Koho CEO Daniel Eberhard took the stage at the Elevate Festival in October and provided an update on his company’s ongoing work to secure a Schedule 1 banking licence. If successful, Koho will be the first Canadian FinTech startup to achieve this regulatory status.

“We want the ability to control our own destiny,” Eberhard explained to the audience. “We really think infrastructure matters in banking.”

It’s a subject the founder knows something about. For years, the company has been quietly investing in its own internal infrastructure, including a complex migration process that helped create the underpinning for a new way of banking.

Migrating to the big time

By 2019, Koho had reached a turning point. 

Founded five years earlier, Koho was motivated by the belief that Canadians were fed up with traditional banking. In a short time, Koho grew a dedicated user base with its accessible spending and saving account, cashback rewards, and credit-building tools.

“The fact that we got to this operating state without losing any of our core business is pretty awesome.”

As its customer base grew, so had Koho’s ambitions, and they began looking for a partner who could match their agility.

“Mastercard was a partner who could match the product velocity we expect at Koho,” said Koho’s chief product officer, Jack Chung. “We expect high quality products and services that help a generation of Canadians make financial progress, and it’s important to have a strategic partner that believes the same.” 

Koho entered into a partnership with Mastercard that allowed the company to issue prepaid cards and take charge of their own product offerings, branding, and customer experience. It was the beginning of the process to control their own destiny.

In Mastercard, Koho found a partner also focused on transformation. The global giant was no longer just a credit card company—it had become a payments technology powerhouse well equipped to enable the growth of emerging FinTechs.

In addition to a payment network, Mastercard offered Koho insight into market trends and consumer behaviour, along with the technical experience from its data and services team to help make it all work.

“Koho was really looking to evolve to grow the business, and was looking for a partnership to gain more control over key aspects of their business and operations,” said Maria Riesenberg, Vice President of Market Development, Mastercard, Canada.

There was only one catch. To achieve their shared goals, Koho and Mastercard had to migrate the FinTech startup’s entire customer base over to the new Mastercard-backed system.

“I was really worried that either customers just weren’t going to switch their cards, or they’d walk off altogether,” said Koho’s head of payments Shane Parkhill.

Speed without sacrifice

Over three years, Koho and Mastercard worked on migrating Koho’s new and existing customers over to the Mastercard network. 

“We deliberately went a little slower than we needed to, because we had a bunch of internal work to do in order to make all of our systems ready to adopt a new network,” Parkhill said.

Mastercard’s data and analytics experts helped Koho understand how to approach the migration, communicate with customers, and craft the right message to switch customers to the new network.

Koho CEO Daniel Eberhard provided an update on his company’s ongoing work to secure a Schedule 1 banking licence at took the stage at the Elevate Festival in October. (Photo courtesy of Elevate)

This included strengthening Koho’s data security, carefully mapping user data and transactions to prevent service disruptions or data loss, and coordinating with third-party vendors to ensure a seamless transition. Parkhill said nailing down the details of the migration early on was crucial.

“As a company that wanted to move really fast but knew that data security and platform stability was paramount, Mastercard was a fantastic resource in helping us figure out the steps we needed to take in order to get from A to B,” Parkhill added. “It always felt like they were trying to help us win.”

For Riesenberg, trust is the foundation of every FinTech partnership Mastercard forms. “Building trust means having open and honest conversations and not being afraid to pivot in critical moments,” she said.

When the migration wrapped up in 2023, Koho had retained 99 percent of its customer spend. More than two-thirds of Koho’s customers now use the service as their primary financial account.

Reflecting on Koho’s growth, Parkhill credits Mastercard for cutting through the red tape and speeding up the process.

“The fact that we got to this operating state without losing any of our core business is pretty awesome,” he said.

To Riesenberg, Koho’s success speaks to Mastercard’s focus on supporting the future of financial services.

“Koho is delivering unique and differentiated solutions that really are innovative in nature,” she said. “Our work with FinTechs is really all about fostering innovation and expanding Mastercard’s reach into new customer segments, while creating trusted relationships.”

Whether you’re just starting or scaling globally, Mastercard provides the tools for your success. Discover how we can boost your FinTech startup’s growth. 

Learn more about how Koho is helping Canadians make financial progress at koho.ca.

Feature image provided by Mastercard.

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