FinTech Startup KOHO Aims to Become Canada’s Next Schedule I Bank

KOHO Financial Inc. published a notice last month in the Canada Gazette announcing its intention to apply for “KOHO Bank” to become a Schedule I bank under Canada’s Bank Act. The innovative digital bank aims to disrupt the market by offering deposit and lending products with better interest rates and lower fees than traditional banks.

In an interview with BetaKit, KOHO CEO Daniel Eberhard argued that gaining access to the same payments infrastructure as banks will allow KOHO to build better deposit and lending products for Canadians by innovating at the infrastructure level. Until now, KOHO has been providing a variety of bank-like offerings – including credit building, spending, and high-interest savings products – largely by relying on third-party products offered by established players.

KOHO is now one of two FinTech companies aiming to acquire a banking license, following Questrade’s application filed just before the pandemic. The approval of these licenses could usher in a new era of cost-effective banking solutions, potentially intensifying competition within Canada's banking sector.