Twelve years ago, a new bank receiving its preliminary charter approval wouldn’t have captured the headlines, but raising capital for a new financial institution was difficult at best during the financial crisis, and with the onslaught of new regulatory burdens, sightings of new banks have been rare. Finextra and other media outlets reported that Varo Bank has secured initial approvals for a charter, with Federal Reserve membership and FDIC approval still on the “to–do” list. They plan to offer a mobile only financial institution and complete with other branchless financial institutions. Despite the mobile tech approach, the charter that Varo is pursuing is a standard, national bank charter, not the new specialty fintech version the OCC is considering:
San Francisco-based fintech startup Varo Money has been granted preliminary approval for a national bank charter by the Office of the Comptroller of the Currency (OCC), paving the way for the creation of the first fully-licensed mobile-only bank in the US.
Co-founded by former Wells Fargo executive Colin Walsh, Varo Money has raised $79 million in funding over the past two years and currently provides a range of savings, loans and account-based services through a relationship with The Bancorp Bank.
The approval for a Federal banking charter will enable the firm to expand its portfolio of millennial-friendly financial products on a national scale, providing a wider range of services in all 50 states.
CEO Walsh says a national bank charter will also allow Varo to streamline operations, lower banking and lending costs further, and increase the pace of customer-focused innovation.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group