As Millennials start to enter their prime earning potential and Baby Boomers shift their financial goals towards retirement, traditional banking institutions may have to change the way they do business or scoot over to make room for upstarts like Koho. That’s right, Koho’s the new kid in town and they are planning to change the way people think about banking.
Let’s say your looking to take a road trip to Tofino in a hundred days. What the Koho banking app does is let you set that up very easily. It takes about 20 seconds and then every day once you’ve set that goal up, you make a daily contribution to that end. In this particular case, it would work out to about ten dollars a day that are tucked away for your trip.
“What happens when people use tools like this is that they are twice as likely to reach their savings goal,” says co-founder and CEO of Koho, Daniel Eberhard.
What Koho has developed is basically a new banking solution, which specifically targets Millennials that are frustrated with their current banking experience. They boast no monthly fees while offering a wide variety of online and mobile features and yes; there is a card that acts just like your traditional debit card.
In under a year, Koho has managed to raise a million dollars, partner with a major Canadian financial institution, validate their idea with a large cohort of young Canadians, and win an innovation award for Best Financial Technology Company – not bad for a bunch of Vancouverites.
“It was a very focused proposition for a segment of Millennials that are being underserved,” says Marcus Daniels, co-founder & CEO of Highline Venture Capital.
Highline VC, alongside a group of other investment firms across Canada, have invested in the Koho proposition and are eager to help them get this latest project to market as soon as possible.
Traditional banks don’t seem to get it
One of the greatest challenges for traditional financial institutions as of late is keeping Millennials “locked into their network” according to Daniels.
Banks are having more and more trouble getting Millennials to buy into the idea of purchasing stocks, investing in housing, and developing the types of financial portfolios that previous generational cohorts have been interested in and for good reason – the traditional banking system doesn’t just need a makeover, it needs a fresh start.
And yet you would think that with all of the signs pointing towards change, major banks would just get it. Over the course of this year alone, we’ve seen some of Canada’s top five banks including RBC, TD, Scotiabank, BMO, and CIBC raise their fees with very few features to show for it.
“A high interest savings account at a big five bank will cost you more if you have less money,” says Eberhard.
Millennials are having a whole lot of trouble getting what they want from current institutions so why not just build a new model?
“We target Millennials because we are Millennials. That’s who we understand and that’s who we are building this for,” says Eberhard.