Varo Money Becomes First U.S. Consumer Fintech to Win National Bank Charter
On July 31, 2020, the Office of the Comptroller of the Currency granted Varo Money, Inc. full approval for a national bank charter, with concurrent approvals from the FDIC and the Federal Reserve. This made Varo the first consumer fintech in U.S. history to achieve this status, enabling it to open Varo Bank, N.A. the following day. The charter allows Varo to offer FDIC-insured deposit accounts and other banking services under a single national regulatory framework rather than navigating state-by-state licensing.
Acting Comptroller Brian P. Brooks described the approval as an 'evolution in banking,' emphasizing that Varo's technology-driven model was designed to serve underserved consumers. The approval culminated a three-year process that included preliminary OCC conditional approval in 2018 and FDIC deposit insurance approval in February 2020.
By obtaining its own charter, Varo eliminated its dependence on partner banks for holding customer deposits, a significant shift away from the BaaS intermediary model. The move set a precedent for other fintechs, such as SoFi, which filed its own national bank charter application in July 2020. The charter was widely viewed as a landmark moment for de novo banking and the broader embedded finance ecosystem.
- Established a precedent for fintechs to obtain national bank charters, reducing reliance on BaaS partner bank arrangements
- Signaled to the market that regulators were open to chartering technology-driven financial institutions, intensifying competition with traditional banks
- Encouraged other fintechs like SoFi to pursue their own charters, potentially reshaping the BaaS value chain as more fintechs vertically integrate