Varo Money Wins Preliminary Approval for US National Bank Charter
Varo Money, a San Francisco-based mobile banking fintech co-founded by former Wells Fargo executive Colin Walsh, secured preliminary approval for a national bank charter in September 2018. The approval positioned Varo as a pioneer among US consumer fintechs seeking full banking licenses rather than relying on bank partnerships or BaaS arrangements. At the time of the announcement, the company had raised $79 million in venture funding to support the extensive regulatory and technology requirements of becoming a chartered bank.
The preliminary approval initiated a multi-step process that would ultimately require Varo to meet capital, compliance, and operational standards set by federal regulators. The development was closely watched across the fintech and BaaS industry as a potential model for other digital banks. Successfully obtaining a charter would allow Varo to hold deposits directly, reducing reliance on partner banks and improving unit economics.
The move highlighted the evolving regulatory landscape for fintechs in the United States.
- Established a precedent for consumer fintechs seeking to obtain national bank charters and reduce dependence on BaaS partner banks
- Raised questions about the future role of BaaS providers if more fintechs pursue direct banking licenses