New US fintech firm follows SoFi by applying for banking charter

By Daniel Lanyon on Tuesday 25 July 2017

Digital BankingSavings and Investment

The move follows on from last month's news from SoFi as well as statements from the Trump administration .

The move follows on from last month's news from SoFi as well as statements from the Trump administration hinting at regulatory support for fintechs moving into 'traditional' banking.

US-based Varo Money, a mobile banking start up, has announced it’s applied to the Office of the Comptroller of the Currency for a national bank charter and to the Federal Deposit Insurance Corporation for federal deposit insurance to form Varo Bank, N.A.

Varo Bank, will be – according to the firm – the “first national bank in American history designed for people who want to bank only on their smartphones”.

The news follows fintech giant SoFi’s announcement last month that it was applying for a banking charter in order to offer more than just student loans and move into offering online accounts.

“We founded Varo because we believe many people could benefit from an easier, more affordable way to manage their money and reach their financial goals with just a few taps on their mobile phone,” said Colin Walsh, co-founder and CEO of Varo Money.

“To do this, we got customers involved in an iterative process from the beginning. We wanted to offer more than just checking, savings and lending products—we wanted to help our customers solve financial problems, fix the fundamentals, and guide them toward a better financial future. As a national bank, Varo will be able to help Americans nationwide,” he added.

In May 2016, Varo announced a $28m funding round led by Warburg Pincus, a global private equity firm focused on growth investing.

Last month, Varo Money launched in the Apple App Store through a partnership with The Bancorp Bank. The Varo app allows customers to manage cash-flow, track spending and see all their accounts, while also handling everyday banking.

The firms says its goal is helping customers solve financial problems, manage money and reach financial goals and avoid nasty penalties and fees. It added that a national bank charter will  enable the firm  to be able to deliver on its stated aim.

“Varo’s digital model helps eliminate the unfriendly fees that big banks often charge, such as overdraft fees, minimum balance fees and foreign transaction fees.”

David Coulter, former Vice Chairman of JPMorgan Chase & Co. and former CEO and Chairman of Bank of America Corporation said: “Acquiring a national bank charter and federal deposit insurance is difficult and it takes time, but Varo is poised for success and backed by leading investors with a financial commitment to creating the bank of the future. If they succeed, they will truly be in a position to make banking better.”

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