Can this FinTech startup become Canada’s next bank?

Koho Financial
CEO Daniel Eberhard explains why Koho is going from challenger bank to actual bank.

Koho is trying to be Canada’s next bank. Why? And how will this impact the state of financial services in Canada?

“If we had a bank licence today, I’m confident in saying we’d have the highest savings rate in the country.”

The first question is easy to answer. As Koho CEO Daniel Eberhard puts it on this week’s podcast, financial products are about “buying and selling money.” Becoming a bank will allow Koho to effectively own its inventory, resulting in higher savings rates and cheaper lending rates for Canadians, if only because the company will not be operating branches across the country.

Answering the second question requires a little context. A new banking entrant in Canada is compelling because Canada has so few: some 35 as of the start of this year. The six largest banks in Canada hold 93 percent of all banking assets in the country. By way of comparison, the United States features over 4,000 commercial banking institutions.

So any conversation about Koho’s impact, if it does indeed become a bank, is a competition conversation. But Eberhard notes it’s also a cultural one, with the wrong lessons learned from the 2008 financial crisis conflating a stable banking environment with a lack of competition.

If Eberhard backs up his claims about rates, Koho could find a willing consumer base, mirroring Wealthsimple’s rise. We’ve also heard on this podcast before that FinTech startups without proper accreditation are treated like second-class citizens in Canada, with little political will for change. Eberhard has a lot to say on that front as well, including how a seat at the table might amplify Koho’s voice.

Will one new bank move the needle in Canada? Let’s dig in. 

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The BetaKit Podcast is hosted by Douglas Soltys & Rob Kenedi. Produced & edited by Kattie Laur.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.

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