A Guide to Online Banking for Beginners in Canada

This article will provide a complete guide to online banking for beginners in Canada that will cover everything you need to know to get started while navigating online banking safely and effectively.

A Guide to Online Banking for Beginners

If you follow all the steps outlined in the guide to online banking for beginners. You’ll be able to get started with online banking without issues, and you will keep all your information safe.

Let’s begin by defining what precisely online banking is.

What is online banking?

Online banking, commonly called digital banking, is a method of using the internet to complete financial transactions.

The government of Canada website states that “online banking allows you to access your accounts and make various financial transactions on the Internet… using either a computer or a mobile device such as a cell phone or tablet.

Online banking provides a way to conduct most everyday financial transactions digitally with nothing more than an internet-connected device.

According to The Canadian Bankers Association (CBA), 93% of online banking customers report high satisfaction.

 

What is the difference between online banking and internet banking?

We’ve covered above that online banking is a method to digitally complete financial transactions.

While some people may refer to these two things interchangeably, an internet bank is a financial institution with no physical branches.

Therefore, an internet bank conducts online banking only, but a traditional bank also allows for online banking (using the internet).

You can see how they can be referred to each other interchangeably, but for this article, this is how we will distinguish between the two.

 

What is needed to set up online banking?

 

Online banking requires the traditional information that you would need to bank traditionally at a branch.

All major banks provide online banking services if you already have a bank account.

There are also numerous internet banks that do not have branches. The setup is similar for both when it comes to opening an account.

You’ll need identification and to fill out an application with personal details such as your home address, date of birth, email address, phone number, and SIN number.

Once you’ve done this, or if you already have a bank account, setting up online banking is simple.

You will find an option on your bank or financial institution’s website to register for online banking. Enter your debit or account number, create a username and password, and read and agree to the terms and conditions.

 

Can you set up online banking without going to the bank?

Assuming you already have a bank account opened with a financial institution, it is entirely possible to never have to return to a bank branch.

You can also open a bank account instantly with an established internet bank such as those mentioned above. Since they have no physical branches, your only option is to use the internet through a computer or mobile device.

These institutions must strictly protect your information as securely as a physical branch.

 

Is online banking popular in Canada?

The Canadian Bankers Association reports that 89% of Canadians used online banking last year, and 78% reported it as their most common banking method.

In 2017 approximately 67% of Canadians visited a bank branch. In 2021 that number was down to 57%. It is estimated that less than half of Canadians will visit their bank once in 2022.

Is online banking safe to use?

Online banking is extremely safe to use when following best practices. Financial institutions implement strict policies to prevent unauthorized transactions and fraud.

In addition, the Canadian Deposit Insurance Corporation (CDIC) insures up to $100,000 per individual account to protect against losses if something happens to your bank.

The CDIC is an independent corporation established by the federal government of Canada.

Member institutions include all major national banks as well as major federal credit unions, several international banks (with Canadian branches), and internet banks such as Wealthsimple, Manulife Bank, and Tangerine.

Over 86% of Canadians surveyed reported that they trust their bank to offer secure digital services and protect their personal information.

 

Mobile Banking: Can I do online banking on my phone?

Mobile banking is the ability to bank anywhere in the world with a mobile device (phone/tablet) connected to the internet through either a mobile app or an internet browser.

Starting mobile banking is as easy as downloading your financial institution’s app and then signing in with your username and password to set up your online banking.

You can also visit the website on your phone and sign in as you would via computer. On some occasions, such as adding a payment recipient for an international money transfer, you’re required to visit the mobile site.

This can also be true for seeing specific data points on investment accounts, such as detailed charts where the computer platform provides more powerful capabilities than the mobile app does not.

Mobile banking will let you safely and effectively access your accounts (savings, chequing, TFSA, RRSP, etc.) and make financial transactions, transfers, pay bills, etc.

 

Benefits of online banking

There are several benefits of online banking that can be unique depending on how each individual uses their accounts.

The 2 main advantages of online banking in Canada for most users are:

24/7 access to accounts

With online banking, you can access your accounts to pay bills, transfer funds, open and close accounts, and apply for credit cards and loans.

You can also always see account details and bank statements. Online banking makes ordering chequebooks and buying insurance seamless and more convenient.

Lastly, there is access to 24/7 chats and hotlines (traditional phone calls).

Virtually all other features associated with online banking are available at any time and place, even when bank branches are closed. This is why this is considered the biggest benefit of online banking.

Automatic bill payments

You can set up an automatic bill payment through online banking effortlessly. If you get a new phone or set up a new subscription service, online banking allows customers to quickly add these payment recipients, so you never miss a payment.

Lower fees and higher interest rates

Online banking and especially internet banks often offer much lower fees because of the lower overhang costs associated with your account usage.

Fewer people in the bank mean less need to pay staff to be in the bank, and ultimately less need for bank branches in general.

Also associated with lower overhead costs is the ability of financial institutions to directly translate those savings into perks for customers. A common way to pass these savings to the consumer is to offer higher interest rates.

Strictly online banks (internet banks) typically provide all major financial institutions’ best interest savings accounts.

 

Drawbacks of online banking

There are certainly some drawbacks of online banking in Canada that vary in importance depending on how you use your bank.

The two main disadvantages of online banking and the things you miss out on with online banking instead of going to your branch are:

Less personal relationships

Online banking doesn’t offer the same level of relationship building as communicating directly with tellers or branch managers.

While most institutions offering online banking also have branches, internet banks are incredibly restrictive in this scenario.

Historically, a great relationship with your branch manager can be advantageous for some situations, like looking for a loan. Many banks now rely on strict algorithms where computers decide based on your credit history, and online banking also records all necessary data for this to occur.

Safety deposit boxes

Safety deposit boxes are one thing that online banking can’t provide. You’ll need to go into your bank to access these.

 

Best Security Practices and features for Online Banking

There is undoubtedly the safest way to do online banking.

These are the 5 things to ensure to adhere to when online banking.

Use a secured wifi connection.

Don’t use public wifi when logging into your online bank. While most of what you do on the internet is irrelevant to fraudsters, signing into your online bank involves typing your username, client card number, and password.

Experienced hackers can hijack public wifi connections and syphon information and data, including what you type.

Avoid using them unless you use them through a trusted VPN service (virtual private network) that masks your connection and protects you from these attacks.

Set a strong password

Choose a strong password consisting of lower and upper case letters, numbers, and symbols.

If you’re able, use something like Apple’s or Google’s suggested passwords that identify random strings of numbers, letters, and characters that make it virtually impossible to guess.

Also, don’t ever reuse passwords. Using your password and email or reusing your username on multiple sites and apps exponentially increases online banking fraud’s danger.

This is because using the same credentials on every account you create means one data breach exposes your information to every other account you’ve created (with the exact details). Not all businesses have as high cybersecurity quality as financial institutions, in-fact most don’t.

So while your bank can protect your information, the next app you signed up for with those same details can’t. If they face an online data breach, your banking sign-in will be compromised and said thief could try it with your bank to see if the login works.

It’s easy to avoid this by using a unique password.

Don’t share your PIN, password or username with ANYONE.

The reasoning here could seem quite obvious; someone you know could steal from you.

So, can you share your passwords for online banking with a friend you trust? NO! This is in the terms and services of all banks and will void any fraud or theft, even if it’s by a stranger on the other side of the planet.

 

What are the best online banks in Canada?

Your online banking experience in Canada can depend on your personal use case(s). We’ll list financial institutions that are rated to have the best online banking experiences in Canada.

Out of the major Canadian banks, Scotia Bank currently offers the best interest rates of 1.35%.

The Royal Bank of Canada has the highest customer experience ranking (99%), primarily based on its high-quality mobile app, which is the best ranked among the major Canadian banks. CIBC is a distant 3rd amongst the Canadian banks falling behind both RBC and Scotia.

EQ Bank is highly regarded as a top internet bank in Canada, providing a 2% interest rate for their savings account and a $100 signup bonus with $0 fees. In comparison, Tangerine uniquely offers a 1% on chequing accounts and also a $100 signup bonus with $0 fees.

Wealthsimple offers the same signup bonus with a superior investment platform offering zero commissions for trading accounts such as TFSA and RRSP with Canadian stock exchanges and highly regarded pre-paid debit/credit cards.

TD Bank is the leader in the investment platform side of the major Canadian banks. They offer over $10 per trade through their investment platform (TD Waterhouse) compared to Wealthsimple’s $0 commissions but do provide more in-depth information.

Meridian Credit Union offers a low-fee chequing account and also has some of the best deals for credit cards, loans, and mortgages.

Are ATMs a feature of online banking?

ATMs are actually one of the most prevalent forms of online banking features. Withdrawals, deposits, and statements displayed are all provided digitally.

ATMs (automated teller machines) are computers that connect to the internet to manage transactions. They allow customers to preview account balances, withdraw or deposit money, and preview account activities.

 

What is a mobile ATM?

A mobile ATM is a relatively new concept in the online banking world. These are simply ATMs that don’t sit in one place… or, more accurately, one place for too long.

They’re often compared to food trucks that show up at events. Outdoor festivals or concerts. For example, a Ribfest or music festival usually takes place in the middle of a large field or park with no standard and constant power service.

These events require many guests to attend, spend, and withdraw funds. Mobile ATMs are the solution.

 

Conclusion to A Guide to Online Banking for Beginners

Online banking is becoming a part of nearly all Canadian’s lives while traditional branches are falling by the side.If you follow the guide to online Banking for beginners, you’ll enjoy the convenience of having access to your accounts from anywhere at any time.

You’ll also be able to keep your financial information safe by strictly following these recommended steps. All in all, the advantages of internet banking services widely outweigh the disadvantages.

By following the tips and information provided, you can ensure your digital banking experience is safe, and all your financial needs can be met.