New Bank, Better Services, Lower Fees… This Could Be a Game-changer.
For eons, the ‘Big Six’ have dominated Canada’s banking sector. However, this is about to change. On June 11, 2026, KOHO Financial, a Toronto-based fintech serving more than 2.5 million Canadians, announced that it had raised $130 million. This funding brings its valuation to $1.33 billion and positions it to become Canada’s first new federally regulated Schedule 1 bank in decades.
This milestone is not just significant for fintech funding; KOHO’s founder and CEO, Daniel Eberhard, described it as “the last piece of the puzzle” in a five-year application process with the Office of the Superintendent of Financial Institutions (OSFI), Canada’s federal banking regulator. Approval for the license, which still requires ministerial sign-off, could come as early as this year.
For Canadians who use KOHO or are considering opening an account, understanding the difference between a regulated bank and a fintech is crucial—especially regarding how funds are protected.
What is a Schedule 1 Banking License, and Why Does It Matter?
A Schedule 1 bank is a domestically owned, federally regulated Canadian bank, with the same legal status as the Royal Bank of Canada (RBC), CIBC, BMO, Scotiabank, Toronto-Dominion Bank (TD), and National Bank. This designation comes with both obligations and privileges.
The most significant advantage for customers and KOHO is the ability to hold deposits directly, something that only Schedule 1 banks can do. Currently, KOHO relies on partner banks to hold and protect client funds, but that will change soon. Once OSFI and the federal minister approve their application, KOHO will be able to hold deposits directly.
KOHO’s Special Offering to Its Clients:
According to Eberhard, beyond deposit protection, obtaining a banking license would allow KOHO to lower its cost of capital, expand its product offerings, and provide more competitive rates. Currently, KOHO offers higher savings rates and lower fees than most of the Big Six Banks, which has contributed to its growth to 2.5 million users.
Who Are the Investors Behind KOHO?
KOHO’s investor lineup includes Mubadala, an Abu Dhabi-based sovereign wealth fund managing over US$385 billion in assets. Mubadala joined as a new investor alongside Savano Capital, a Baltimore-based institutional firm. Additionally, Shopify founder Tobi Lütke and Affirm COO Michael Linford participated in the investment, signaling that some of North America’s most credible technology names view KOHO’s ambitions as viable.
Bottom Line:
Canada’s banking sector has been remarkably stable for decades, partly because OSFI has historically prioritized preventing failures over encouraging new entrants. However, OSFI Superintendent Peter Routledge has signaled a shift in that philosophy.
Most financial analysts believe that whether KOHO becomes a bank this year or next, the competitive pressure it creates on market leaders to improve their services is very real.
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