After 20 years of operating together, CIBC and President’s Choice Financial announced yesterday that they would be ending their banking services partnership. PC Financial has run jointly with grocery chain Loblaw Cos. Ltd. for 19 years, with CIBC handling all of their daily banking services. Now, with roughly two million consumers using PC Financial banking products, CIBC plans to absorb these accounts, and move them over to its own new online banking venture, Simplii Financial Bank.
"This is an exciting step as we continue to build a leading client-focused direct banking offer," said Mike Boluch, CIBC’s Executive Vice-President, Direct Banking, Innovation & Payments, in a statement released yesterday by CIBC. "Simplii will deliver straightforward, no-fee everyday banking and great rates for the growing number of Canadians who prefer to do their banking by telephone, online, or through mobile and other digital channels.”
Although it sounds like a bad breakup, it’s really just a name change and rebranding.
Effective November 1, the Simplii Financial brand will replace all of the PC Financial-branded banking products and services provided by CIBC. Day-to-day banking products, as well as any investments, loans, or mortgages you hold with PC Financial will remain the same, but will just be under a new name. There will be no changes to account numbers, registered bill payments, preauthorized debits or automatic payroll deposits. The terms and conditions of mortgages will also remain the same.
At the moment, PC Financial’s focus is to ensure a smooth and seamless transition. Besides the name change, the only other things you may notice are CIBC ATMs and PC Financial kiosks being removed from grocery stores. Those machines will be replaced with new bank machines solely owned and operated by PC. And as such, CIBC and Simplii Financial customers will have to pay a fee to use them.
On the other hand, Simplii Bank users will still have free access to CIBC’s network of ATMs.
What happens to PC Financial MasterCard holders?
There will be no changes to the PC Financial® MasterCard® products as they are solely owned by PC Bank. Points can still be earned as per usual when you use your PC Financial® MasterCard®, which then can be used to redeem groceries and other items at stores where PC products are sold.
However, if your banking product is under the Simplii Financial brand, you will no longer be eligible to earn points with that product after October 31. For example, if you have a PC No Fee Bank Account that earns points on all of your debit purchases, you will no longer be able to earn points once you are moved over to Simplii Financial.
Why is this happening now?
This is purely my speculation, but it’s likely the relationship between PC Bank and CIBC just ran its course. Their profit-sharing model worked well for nearly two decades, but perhaps CIBC was simply looking to launch their own online bank, as consumers are opting for a more modern, convenient way to bank.
At the same time, PC Bank may have decided that this piece of business was no longer worth it for them. The PC Financial® MasterCard® has become a popular credit card among Canadians, so perhaps PC Bank would prefer to focus on that for now.
Why branchless banking makes sense
Online banking was created to give consumers more choice and convenience. And with the growth of financial technology, Canadians are expecting more and more out of their online banking experience.
When you bank online, there’s no need to wait in lines or book appointments to make a transaction. You can do your banking whenever and wherever you want. But keep in mind that online banks aren’t meant to replace physical banks, they’re more of a complement to your day-to-day needs.
Although the split between CIBC and PC Bank was unexpected, there’s no doubt that online banks are something Canadians crave. Tangerine (formerly ING) has been around for two decades while new players such as EQ Bank and Oaken continue to attract new clients.
However, if you are a PC Bank client and have questions on how your product may be affected in the changeover to Simplii Financial, it’s best to give PC Financial a call and speak to a financial advisor.
If you think it’s time to compare bank accounts, RATESDOTCA can provide you with an array of options based on your needs.