One of the long-term effects of the 2008/09 global financial crisis is that it has ushered in a wave of savings versus credit-based economy within much of the world. For many, the evolvement away from credit is the result of tighter fists by banks, limiting to whom they lend. For others, it is a life choice to decrease their dependence on financial firms and limit purchases to what they can afford.
One sector benefitting from this trend are online and mobile banks. Offering simple banking features as well as no physical branches, these online banks provide customers with more affordable banking services. In replace of opening accounts in branches and check deposits, are mobile sign ups and direct deposits from employers and online bill paying. Replacing physical banking with a digital world also avails these firms in providing customers additional resources for monitoring their accounts online.
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Among online banks aiming to carve out a niche with millennials is Canadian Koho. Different than actual banks, Koho is in essence a sophisticated pre-paid credit card. Users receive the card and then are provided the ability to fund it through direct deposits to their account or via e-transfers. Client funds are held with a partner credit union, with Koho receiving revenues as a percentage of merchant charges on payments using the card.
Providing solutions tailored for millennials, users can monitor their spending on the Koho mobile app or online site. In addition, they can enter saving goals or filter that will notify them when they are spending too much.
Yet to launch, Koho recently announced that it has received $1 million in a seed funding round. Led by Ferst Capital, Hedgewood, and Stanley Park Ventures, the funding was double the figure Koho was aiming to raise. The funds will assist Koho in completing to build their product as they approach their planned Q3 2015 launch date.