The Challenger Bank

Challenger banks are newer banks that are armed with the latest technology to democratize access to financial products. They’re also disruptive, pioneering a new space, and might even be seen as attacking their incumbents. But in reality, banking is not a zero-sum game. In the latest episode of The Yield, Peter Kerr, CFA, and Daniel Eberhard discuss the next age of banking. Daniel has built his career as an entrepreneur by finding ways to create scalable mission-driven companies. In 2010, he co-founded Kineticor Renewables, a wind energy company that developed $50M dollars in wind projects. The company was acquired by Algonquin Power in 2011. In 2014, Daniel founded KOHO, a leading Canadian challenger bank that has raised more than $130M on the path to democratizing access to financial products.

Key Takeaways:

[1:40] Challenger banks as technology-enabled leaders that are democratizing access to financial products.

[6:33] KOHO aims to eliminate the poor tax that hits the underbanked.

[10:49] What makes a challenger bank’s offerings differ from those at a traditional bank?

[17:25] Overcoming the common pitfalls that lead to low credit scores.

[21:20] Are digital currencies a threat to the challenger bank model?

[24:30] Lessons learned from this successful entrepreneur.

Daniel’s company KOHO aims to eliminate the poor tax that hits the underbanked and the underserved, a reality that applies to the potential two-thirds of banking individuals in the U.S. and Canada. With low-fee structures and a variety of services and products that are more accessible to everyone on both the debt and the payroll side of personal finances, this challenger bank is looking for ways to serve as many situations as possible.

Especially, KOHO offers opportunities to improve credit scores without having access to unmanageable amounts of credit. Dan walks the listeners through the common scenarios in which a person might have bad credit and the non-traditional offerings that can help build a credit score up again. Products like this might be harder to find in a brick-and-mortar bank but are just one of the many offerings available from challenger banks. From affordable payday loans to simple credit building tools, challenger banks are living up to their reputation of disrupting the banking industry, and in the best ways possible.

No conversation about disruptions to the traditional banking model would be complete without a look at the digital currency market. While still incredibly new, the pressure that cryptocurrency is putting on the international banking system around the speed of transaction, simplicity, transparency, and fees is likely to result in better outcomes all around. And while both traditional and decentralized markets are going to continue to evolve and change, Dan believes that these complementary forces from a market perspective, are both necessary to keep the other side of the market honest.

As the founder of two successful start-up companies, Kineticor Renewables and KOHO, Dan has learned plenty about the strategy, luck, and hustle that is needed to succeed as an entrepreneur. He shares two key insights on this podcast- first, that the main difference between people who are successful and those who aren’t is largely defined by those who are willing to get started. And second, the fact that it is critical to seek out the work that you are passionate about. Whether it’s investing or pursuing your dreams, everyone is faced with days that are harder than others.  And according to Dan, success comes when you know that your best effort was directed in the way that matters most to you.

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