In a Nutshell: For Canadians who’ve grown tired of high fees at the Big Five banks, KOHO offers an affordable, alternative solution. Its free spending accounts linked to a reloadable Prepaid Visa card have perks and rewards similar to those of credit cards, including automated savings and cash back, with no hidden fees. Premium accounts offer additional benefits like more cash back and price matching on everyday goods and services. KOHO strives to provide the services and features Canadians desire while maintaining a human touch. And the company plans to scale its operation to meet the emerging needs of modern consumers.
Daniel Eberhard became well acquainted with the European banking system as he spent time traveling around the continent. He found that the system provided consumers with greater transparency and fewer hidden fees — a situation in stark contrast to that of his home country of Canada.
Upon returning home, Eberhard began asking friends and family members if they were are of the fees their banks charged them. Most weren’t, and his brother even investigated his bills and found that he’d paid $85 in bank fees without knowing about them. That response inspired Eberhard to expand the scope of his inquiry to the Canadian population at large.
“He started a website and asked a larger group of Canadians if they felt the same way — and the results were overwhelming,” said Silvi Pukitis, Financial Coach at KOHO. “Then, he took that to investors and decided to start something that could challenge the Big Five banks and provide a better financial system to Canadians.”
KOHO is the result of Eberhard’s hard work and research. The bank is entirely digital, which allows it to save on overhead costs and offer free spending accounts with no hidden fees.
Account holders receive a reloadable Visa card that is accepted by merchants worldwide, and they can manage their accounts through the KOHO mobile app.
Additional features and functionality — including perks and rewards not typically offered by debit cards — help users save and manage their money.
KOHO is a cost-effective and transparent alternative to the Big Five banks in Canada and is fast becoming popular with a new era of modern mobile consumers.
Filling the Financial Gap Left by Big Canadian Banks
The Canadian banking industry is dominated by the Big Five banks. But despite their massive presence, consumers aren’t satisfied with the service they offer.
In May 2019, JD Power reported a decline in satisfaction among Big Five bank customers below the age of 40. In particular, they cited poor in-person service, problem resolution, automated phone service, and assisted online service as some of the major pain points. In July 2017, Vice reported that customers of these banks received low interest rates ranging from 0% to 0.75% but paid an average of $220 in bank fees each year.
For customers curious about those charges, KOHO’s What the Fee website offers some much-needed transparency. Consumers can enter their banking information on the free, secure site to find out how much they’re paying their bank in fees.
“We do a lot of surveys, and one thing we’ve found is that people are seeking an alternative,” Pukitis said. “They’re tired of the banks.”
For Canadians seeking relief from high fees, low interest rates for savings accounts, and poor service, KOHO offers a refreshing change. Consumers can use KOHO cards and accounts for bill payments, e-transfers, online shopping, ATM withdrawals, and other standard financial transactions.
In addition to that functionality and wide acceptance, KOHO promises no hidden fees and a commitment to maintaining a personal banking experience.
Full-Service Accounts with Transparent Fee Structures
The KOHO app — available on iOS and Android — helps account holders accomplish their goals. The app is free, and users don’t pay a fee to open an account. Once users sign up, they receive their Prepaid Visa by mail within 15 days. The card is prepaid and reloadable, and account holders can opt to directly deposit their paychecks into their KOHO account.
“Banking is usually complex and robotic and has a lot of fees, and we want to make it simple and designed for the human experience,” Pukitis said. “We want to help people find a balance of spending and saving, and not make it so easy to spend, and not make it so hard to save.”
Those features make KOHO a prime choice for consumers who want to manage their spending more carefully and avoid overdrafts or overspending on their lines of credit. It is also a practical option for those who want to avoid paying interest on credit card balances while still enjoying perks and rewards.
Another benefit of KOHO accounts is that they can be either personal or jointly held. In both cases, basic accounts are free, which is atypical in the market.
“In Canada, there are tons of fees and restrictions around joint accounts, whether it’s that you get five transactions a month or you have to maintain a minimum balance,” Pukitis said. “We don’t have any minimum balance fees, no NSF fees. There are, essentially, no hidden fees that you’d find at most of the banks.”
And KOHO accounts offer a variety of perks and features. These include PowerUps, which gives users 0.5% cash back on purchases and the option for an extra 0.5% for 90 days after the first direct deposit of $500 or more.
Account holders can also use RoundUps to automate saving by rounding each purchase up to the nearest $1, $2, $5, or $10, and putting the difference into savings. And money set aside through RoundUps remains easily accessible for those times when users need to draw on their savings.
KOHO customers can also rest assured that their money remains secure while enjoying easy access to their funds. Users can lock their account from the app if their card is ever lost or stolen, and all funds are held by Peoples Trust, a federally regulated and CDIC-insured bank. KOHO cards are covered under Visa’s Zero Liability policy, which protects account holders from unauthorized use of funds or account information.
Premium Services Offer Additional Savings and Perks
While KOHO’s basic accounts are feature-rich, premium accounts go even further by helping account holders save more money on a variety of transactions.
Premium accounts offer a full 2% cash back on select transactions with merchants, including grocery stores, restaurants, food delivery services, bars, and coffee shops. That 2% cash back also applies to transportation costs, including public transit, Uber, Lyft, taxis, gas, highway tolls, and parking fees.
Account holders also pay no foreign transaction fees. Additionally, premium users get one free international ATM withdrawal each month, which typically costs between $2 and $3.
KOHO premium also offers a retroactive price-matching service. This feature is available for transactions that are marked by a magnifying glass icon in the user’s account statement.
Users can send a picture of their receipt via the app or email, and, if KOHO finds a better deal, it will help users get the difference back into their KOHO account. In addition, premium account holders have access to free financial coaching sessions with a certified professional.
Those savings opportunities, cash back, and coaching can easily offset the $9 per month premium (or $84 upfront for the entire year — a savings of $24) users pay. KOHO also offers a 30-day free trial for its premium service, and users can easily upgrade their basic account within the app in minutes.
KOHO Provides In-Demand Products with a Human Touch
KOHO helps Canadians — whether they’re underserved or unsatisfied — regain their independence from big banks . And the company accomplishes that while also adding a personal touch.
“We’ve had some inspiring and touching stories of people in really remote areas,” Pukitis said. “In Canada, the First Nations areas in the very northern tip are remote communities. They might only have one bank, or the bigger banks are an expensive trip away — maybe a couple of hours. In a remote community, people may pay $0.50 per transaction.”
Users may also incur monthly account fees, ATM fees, customer service call fees, and even face online shopping restrictions.
Another essential part of KOHO’s approach is financial education. In addition to online self-service resources and in-app insights that help customers learn more about their own spending, KOHO also offers personal financial coaching.
“It’s such a challenging issue to have the human touch but also be scalable,” Pukitis said. “It’s an ongoing evolution and experiment, but people can reach out if they either get their paycheck put into KOHO or if they’re a KOHO Premium member. They can ask anything they want.”
To better serve these customers, KOHO continually collects feedback through its digital channels. Customer input helps KOHO develop its road map, which is publicly available online. Anyone interested in the bank’s plans for new features and further innovations can see where KOHO is headed.
“It’s a really exciting time because we’re just beginning. We’re always figuring out what Canadians want, what is happening throughout the rest of the world, and what practices we can bring to Canada,” Pukitis said. “Even if we don’t end up being one of the biggest banks in Canada, if we can get the other banks to take a look at their fee structures and challenge the status quo, that’s a huge win for us.”