Jun 18, 2026
Canada’s banking sector has been dominated by the same six institutions for generations — the Big Six Banks. That’s about to change. KOHO Financial, the Toronto-based fintech that serves more than 2.5 million Canadians, announced on June 11, 2026 that it has raised $130 million — bringing its valuation to $1.33 billion and putting it within reach of becoming Canada’s first new federally regulated Schedule 1 bank in decades.
This isn’t just a fintech funding milestone. KOHO 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. A licence approval — which still requires ministerial sign-off — could come as early as this year.
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For Canadians who already use KOHO, or those considering a new account, the distinction between a regulated bank and a fintech matters — particularly when it comes to how your money is protected right now.
What is a Schedule 1 banking licence and why does it matter?
A Schedule 1 bank is a domestically owned, federally regulated Canadian bank — the same legal status held by the Royal Bank of Canada (RBC), CIBC, BMO, Scotiabank, Toronto-Dominion Bank (TD) and National Bank. That designation comes with both obligations and privileges.
The most significant change — for customers and KOHO — is the ability to hold deposits directly. Right now, KOHO is not a deposit-taking institution. When customers load money into their KOHO accounts, those funds are held in trust by one or more partner banks that are Canada Deposit Insurance Corporation (CDIC) member institutions — not by KOHO itself.
Once KOHO obtains a Schedule 1 licence, it will become a CDIC member in its own right, allowing it to hold customer deposits directly. That changes the regulatory relationship — and the accountability structure — significantly.
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Is your money protected at KOHO right now?
Whether money in your KOHO account is protected really depends on your account type.
The Canada Deposit Insurance Corporation (CDIC), a federal Crown corporation, protects eligible deposits at member institutions up to $100,000 per category, per institution. KOHO is not currently a CDIC member.
However, if KOHO customers opted into the firm’s ‘Earn Interest’ feature, then their funds were placed in trust with CDIC member institutions. Those funds are eligible for CDIC protection.
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That nuance matters. Many Canadians assume fintech accounts carry the same automatic deposit insurance as a bank account. They do not — at least not yet, and not unconditionally.
Its partner banks carry full protection. While that indirect structure works — protecting customers and helping firms — it’s not the same as banking with a CDIC member directly.
What changes if KOHO gets its licence
If OSFI and the federal minister approve KOHO’s application, the company could hold deposits directly — eliminating the need for the current partner bank trust structure. That means Canadian customers would then be banking with a CDIC member institution, outright, and KOHO wouldn’t have to rely on partner banks to hold and protect client funds.
Beyond deposit protection, Eberhard has said a banking licence would allow KOHO to lower its cost of capital, expand its product suite and offer more competitive rates. The company currently offers higher savings rates and lower fees than most of the Big Six — a positioning that has driven its growth to 2.5 million users.
What investors helped make this happen
The investor lineup behind the funds KOHO raised includes Mubadala, an Abu Dhabi-based sovereign wealth fund managing more than US$385 billion in assets. Mubadala joined as a new investor alongside Savano Capital, a Baltimore-based institutional firm. Shopify founder Tobi Lütke and Affirm COO Michael Linford also participated — a signal that some of the most credible names in North American technology see KOHO’s ambition as viable.
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What to do now
A licence approval is not guaranteed, and timing depends on OSFI’s regulatory process and ministerial review. Here is what current and prospective KOHO users should know:
- Check your deposit protection today. If you use KOHO but have not opted into Earn Interest, your balance does not currently qualify for CDIC protection through KOHO’s partner banks. Log into your account and confirm your settings.
- Understand the trust structure. Funds held in trust at KOHO’s partner banks are eligible for CDIC protection up to C$100,000 per beneficiary, per member institution — but KOHO itself is not the insurer. Review KOHO’s legal terms at koho.ca/legal for current details.
- Watch for the OSFI announcement. The licence remains subject to ministerial approval. No formal approval date has been confirmed by OSFI. “Final stages” is the company’s characterization — not a regulatory guarantee.
- Compare rates and fees. Whether or not the licence comes through, KOHO’s current fee structure and savings rates may be worth comparing against your primary bank — especially if you’re paying monthly account fees or earning minimal interest.
Bottom line
Canada’s banking sector has been remarkably stable for decades, in part because OSFI has historically prioritized preventing failures over encouraging new entrants. OSFI superintendent Peter Routledge has signalled a shift in that philosophy, and Eberhard cited that change as critical to KOHO’s path forward. “These folks at OSFI are really enthusiastic and encouraged by the new direction,” he said in an interview with the Globe and Mail.
Whether KOHO becomes a bank this year or not, the competitive pressure it is creating is real.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
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