rates went up and squeezed margins. But it is “starting to accelerate” this year and Holbrook anticipates significant growth in the next few years.

He views the rise of EQB Inc. , Canada’s seventh-largest bank, as the “use case” for alternative financial banking models. After starting in 2016, EQB’s assets quickly grew to $134 billion. In comparison, Vancity is at about $37 billion.

“It’s quite realistic, in my view, that a handful of larger credit unions with the right strategy could really see a big leap to create a stronger middle-sized banking sector, the kind that has hollowed out in Canada,” Holbrook said. “I think it’s up to us to start filling it.”

EQB also had a 23 per cent year-over-year growth in its customer base, according to its latest quarterly results released in May. The online-only bank’s strategy has been to rely on attracting consumers who are underserved or ignored entirely by the Big Six, analysts say.

The Toronto-based bank was dealt an unexpected blow when longtime chief executive

Andrew Moor died in June . In an interview in June, he said EQB was gaining customers at a faster rate than the Big Six, and its focus has been on marketing to both build credibility and break through the advantages and familiarity that customers have with the Big Six.

One way EQB has attempted to do that was by hiring the father-son duo of Eugene and Dan Levy — stars from the hit television show Schitt’s Creek — to represent the bank in commercials.

The ads helped EQB connect with a wider audience and gain a sense of credibility, Moor said. It made an online-only bank seem “real,” akin to a brick-and-mortar branch around the corner.

Operating without physical branches also helps EQB save a “ton of money,” said Shalabh Garg, an analyst at Veritas Investment Research Corp., and allows it to offer unique, low-cost products to its clients.

On the flipside, he said the bank has higher technology expenses, such as the need to spend more on cloud-based servers.

For some other firms, such as Ottawa-based Alterna Savings and Credit Union Ltd., it was the increase in the number of people looking to renew their mortgages and shopping for better deals that led to higher-than-usual growth in the past two years, chief executive Rob Paterson said.

He said this suggests Canadians are more open to trying out different products at alternative financial organizations as opposed to just sticking to one bank.

“They may come to Alterna for a mortgage, they may go to a fintech for a credit card or a wealth product and then go to EQ Bank for a high-interest savings account,” he said.

Consumers, especially those under 35, are increasingly looking for “hyper-local advice” that’s tailored to their needs, something Paterson said the Big Six is missing out on since they are focused more on their shareholders and their goal of “maximum profitability” during each quarter.

Neo Financial Technologies Inc. co-founder Jeff Adamson said half of Canadians today split their money across multiple banks, which indicates that the “legacy behaviour” of sticking to just one bank account for “your whole life” and not opening any other accounts has changed.

Neo Financial isn’t a bank, but offers similar products, such as a credit card and an everyday account, and has gained more than a million customers since it was founded in 2019 by the co-founders of SkipTheDishes Restaurant Services Inc.

“What we’re seeing in Canada is a real springtime for new alternatives to the kind of traditional legacy ways of banking,” Adamson said, pointing out that the number of customers turning away from long-established banks has doubled.

Canadians are gradually learning to trust tech companies with their money, Adamson said, calling it a “natural evolution” akin to how people today have no issues “getting into an Uber or watching movies on Netflix.”

But he also said this is an “evolution and not a revolution,” and that disrupting the banking sector will take more time than others.

“The transport sector is not the same as health care or financial services,” he said. “Trust is not built overnight.”

Despite the advances made by the alternate lenders in recent years, there’s no immediate danger of a negative impact on the Big Six, banking analysts say.

John Aiken, an analyst at Jefferies Inc. who has been following Canada’s financial sector for more than two decades, said there’s a “lot of interesting innovation” within the Canadian banking sphere and it’s taking place “at a pace that we probably have not seen before.”

He said the “fintechs or disruptors” do appear to be making inroads, but they are not enough to meaningfully impact the momentum of the Big Six just yet. The alternative players are still very small compared to the “behemoth” that the biggest banks are, and their strong growth numbers are “off what is effectively a zero balance,” he said.

For example, EQB had a market cap of around $3.9 billion as of mid-July, a fraction of

Canadian Imperial Bank of Commerce’s $90.1 billion and National Bank of Canada’s $47.2 billion, the fifth- and sixth-largest banks, respectively.

The loan growth and deposit numbers for the big banks are also still quite healthy, which suggests that companies such as EQB or Wealthsimple aren’t really taking away market share, Garg said.

Banks often look at fintechs almost as test cases, Aiken said. If they see that a new product is successful, they usually end up buying it, he said.

However, he said it’s an exciting time to be an investor at some of the alternative financial firms since they only need a “microscopic share” of what the biggest banks have to be “wildly successful.”

As for financial firms looking to take advantage of the relatively higher fees charged by the Big Six, Aiken said it seems as though Canadian consumers are “implicitly happy” with the “tax” associated with banks since it provides a stable financial system.

“Look at all the issues that the United States had a year and a half ago. But not a ripple in Canada,” he said. “Maybe we as Canadian consumers are willing to pay these higher fees so that we don’t have to have a crisis every 18 months.”

Aiken doesn’t see the rising activity among alternative lenders impacting the Big Six in the near term, but the conversation could be different in a decade.

“As they continue to grow, as they continue to take market share, that can become a bigger issue,” he said. “And so in 10 years’ time, the conversation could be, ‘Well, how are the banks trying to fight against these intrusions?’ Whereas, right now, I don’t think they’re actively fighting against it, but they’re paying attention.”

Garg, however, said that what is more important is whether the alternative lenders can become a one-stop shop for their customers or at least come close to becoming one in the future.

He said fintechs and other alternative lenders are popular among younger consumers because of their preference for digital solutions and lower fees, but that may not hold once they grow older, progress in their respective careers and make more money.

“That’s where these fintechs fail,” Garg said. “What if you are earning more money now and need advice? Or you want tax-planning or mortgage advice? Also, once people start building wealth, no one wants to have 10 different banking accounts because that’s complicated.”

The big banks are aware of this and are increasingly focusing on multiproduct consumers who tend to be more valuable for the bank, he said. A person who has a chequing account and a credit card with a specific bank is more likely to get a better deal on a mortgage there compared to someone who doesn’t.

As such, the real test for alternate lenders is whether their customers will stick with them in the future, Garg said. They will also have to keep tackling the big banks that will keep adapting and evolving.

JD Power senior director Jennifer White said it’s all going to boil down to winning the “hearts and minds” of young customers, who represent a key demographic for growth.

These relationships between banks and consumers take time to grow and require a long period of successful interactions, ranging from something as basic as checking one’s balance or paying a bill to successfully using AI chatbots, she said.

“All those have to move in a bit of a harmonious way,” she said.

That’s what Wealthsimple’s Katchen hopes to do, as his firm tries to hold onto the millions of clients it has attracted in the past 10 years while continuing to grow.

“Ten years ago, there weren’t alternatives to the Big Six banks,” he said. “(Today), what you are seeing is Canadians, for the first time, waking up to see that there is an alternative that is better, and they’re putting in real dollars.”

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