Colin Walsh got lots of laughs five years ago when he talked of his intention to launch a financial technology (FinTech) startup.
Since then, the skepticism has evaporated and the CEO of Varo Money Inc., the San Francisco-based online bank, had the last laugh.
On Friday (July 31), the Office of the Comptroller of the Currency (OCC) announced Varo Bank has been granted its full-service national bank charter.
OCC is an independent bureau of the U.S. Department of the Treasury that charters and regulates financial institutions. The designation allows the startup to offer a full range of services backed by the Federal Deposit Insurance Corp.
“Varo Bank’s opening … represents the evolution of banking and a new generation of banks that are born from innovation and built on technology intended to empower consumers and businesses,” said Brian Brooks, OCC’s acting comptroller in a statement. “As a new national bank, Varo joins the world’s most respected system of financial institutions and has the opportunity to become a household name as many other national banks have become.”
Varo is the first consumer FinTech to receive a new national bank charter from the U.S. government, joining just a few recipients since the 2008 financial crisis, Bloomberg News reported.
Since its inception, Varo has provided free checking and savings accounts and no overdraft fees through its mobile app. As a national charter, the bank can offer credit and cash-flow management, the company said.
Varo Bank N.A. will serve as the firm’s new banking arm, with Varo Money becoming its holding company. As part of the agreement, Varo will purchase the accounts of its 2 million customers from Bancorp Inc., which had housed them, the news service reported.
“Varo coming in as a full national bank, with an already proven market fit and massive demand for more-affordable digital-banking solutions, is a very exciting moment,” Walsh told Bloomberg.
Last month, Varo closed on a $241 million Series D funding round. Varo said it will use the investment to grow and create new products.
The initiative was co-led by new investor Gallatin Point Capital LLC, a Connecticut private investment firm, and existing investor The Rise Fund, a global impact investment fund. To date, Varo has raised $419.4 million.