Varo Money on Track to Be First All-Mobile National Bank Following OCC Approval
09/11/2018On September 4, 2018, banking startup Varo Money (Varo) announced that its application to form a de novo national bank has been preliminarily and conditionally approved by the Office of the Comptroller of the Currency (OCC). Varo applied for the national bank charter in 2017, and its approval marks the first time an all-mobile bank has been approved for a national bank charter by the agency.
Varo is still working to form Varo Bank, N.A., and the bank will only obtain final approval from the OCC once certain conditions and organizational steps have been satisfied, although these conditions have yet to be made publicly available. Varo still must also be approved for deposit insurance from the Federal Deposit Insurance Corporation and for Federal Reserve System membership before becoming fully operational.
In a press release, Varo said that with the bank charter, the firm “can expand the types of products and services it offers directly to its customers while making loans available in 50 states. 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.”
Although Varo is a FinTech firm, it received approval as a national bank rather than through the OCC’s recently announced special purpose national bank (SPNB) charter. Going forward, it will be interesting to monitor whether other FinTech firms that have been hesitant to apply for the SPNB charter attempt to follow Varo in applying for a standard national bank charter.