Like Pinocchio wishing upon a star to become a real boy, Koho is wishing upon a cash infusion to become a real bank.
What happened: Toronto-based fintech Koho Financial raised $190 million in debt and equity financing, which it will use to expand its loan business and offer more services. This will support its larger goal of nabbing a Schedule 1 banking licence from banking regulators.
- A Schedule 1 licence is what separates scrappy challengers from the big-name lenders that are allowed to deliver financial products and accept deposits without relying on regulated third-party partners.
Why it matters: Koho could be the first of Canada’s fintech startups to reach ‘real bank’ status. And while it’s basically impossible for Koho to ascend to the level of the Big Six banks, it could be another option with new products for underserved consumers.
- Koho’s target market right now is the broad segment of the population living paycheque to paycheque.
Zoom out: Online brokerage Questrade (whose ads this writer could go without ever seeing again) is also in the race to be the first fintech to get a Schedule 1 licence. Meanwhile, Canadian fintech heavyweight Wealthsimple said earlier this year it’s fine with its current status.—QH