Canadian banking co-operative Desjardins is to wind down the operations of its mobile and online-only direct bank Zag Bank.
The contrary decision to close the Calgary-based offshoot comes at a time when major banks the world over are contemplating setting up their own standalone digital operations to compete with newcomers and fintech startups.
Announcing the decision, Denis Berthiaume, senior EVP and COO of Desjardins, says: "We recently reviewed our activities in Ontario and in the Western and Eastern provinces and decided to concentrate our efforts, resources and investments on innovation and growth in P&C insurance, wealth management and payment services. As a result, we determined that an online or direct bank was no longer a strategic fit with our long term strategy."
Zag Bank, formerly Bank West, a federally regulated bank founded in 2003, was acquired by Desjardins Group in 2011 as part of the acquisition of Western Financial Group. In 2014, it was renamed Zag Bank and repositioned as a direct bank, offering various financial products through online and mobile applications to consumers across the country.
The bank has commenced the winding down of its operations, shutting up shop for new accounts and setting a target of the second quarter of 2019 for closure.
The company currently employs approximately 60 people based in Calgary, Toronto and Montreal. Berhtiaume says where possible redundant staff will be redeployed across the group.