July 25 – San Francisco-based Varo Money Inc., a mobile banking startup, announced that its leaders have applied to the Office of the Comptroller of the Currency for a national bank charter and to the FDIC for federal deposit insurance to form Varo Bank N.A. The bank would be the first national bank in American history designed for people who want to bank on their smartphones.
The OCC’s proposed national charter for fintechs has been controversial, with such groups as the Conference of State Bank Supervisors maintaining that the OCC lacks the authority to grant such status. Acting Comptroller of the Currency Keith Noreika voiced a strong defense of a national charter for fintechs in recent remarks.
“We should be careful to avoid defining banking too narrowly or in a stagnant way that prevents the system from evolving or taking proper and responsible advantage of advances in technology and commerce,” he said.
Colin Walsh, co-founder and CEO of Varo Money, says the app enables customers to get “involved in an iterative process … to 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.”
In June, Varo Money launched in the Apple App Store through a partnership with The Bancorp Bank of Wilmington, Del., a leading ACH originator and issuer of prepaid cards. Varo said it recognizes that the smartphone can transform the way people manage their finances and wants to be the first national bank designed for people who want to bank on their smartphones.
The Varo app allows customers to manage cash-flow, track spending and see all their accounts, while also handling everyday banking.
Varo says its appeal is targeted to people who take a “hands-off” approach and check their bank balances a few times a week, with a general sense of how much they can spend each month. Varo’s app create a cash-flow dashboard that provides alerts, information and recommendations. Its digital model helps eliminate overdraft fees, minimum balance fees and foreign transaction fees.
In May 2016, Varo announced a $28 million funding round led by Warburg Pincus, a global private equity firm focused on growth investing. Bank accounts for Varo Money are provided by The Bancorp Bank.