Questrade Financial Group Inc. has secured final approval for a licence to launch a new Canadian bank as part of a bid to diversify beyond low-cost stock trading.
The company said Monday that it received approval for a licence from the Office of the Superintendent of Financial Institutions (OSFI) to launch banking operations under the name Questbank. Questrade is stepping into banking at a critical time when new players are entering the market and updated systems could boost competition in the sector.
“We think that there is a need to serve Canadians much better. There is room for a new kind of bank and a new kind of player in the bank space,” Questrade chief executive officer Edward Kholodenko said in an interview.
“We chose to get regulated and be inside the tent because it’s important for Canadians to deal with a regulated institution directly and understand where their money is being kept.”
Questrade launched 26 years ago and has since grown into an online brokerage with $85-billion in assets, up from $9-billion when it first applied for the licence in 2019.
Questrade inches closer to winning Canadian banking licence
The company said it expects to announce next steps on banking products and services in the first half of 2026.
“We want to make sure that we’re serving [Canadians] in the best way possible with all of their financial needs,” Mr. Kholodenko said.
The process of becoming a bank is rigorous. A Schedule 1 lender is a domestically owned institution that accepts deposits. The application requires approval from OSFI and the Minister of Finance.
Deposits are a key part of a bank’s business model. Lenders use customers’ cash to fund loans and investments, and to generate revenue through fees and interest.
In April, OSFI granted a banking licence to Spanish lender Banco Santander SA SAN-N. On Monday, its Canadian consumer banking unit launched guaranteed investment certificates (GICs).
Online bank Koho Financial moves to next stage of approval toward gaining a banking licence
Mobile banking provider Koho Financial Inc. has also applied for a banking licence. Early last year, CEO Daniel Eberhard said Koho had moved into the second of three phases, and that he hoped its new bank unit would begin operating within 18 to 24 months.
Meanwhile, fintech companies are awaiting new details on long-delayed Real-Time Rail (RTR) and open banking regimes as Ottawa prepares to unveil its federal budget on Tuesday.
The RTR project is a new system that would allow payments to be sent and received instantly. Open banking involves a framework that enables financial institutions to exchange information more efficiently and securely.
Canada’s six biggest banks dominate the market. Moving to a different bank is often difficult as it means leaving personal financial history behind and starting fresh with a new institution.
Proponents of open banking say the rules would provide consumers with more control over how they share their financial data, making it easier for them to switch banks while boosting competition in the sector.
“That’s been a huge source of friction for many Canadians because when you establish a long relationship with one bank, it is a big pain to undo all that and then try to go somewhere else,” Mr. Kholodenko said.
“Once you have access to all the data that’s been under lock and key – with permission, of course – that leads to better outcomes for Canadian consumers.”