Invasion of the Mobile Banking
The mobile banking app Varo has announced it will become its own bank. Varo was granted a national bank charter from the Office of the Comptroller of the Currency and secured regulatory approvals from the FDIC and Federal Reserve on Friday July 31, 2020. Recently Varo closed $241 million in Series D funding which will help transition its service to its own bank. The funding will help them expand into new banking products and hire new staff across operations, marketing, risk, engineering and communications.
Varo was launched in 2017 and aimed their services to a younger crowd that was comfortable doing their banking online only without dealing with a physical bank branch. This is not the only banking app that is available; Varo does compete with Chime, Current, Space, Cleo, N26, Empower Finance, Level, Step, Moven and many others.
Varo’s features include: easy accessible bank account with no monthly fees or minimum balance, high-interest savings and a modern mobile app experience. Customers have the ability to access their money through more than 55,000 fee-free Allpoint ATMs worldwide.
This is the first U.S. consumer fintech to be granted a banking charter. The FDIC gave approval to Square Financial Services Inc. in March to conduct deposit insurance so it could open its own bank. Then in July SoFi also filled out an application to expand into new products and create its own bank.
The bank charter is planning to meet the customer needs by including financial resiliency, affordable access to credit, and the easier management of volatile cash flow. In other words; credit cards, loans, and savings products.
When the pandemic hit Varo was offering customers early access to stimulus deposits, increasing deposit and ATM limits, along with helping customers find work. Varo Bank founder and CEO Colin Walsh says in the article Mobile banking startup Varo is becoming a real bank
“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. 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. We are excited to lead a new wave of financial inclusion by offering fair, transparent, intelligent, and comprehensive financial services to all.”
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