Like many millennials, Daniel Eberhard has travelled widely. At the age of 29, he’s already visited 35 countries.
He’s trekked through the Himalayas, explored Burma, seen North Africa, and stayed in Central America.
In 2010, while he was visiting the Indian city of Varanasi—which is deemed holy by Hindus—a terrorist bomb went off within about 20 metres of where he was standing near the Ganges River. It killed two people, and more than 30 others were injured in an ensuing human stampede.
“All of my travels—this experience being one of them—have exposed me to a lot of other cultures in a way that has made me profoundly grateful to have the opportunities that I have,” Eberhard said in an interview at the Georgia Straight office. “We live in a country where we’ll always be relatively comfortable. So it just makes sense to dedicate your life to something that can move the needle.”
In Eberhard’s case, moving the needle meant launching a wind-energy company in 2010, which was later sold. Now he has cofounded a financial-technology company called Koho to help millennials save money.
The youthful CEO noted that there are no bricks and mortar attached to his “neobank”, and there also aren’t any service fees.
He emphasized that Koho’s agenda is to make banking simpler, more transparent, and more cost-effective.
“We partner with a federal financial institution,” Eberhard explained. “So they hold the money. We don’t hold or move money. We’re everything else.”
Koho recently announced its partners. The first is People’s Trust Canada, a federally regulated financial institution. Another is Galileo Processing, which enables Koho members to transfer money. The third partner is the credit-card giant Visa.
Creating an account is easy
Eberhard said it takes about three minutes for people to create an account on the Koho website. From there, members can deposit money from a pre-existing account.
“It does everything you do with your normal bank account and there are a number of other features that make it unique,” he said.
Koho makes its money off interchange, not banking fees. Every time a transaction is processed, Koho gets a small amount from the vendor.
It works the same way as when a person uses a credit card to buy groceries. The merchant receives the money minus interchange, which goes to the credit-card company. The owner of the credit card does not have to pay any fee to the vendor.
“Effectively, what Koho has done is we’ve removed enough costs so that we can be profitable off interchange alone,” Eberhard said.
Koho must know its clients
Koho is a private company and it’s overseen by the Financial Transactions and Reports Analysis Centre of Canada, aka FINTRAC.
As such, Koho is required to know its clients in the same way as a brokerage firm or other institutions.
“It’s a lot of the things you’d expect a millennial solution to be,” Eberhard said. “It’s social media, it’s grassroots, and it’s referrals through a peer.”
He added that the company’s goal is to offer more financial empowerment to young people.
He pointed out that the average Canadian pays $185 per year in banking fees, but those levies are waived for those who have sufficient assets, in the eyes of the bank.
Millennials tend to be asset-poor, so Eberhard believes that they’re likely paying more than the average in annual banking fees.
“I think we have a realistic chance to help people pay down debt sooner, get into homes sooner, and just be in a better financial position,” he said.
Eberhard relies on experienced mentors
Koho’s advisory board includes former Coast Capital CEO Lloyd Craig, former Assante Wealth Management CEO Joe Canavan, and former Wikia CEO Gil Penchina. Eberhard said he has benefited enormously from being able to bounce ideas off all three of them.
An avid reader, Eberhard also cited Rohinton Mistry’s A Fine Balance and Sam Harris’s Waking Up: A Guide to Spirituality Without Religion as major influences. He also meditates regularly and has read a lot about Stoicism.
Eberhard said Koho has six employees, and this month it moved into a larger office at 33 Water Street in Gastown. So where does he see Koho in three to five years?
“It’s not unreasonable to have 150,000 to 200,000 users at that point,” he said. “We will be a major player in the banking space in Canada.”
He acknowledged that there will always be those who want to enter bank branches. But he also noted that a growing portion of the population no longer cares about that. And if Koho takes off, it will also suggest that people are no longer looking for their bank CEO to be a 60-year-old white guy in a suit.