Canadians embrace multi-banking as fees & budgeting bite

New research from the Canadian Prepaid Providers Organisation suggests Canadians are increasingly using both traditional and digital financial providers, indicating a rise in what it calls "multi-banking" across the country.

The study found 47% of Canadians use online or challenger banks, while 41% have relationships with both traditional and digital providers. Among those aged 18 to 64, digital bank use rises to 52%.

The findings suggest consumers are turning to newer financial services for practical reasons rather than brand loyalty. Lower fees or better rates were cited by 42% of respondents as reasons for using neobanks, while 29% cited stronger mobile experiences.

Budgeting and day-to-day money management also ranked highly. Nearly half of respondents, 48%, said they prefer financial apps that help them budget and manage money more effectively.

The research comes as Canada's fintech market continues to expand. The sector is projected to reach USD $18.84 billion by 2033, reflecting broader changes in payments, banking and embedded financial services.

Cost pressures

Economic conditions also appear to be shaping behaviour. The study found 80% of Canadians consider better money management tools important amid economic uncertainty, and 75% said avoiding banking fees has become more important over the past year.

There are also signs that some consumers are relying less on borrowing for everyday spending. The findings show 44% are actively trying to use their credit cards less for routine purchases.

The shift extends to prepaid products, which are increasingly being used to control spending. Adults aged 18 to 34 were more likely than older Canadians to say they expect to increase their use of reloadable prepaid products.

Among prepaid users, 45% said spending limits or budgeting tools were the most helpful feature. Convenience was the main reason for use for 40%, while 39% cited the ability to set spending limits, and 33% pointed to security.

For online shopping, 44% of prepaid users prefer prepaid cards to credit or debit cards. That suggests some consumers see prepaid products as a way to manage risk and maintain tighter control over household spending.

Government payments

The research also points to a demand for changes in how the public sector sends money to citizens. Nearly seven in ten respondents, or 69%, said governments should stop mailing cheques and modernise payment and disbursement methods.

Direct deposit was the preferred option for receiving government payments, chosen by 81% of respondents. The figures suggest consumer expectations for speed and convenience in financial services now extend beyond private-sector banking and payments.

Jennifer Tramontana, Executive Director of CPPO, said changing consumer behaviour has raised the role of prepaid products in the wider financial system.

"As Canadians create a multi-banked lifestyle, prepaid technology has emerged as the underlying infrastructure making it possible," Tramontana said.

She said consumers are choosing financial tools that better match everyday needs around cost and convenience.

"Consumers are building a financial system that works for them by choosing tools that prioritize convenience, lower costs, and stronger money management. The opportunity now is to keep momentum going by supporting the right environment for Canada's fintech builders to keep improving these products for Canadians," Tramontana said.

The Canadian Prepaid Providers Organisation represents participants in Canada's prepaid payments market, which it values at CAD $14 billion. Its members include networks, issuing banks, fintechs, programme managers, processors, challenger banks, service providers and entrepreneurs.

The findings offer a snapshot of a consumer market that is becoming more fragmented, but also more intentional, as households mix providers and products to manage costs, payments and daily budgeting.