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Mobile Banking Startup Varo Money has Applied for a Bank Charter

Due to a challenging regulatory environment and high switching costs associated with getting consumers to change banks, few startups try to compete with the big incumbent financial institutions head-on. But Varo Money, which provides a mobile-first banking product to consumers, is up to that challenge. In an effort to offer similar — but better — checking, savings and lending products to consumers, the company has applied for a national bank charter with the Office of the Comptroller of the Currency.

Varo Money was founded in 2015 by Colin Walsh, who spent 25 years working for incumbent financial institutions like American Express and Wells Fargo before deciding to launch a banking product for a new generation of consumers.

Varo provides everything you’d want from a traditional checking account, including direct deposit, online bill pay and a debit card. But unlike traditional banks, Varo is built to be consumer-friendly, doing away overdraft fees, minimum balance fees and ATM fees that most financial institutions rely on.

That is not an entirely new idea — after all, banking products like Simple have launched with similar features. What sets Varo apart is how it connects with consumers’ other bank and credit card accounts to provide a fuller picture of their financial lives. Through its app, users can manage their cash flow and track their spending across all their savings and credit card accounts, not just their Varo account. The company has also launched a lending product to enable users to take out personal loans that can help them get out of high-interest credit card debt.

But the company has bigger ambitions, and hopes to become a bank itself. As a result, it has applied for a national bank charter through the OCC. In doing so, Varo is joining online lender SoFi in the vanguard of Silicon Valley startups hoping to get licensed so they can offer many of the same products as big financial institutions like Wells Fargo or Chase.

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