What’s the future of banking? If Koho has anything to do with it, it’s simple, modern, mobile, and free. Koho Financial Inc. is a Vancouver-based startup that provides traditional banking services, but has no branches, doesn’t hold deposits and doesn’t handle transactions.
Technically, it’s not even a bank. That hasn’t stopped Koho from delivering services that people associate with a bank, such as holding money securely, paying bills, transferring money, providing access to cash and buying goods and services with a credit card. By using an innovative business model, amazing technology and a network of powerful partners, Koho can deliver financial services similar to a bank but doesn’t require a bank license.
As opposed to becoming an actual financial institution and all the regulatory burdens that come with that, Koho’s core competency is technology. They focus on providing a really simple way to access, understand and move money. Some of the innovations they offer are real-time updates, saving automation, spending categorization and insights as well as free Koho-to-Koho transfers.
Another differentiator is their focus on no or low fees. They try to avoid fees or, if they have unavoidable costs, they strive to offer the lowest cost option; as an example they provide access to 8,500 Fee-free ATMs.
You might be wondering, if they are not a bank, are they safe? How can they deliver bank-like services without being regulated? They partner with financial institutions that actually provide the service.
Innovative Financial Model
Koho works with Peoples Trust Company, a federally regulated trust company and the leading issuer of prepaid cards in Canada. Basically, Peoples Trust issues the card and holds the money, while Koho provides the technology that you interface with. They also work with Utah-based Galileo Processing to handle transactions, and Visa, who issues a prepaid credit card that functions as Koho customers’ primary bankcard.
They also work with Trulioo. As their model is branchless and focuses on mobile, having customers submit physical ID kind of defeats the purpose; they need an onboarding process that is simple, quick and can be done mobile.
They also need to ensure that they are compliant with AML/KYC (Anti-Money Laundering/Know Your Customer) Laws. Even though they aren’t a bank, they still need customers to go through thorough identity screenings to ensure they are who they say they are.
For non-face-to-face identity checks, FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) requires two independent corroborating sources of data, if the credit file is less than three years old.
By using Trulioo, they accomplish both goals; they can provide a quick, seamless mobile onboarding process and, at the same time, meet regulatory requirements. As CEO Daniel Eberhard says, “Because we are the first point of contact for our customers, it is mission critical that we get it right. Trulioo allows us to meet our compliance with ease, while providing a seamless customer onboarding experience.”
To learn more about Koho and how it uses Trulioo to speed onboarding, lower costs and stay compliant,
Download the Koho Case Study.