For all the excitement about challenger banking ex-U.S., there may be more going on in the alternative banking scene in America than many think.
Mobile banking company Varo Money, for example, announced this week that it has received approval for deposit insurance from the Federal Deposit Insurance Corporation (FDIC). This is a significant step on the company’s journey toward obtaining a national bank charter and moves Varo to the final stage of the approval process, the company said in a statement.
Varo Money CEO Colin Walsh said that the goal of earning a license to operate nationally was “part of Varo’s vision from the very beginning.” Walsh noted that the bank charter would help Varo also meet its goal of boosting financial inclusion. “Becoming a fully chartered bank will give us greater opportunity to deliver products and services that positively impact the lives of everyday people around the country,” he said.
Founded in 2015 and headquartered in San Francisco, California, Varo Money offers a mobile banking account with high-yield savings, direct deposit, and no account fees. The company had a big 2019 – forging partnerships with Galileo Processing, Socure, Cachet Financial, Bancorp Bank, and iHeartMedia in the second half of the year alone. Varo also raised a significant chunk of change in 2019 – picking up a $100 million investment from Warburg Pincus, Gopher Asset Management, and The Rise Fund that drove the company’s total capital to more than $178 million.
En route to earnings its national banking charter, Varo still needs to complete certain organizational requirements, as well as meet terms of both the OCC’s (Office of the Comptroller of the Currency) and the FDIC’s Federal Reserve membership. The company said that once it earns its charter it will expand its offerings to include products like credit cards, loans, and savings solutions.