The lack of competition in Canada’s banking sector has resulted in excessive fees and low customer satisfaction, but that’s starting to change, according to Daniel Eberhard.
“What we are now entering into is hopefully a period where you have true meritocracy,” says the CEO of Koho Financial. “May the best product and business win.”
Eberhard says he founded the financial technology (Fintech) platform in Vancouver in 2014 to help Canadians keep more of their hard-earned cash.
That was around the time Eberhard sold a wind energy startup he co-founded as a student at Mount Royal University, and started looking into his mother’s retirement savings.
After realizing that she was losing money to overpriced financial products, Eberhard decided to offer alternatives that better served working Canadians.
Koho launched in 2017 allowing customers to pay bills, send e-transfers, use ATMs and make purchases on their mobile device. The company has since expanded into savings accounts, credit cards, cash advances, renters’ insurance and more.
Today, Eberhard says the company has 2.3 million customers serviced by about 230 staff.
In late 2025, Koho became one of the first Fintechs to receive Payment Service Provider (PSP) designation in Canada, and is on track to earn its banking licence this year, which Eberhard takes as a sign that regulators are welcoming more competition. Canada’s Big Six, however, still collectively hold about 93 per cent of the country’s banking assets.
“We have had the least competitive banking economy in the world for a long time,” Eberhard says, “and consumers have suffered.”
The Star recently spoke with Eberhard from his home office in Vancouver to talk about the nation’s financial well-being, why the country’s banking system is suddenly changing, and what it means for Canadians.
Did you always want to be an entrepreneur?
No, I just wanted to lead a life of adventure. I just fell into entrepreneurship.
How?
I was interviewing for entry-level positions in Calgary’s energy sector as a student at Mount Royal University and the idea that these people were going to determine my future scared me. I wanted to be the one with the finger on the dial.
A classmate and I designed a wind energy startup as a school project, and at some point we realized it could be a real business, so I went down to southern Saskatchewan trying to sell farmers wind turbines. Most said “no” but a few said “yes.”
At the time the province had this Green Options Partners Program, which had a big energy production program, and a small one. The big one was for 75 megawatts, and the small one was 10 megawatts and offered about $25 million in construction subsidies. The big players were all going after the big one, but for us $25 million was enormous.
We ended up getting people to rent us land for two weeks, and if the application won, they would get a two per cent royalty on the wind farm, forever. I think we ended up submitting like 20 of the 27 applications they got that year, and two of them won, which resulted in the Red Lily Wind Power Facility in Western Saskatchewan.
We were just two kids, but within a year there were nine companies trying to acquire us. If the big companies had just assigned an associate intern they could have lit that program up, but they didn’t.
We ended up selling the company after 18 months, without ever building a turbine. It was just a shovel-ready contract at that point, and we decided to take our chips off the table.
That taught me that big companies that seem impenetrable from far away actually have deeply flawed incentive structures and are often mediocre up close.
Is that what inspired you to challenge the big banks?
Partially.
The other element was that I was raised by a single mother who worked very hard cleaning houses and driving busses to give us a middle-class life. I never had money, so when I sold this business, I started to investigate what people who have money do with it.
As I educated myself, I realized there are enormous differences between great financial products and mediocre ones — we’re talking 30 per cent to 50 per cent more retirement dollars over time.
If you look around Canada, the vast majority are in the mediocre products and should be retiring with more money.
Then I discovered that my mom was one of them; she had worked her whole life, but her financial setup was extracting a significant portion of her wealth, and that seemed wrong.
How did you start Koho?
In 2014 we put up a website to see if people would sign up for this online banking service and we got like 10,000 people on the wait-list in the first couple of months, which we used to raise our first million bucks in 2015.
We didn’t launch until 2017, and at the time it was like, is this even legal? The first two-and-a-half years we were in the wilderness with a team of eight to ten just trying to make it work.
In 2017 we raised $8 million — we’ve raised north of $350 million to date — and we’ve been in growth-slash-survival mode ever since. A lot of fintechs died in 2021 when the world changed in terms of how these businesses were valued. We weren’t always sure we would make it.
Now, we’re in a new phase where the existential risk is largely behind us.
What kinds of products do you offer?
We have three plans. The first is free for most customers, with up to 4 per cent interest on savings accounts, depending on the product, but we also have a plan most people can get for free that comes with no foreign exchange fees, high cash back, high savings rates, that kind of stuff.
We have safe and simple ways for folks to build their credit, like using rent or with small loans up to $250. We also have a buy now, pay later product, renters’ insurance, international money transfers and some of the lowest cost and fastest international remittance in the country.
The average Koho user is 30 years old, and many are newcomers. We’re very focused on the 70 per cent of Canadians to make less than $80,000 a year.
We have some high earners, and we really like them, but we think we can create the most value for the 50 per cent of Canadians that live pay cheque to pay cheque.
What should readers know about Koho becoming a PSP?
I don’t know if they should. That’s our job.
We have had the least competitive banking economy in the world, and consumers have suffered. PSP, real-time-rails, open banking, all of these things that almost every other developed country has, we now have, and that will create more competition.
In totality, that will give folks a better banking experience, but it’s not like anything changes overnight once you’re a PSP.
Why did Koho apply for a banking licence?
We’re in the late stages of the multi-year process to become a bank, and we should be finished with that process this year.
Basically, when you’re a bank, money is your inventory, and we want to be able to control our supply chain.
If we had a banking licence, we could pay the highest savings rate in the country, or lower the cost of our borrowing products, or both. Either way, that will translate into a better user experience.
What can you tell me about your recent partnership with Canada Post?
People can deposit cash at Canada Post, and have at 2,500 Canada Post locations, which is more than most banks have branches. We still can’t do everything a bank can do, but the partnership offers a creative solution.
How are Canadians doing right now, financially?
My view is Canada’s been in a recession for a longer time than people have appreciated.
It’s been an anemic economy for the last 10 years, and that’s now getting more attention, which I’m happy about. People are blaming it on the U.S., but all they did was reveal our vulnerability.
What is the future of banking in Canada?
It’s exciting.
Back in 2021, Canadians were transacting $3 billion through Koho, which is not nothing, but we could not directly connect to any payment rails.
When people tried to add funds to their Koho account they would send us e-transfers and we would be manually typing in passwords at three in the morning.
The idea that things are finally coming true with open banking and real-time rails will hopefully lead to a thriving and more competitive market. It’s going to take a long time, most Canadians still haven’t touched a Fintech, but it’s inevitable.
What changed?
The federal government.
For the first time in a long time, we really do have a sincere group of folks who are pro-prosperity, pro-growth, and I think Canadians will benefit from that.
Because we elected a banker as prime minister?
Exactly.
Have you accomplished your goal of helping folks like your mom?
In a sense, for sure. We have helped hundreds of thousands build their credit, borrow safely, we’re paying great savings rates, all those things.
Most Canadians have never used us; it’s one thing to say we’re close to touching one per cent of GDP, but what about the other 99 per cent? It still feels very early.
We have 2.3 million accounts, which is great. That’s how we directly impact people. How you indirectly impact the whole country is by becoming such a force that the folks who offer not great products can’t compete anymore. That’s the goal.
