Is Neo Financial at risk of being taken over by one of the big Canadian banks

A new player in the Canadian credit card industry, Neo Credit Cards has been gaining traction since 2019. It markets itself as an alternative to conventional banks by offering streamlined services including debt consolidation and rewards points for regular payments. There is still a chance that one of the major Canadian banks may acquire Neo Financial, despite the fact that it is a formidable competitor and has had success in recent years. Whether we want to know whether Neo Financial is in danger of being acquired, we need to look at the competitive environment. Large Canadian banks have a disproportionate share of the market and are reluctant to cede that power. The large banks can afford to buy Neo Financial if they think it will increase their profitability by reducing their reliance on intermediaries. Neo Financials’ organisational structure, absence of physical sites, and absence of participating suppliers may also provide large banks with a promising investment opportunity. Next, we need to think about regulation. One of the most powerful reasons preventing the large banks from absorbing neo-financial institutions is regulation. The Canadian government is not fond of Neo Financials’ portrayal of itself as a threat to the established banking system. […]

Investing in GIC in Canada

Investing in Guaranteed Investment Certificates (GICs) in Canada is one of the most popular methods of savings and investment vehicles used amongst individuals. GICs offer higher return rates than what many of the biggest Canadian companies are paying out as dividend, yet do not come with the inherent risk associated with individual share ownership. Currently, the interest rates on GICs range from 1.8% to 3.3% (as of May 2020) with some banks and trust companies from time to time putting up promotions of higher rates of up to 4.45%. Though these rates offer much better returns on investments when compared to the returns of individual share ownership of any of the large Canadian companies, there are a few factors to consider before deciding to invest in GICs. When deciding to put in money into a GIC, the first thing to consider is the length of term of the investment. Usually, the longer the term, the higher the interest rate that most banks or trust companies offer, as the interest rate is meant to compensate for the investor’s willingness to tie up their money for a longer period of time. If the investor wants to withdraw from their GIC before the […]