Forget Predatory Fees: Here’s KOHO’s Consumer-First Digital Bank

13 May 2022

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The traditional bank is trying hard to change its ways, but hundreds of years of history make for difficult ground on which to grow and branch out in new directions. Customers for banking services today are looking for the type of convenience and speed that dozens of providers offer them via the smartphone in their pocket. Order a cab, a take-out meal, change car insurance, even buy an apartment? It’s all done from an app in 2022. Shouldn’t banking be the same?

Daniel Eberhard founded a home-grown Canadian offering, KOHO in Vancouver, and the bank is now HQ-ed in Toronto. It provides some innovative banking services that could only be offered from a digital-first institution, all via a mobile app and/or a “traditional” Visa card. There’s an element of a mission from KOHO to democratize the country’s financial sector for consumers, a goal it’s pushing towards with proper use of digital technology. And it all begins by simplifying the banking experience.

The prepaid Visa card (available for standard, joint, and Premium accounts) links your income to your bank in new ways, even allowing early government payments when you need them (link your CRA to KOHO to qualify). Add money to the card account by sending funds by bank transfer or request your employers deposit your paycheque directly. Employers can offer Instant Pay to their staff, too, so employees can cash out up to half their pay earned each day, every day.

The app offers consumer-focused features such as the ability to track your spending and savings, categorizing what you spend and where. Plus, you can invoke a “round-up” feature that takes the (virtual) pocket change from purchases and stashes it away. Without giving it too much thought, KOHO customers find they’re saving, perhaps like they never have before.

There’s little or no cost to most features, and the account offers interest on credit balances (at a higher rate in the Premium account), and you earn cashback on every purchase. Instead of quietly waiting for you to go overdrawn and then landing the unwary spender with charges and interest, KOHO actively encourages you to stay within budget and know where every cent goes. There’s even financial advice on tap if you’re struggling to make ends meet.

Users of “challenger” banks worldwide tend to switch accounts over to a digital-first provider gradually, and KOHO is set up for just that arrangement. The advantages of the new style of fintech (financial technology) banking stem from several causes. Institutions like KOHO have no merchant banking or investment arms and don’t have a long history of debt with stock exchanges or existing arrangements with governments in Bonds. The big win for consumers is that there are no ground rents or brick-and-mortar costs that the bank must pay for, passing those costs on to the consumer.

Perceptions of traditional banking are rooted in reliability, trustworthiness, and the fact that many have been around for decades, even centuries. Yet challenger banks, like their older competition, must conform to the exact same rules, regulations, and financial guarantees as any other. Consumer protection, surety of funds, and business continuance are all binding in law for all banks: the KOHO difference is that its ethos is focused on consumer value, not paying anonymous shareholders. It provides the same level of security as traditional banks to keep your data and finances safe.

And at a time when the average Canadian has $1.73 debt for every dollar they earn, add-on features like a credit-building service are invaluable for many. And being a prepaid card, the KOHO Visa does not count as debt on users’ credit scores.

Create budgeting goals and access financial coaching, pay bills online with a single tap, and earn cashback (and interest) as you go. Open a KOHO account today, say goodbye to hidden fees, and say hello to safe and reliable banking!