The American neobank Varo Bank operates its headquarters from Salt Lake City in Utah. In 2017 Varo launched its operations as the very first neobank to obtain a national bank charter from the Office of the Comptroller of Currency. As its head and CEO, Colin Walsh leads Varo Bank.
History
Varo Money established Varo Bank parent company in 2015 through its founder Colin Walsh, who situated it in San Francisco, California. Warburg Pincus provided US$27 million in funding to Walsh when he founded the company while the executive developed a mobile banking application. The mobile platform launched in 2017 enabled users to deposit money directly and obtain a debit card and manage their bills electronically through the system. All Varo users receive fee-free service for overdrafts and ATMs, as well as without any required minimum balance. The Bancorp Bank operated as Varo Money’s account opening partner.
Varo Bank stands as the pioneering consumer de novo bank to obtain a full national bank charter through the Office of the Comptroller of the Currency (OCC). Varo Bank emerged in 2015 as a financial institution dedicated to providing banking services to Americans who seek financial goals through an industry where they traditionally received inadequate service at elevated costs.
The Varo Bank mobile app together with its online banking system provides tools for customers to extend their paycheck funds while building credit and saving money. Varo Bank provides banking products that feature bank accounts without balance requirements and monthly fees as well as high-interest savings and flexible lending products and secured charge cards.
Challenges facing Varo
The major challenge for Varo Bank after obtaining a bank charter involved migrating users from previous platforms to new ones.
Secure and fast customer migration required Varo Bank to rely on Plaid as their solution.
Walsh started the neobank Varo charter process for a national bank during 2017 and the company received an additional US$45 million funding from Warburg Pincus and The Rise Fund in 2018.
After extensive assessment in 2020, the Federal Deposit Insurance Corporation authorized Varo to use federal deposit insurance. The Office of the Comptroller of the Currency provided Varo Bank with its national bank charter during the latter part of 2020, which marked the initial time a US-based fintech company gained this authority. After obtaining its charter, Varo acquired the two million customer accounts from Bancorp while Chad Brownstein and Russell Westbrook represented early investors in the company.
The closure of customer accounts by Varo during 2021 led to public criticism against the company. The money belonging to affected customers was both refunded by Varo while receiving a bonus of US$100. In September 2021 Lon Pine Capital led a US$510 million investment for Varo that brought the total funding amount to US$992 million. When it reached that point, Varo operated 4 million active customer accounts. The company hired 700 additional employees in its employee base that year. July 2022 marked the start of job losses within the neobank when it discharged 75 members of staff as part of its cost-saving strategy.The business publication Inc recognized Varo for its excellent business practices between 2021 and 2023. Forbes included Varo in the “Fintech 50” rankings during 2021 together with Fast Company naming the company among its top “Most Innovative Companies in Finance” that year. The company received top fintech recognition from CNBC within their 2024 rankings.
Operations
The headquarters of Varo operate from Salt Lake City, located in Utah. Varo Money relocated its main office from San Francisco during 2020. The organization operates under the direction of principal members Colin Walsh, President of Varo Money, acting as the chief executive officer, together with Pepe Porrata serving as chief operating officer, supported by Thibault Fulconis as chief financial officer and Sachin Shetty as chief technology officer.
The product line at Varo consists of checking and savings accounts, in addition to “Varo to Anyone” fund transfer capability and tax filing along with credit cards and cash advance services. It is integrated with Zelle.
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