Newspaper article The Canadian Press

Big Banks Respond to Fintech Challenge by Cutting Fees and Offering New Options

Newspaper article The Canadian Press

Big Banks Respond to Fintech Challenge by Cutting Fees and Offering New Options

Article excerpt

Big banks moving to meet fintech challenge

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OTTAWA - Technology firms have turned several industries on their head. The way people buy books, hail a ride home from the bar or find a room for the night while on vacation have all changed.

And now financial technology or fintech firms are turning their sights on the banking industry, but Canada's big banks aren't going to give up their dominant position without a fight.

Joanna Rotenberg, head of personal wealth management at BMO Financial Group, says the needs of customers are shifting and clients are seeking out digital tools to access and manage their money.

In response, earlier this year the Bank of Montreal launched its SmartFolio investment service, which offers a professionally managed portfolio online for a low fee.

"It's for clients who want support from human professionals," Rotenberg said. "It's not a robot behind the scenes, but people who want to be able to access that digitally versus needing the hand-holding and face-to-face support."

The BMO offering comes as companies like Wealthsimple, Nest Wealth and ModernAdvisor look to take a bite out of the big players by making easy-to-open accounts online and cheaper by using exchange-traded funds.

Rotenberg says it has been more than just digital-savvy millennials opening accounts with the new BMO service, adding that it has attracted the attention of a wide range of clients in both age and amount of savings they have to invest.

"You can't stereotype people in terms of who is interested. It really is about people who are looking for something that they can use on their smartphone, but they are going to get the money management support that they need," she said.

And it isn't just investing where the big banks are fighting off new competitors. Retail banking, long the bedrock of the big banks, is seeing new challengers offering basic banking services to Canadians who have long complained about the fees they pay.

Online banks like EQ Bank, which is backed by Equitable Bank, and Zag Bank, which is supported by Desjardins Group, have launched with promises of lower fees and high interest rates on deposits as well as apps to help people manage their money. …

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