Varo Gets OCC's Preliminary Approval for Bank Charter
This approval sets the course for what could become the nation’s first national all-mobile bank.
The Office of the Comptroller of the Currency has granted Varo Money preliminary approval to form a national bank, setting a course for what could become the nation’s first national all-mobile bank.
The fintech company, which was founded in 2015 and is based in San Francisco and Utah, offers all-mobile bank accounts through The Bancorp Bank, as well as personal loans and financial tools; it is also part of the Allpoint ATM network. The company was founded in 2015 and has raised more than $79 million in capital, it said.
“Varo Bank, N.A. is currently in formation and will obtain its final national bank charter upon completion of organizational steps and satisfaction of the OCC’s conditions, as well as approval from the FDIC to obtain insurance and Federal Reserve membership,” the company said in a press release.
“This is a historic moment and marks the start of a new era in banking,” Varo Money co-founder and CEO Colin Walsh added. “We founded Varo because we saw that banks weren’t serving the majority of their customers very well, and we wanted to fix that. So we decided to build a bank from the ground up with the goal of improving consumers’ financial health through better technology and a more efficient business model.”
Varo Money applied for a national bank charter and federal deposit insurance back in July 2017, but isn’t the only company that’s done so. Lending fintech firm SoFi and payments fintech company Square have also applied for bank charters.
On July 31, 2018, the OCC announced it would indeed begin accepting national bank charter applications from fintech companies. Those that get bank charters will be subject to standard capital, liquidity and financial inclusion commitments, and they must maintain acceptable contingency plans for handling financial stress that could threaten their viability. Fintech companies that become national banks will also face heightened supervision initially, it noted.
“Over the past 150 years banks and the federal banking system have been the source of tremendous innovation that has improved banking services and made them more accessible to millions. The federal banking system must continue to evolve and embrace innovation to meet the changing customer needs and serve as a source of strength for the nation’s economy,” Comptroller of the Currency Joseph M. Otting said at the time.
“The decision to consider applications for special purpose national bank charters from innovative companies helps provide more choices to consumers and businesses, and creates greater opportunity for companies that want to provide banking services in America,” he added. “Companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale as a federally chartered, regulated bank.”