Varo Money Granted National Bank Charter, Forming Varo Bank
As several startups have started expanding into banking services, such companies have partnered with existing banks in order to provide FDIC insurance and other benefits to their customers. However, at the same time, some of these businesses have attempted to build their own path by applying for charters — and now one firm has actually earned one. Late last week, Varo announced that it was officially the first consumer FinTech to become a bank.
After years of waiting punctuated with glimpses of progress, Varo Money has officially obtained a national bank charter of its own. As the proud owners of their shiny new charter, the company plans to roll out more financial products including credit cards. In each case, Varo aims to “improve the financial health of the millions of Americans who have been overlooked and underserved by the traditional financial system.”
For Varo, the journey to this day has been long. The company originally filed its application in 2017, gaining initial approval from the Office of the Comptroller of the Currency the following year. As for the FDIC, Varo received their blessing (on the second go-round) earlier this year. Meanwhile, in anticipation of this day, the FinTech raised $241 million in a Series D back in June. That round was co-led by Gallatin Point Capital and The Rise Fund.
In a press release announcing the finalization, Varo Bank founder Colin Walsh stated, “This is a thrilling milestone for Varo, as the bank charter has been a core part of Varo’s disruptive vision from the very beginning,” continuing, “2020 has been challenging for many of us across the country and has highlighted, once again, how the traditional financial system is not meeting the needs of hardworking, everyday Americans. The ability to operate as a full-service national bank gives Varo more freedom to deliver the kind of innovation and allyship that many Americans have never had from their bank before.”
Also commenting on the charter was Acting Comptroller for the Currency Brian P. Brooks who said, “Granting a national bank charter to Varo marks an evolution in banking and a new generation of banks, born from innovation and built on technology intended to empower consumers and businesses. Each national bank charter granted by the Office of the Comptroller of the Currency signifies the bank has survived our rigorous vetting and meets the standards and qualifications necessary for it to operate across the country under a single, uniform regulatory framework.” He added, “I congratulate Varo founder Colin Walsh and all the people behind Varo Bank, N.A. on this important occasion, and I wish them great success in meeting banking and financial needs of their community and customers.”
There’s no question that the founding of Varo Bank, N.A. is a major moment for FinTech. With Varo finally making it through to the other side, it could very well open the door for other startups to follow suit — including some that have previously attempted to. Plus, others will now have the benefit of watching what Varo does under its new banking model in hopes of learning from their transition. As a result, when observers look back, 2020 could well be viewed as the year that FinTech officially grew up.
Also published on Medium.