EQ is one of the alternatives in Canada’s financial industry that have been working to diversify the landscape, but while they have made inroads, the near-term forecast is for even more concentration ahead
Whether you’re catching a flight, opening a new bank account or picking up groceries, a small group of big names takes up most of the market share. Competition Ltd. is a Canadian Press series that explores what this means for products – and prices – in the country.
EQ is one of the many alternatives in Canada’s financial industry that have been working to diversify the landscape, but while they have made inroads, and there are structural changes in the works that could give them a boost, the near-term forecast is for even more concentration ahead. The industry association maintains that the market is competitive, with 34 domestic banks, more than 200 credit unions, a growing number of fintechs plus trusts, life insurers and foreign-owned banks in the mix.
He points to challenges of scale, such that EQ pays about seven times more per Interac transaction as the big banks since larger institutions can spread fixed costs over more transactions. One of the biggest possibilities to shake up the system is the rising trend globally towards open banking, which is in essence allows customers to give banks permission to share their personal data with other financial companies.
The delays mean all sorts of innovations are slower to arrive, said Vass Bednar, executive director of the Master of Public Policy in Digital Society at McMaster University. The industry is simply concerned with making sure the government balances safety and security with competition and access, said Hannah at the bankers association.The tension between competition and security is seeing more focus these days following several high-profile bank failures including Silicon Valley Bank and Credit Suisse.
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