Member Exclusive, New banks

Inside Varo’s product roadmap as a new bank

  • Varo is the first fintech to receive a national bank charter.
  • The company is charging ahead with new products and a redesign.
close

Email a Friend

Inside Varo’s product roadmap as a new bank

The road to a bank license hasn't been easy. Varo has been working on a national bank charter since its inception almost five years ago. Now, with the first national charter awarded to a fintech in the U.S., the challenger bank has a lot of work to do.

"It's not trivial," said Philippa Girling, chief risk officer at Varo, at Tearsheet's inaugural Challengers Conference held last week. "It's been a slog. There is a lot of work to do."

Varo is planning to launch multiple products aimed at servicing its current and future customers. First up is small dollar lending, something made easier and more profitable with a banking license. Many challenger banks offer some type of lending, either on their own or through a partner bank. Varo plans to join them. The challenger bank is already looking at innovative uses of alternative data to help provide credit to its 2.5 million users.

SPONSORED

Also on the roadmap is a rebranding and redesign that's already underway. Varo plans to launch the new look and feel early in 2021.

Getting its own license means Varo can build and own a larger piece of the banking technology stack. Although Girling says Varo has a good relationship with its partner bank, Bancorp, she's excited about the future of going at it alone.

"We've built out a really phenomenal tech stack that leans into the latest technology," she said. "And that's very exciting for us, because it really takes the lid off what we can do in the way of personalization, in the way of innovation and creativity, and also the speed at which we can design and deliver something."

Girling emphasizes the importance of owning the entire customer journey, especially as the company grows. Varo has seen new account growth of 200% year over year. Owning the tech stack also means Varo can control more of the touchpoints of the user experience.

"We are a digital bank -- we have no branches, no way to interact with our customers, other than through our technology," she said.

"And so it's really critical that we own that relationship and that experience for our customer. Because if we need to make a quick pivot, or move in a certain direction, to delight and provide our customers with what they're looking for, then we need to own that tech stack, we need to make sure that we're able to move swiftly."

Having the bank charter improves economics significantly for the challenger bank. Girling says Varo expects to be profitable in 2021.

For other fintechs considering applying for a banking license, the OCC has made it clear that they are supportive of issuing new licenses to fintechs. There is no secret sauce when it comes to securing a license, though, according to Girling.

"There's no shortcut to this process," she said. "There's no secret to how we did it. We did it the way you have to do it. And it takes three years."

0 comments on “Inside Varo’s product roadmap as a new bank”

New banks

‘Fintechs need to do a better job of talking about how we’re at the forefront of trust and security’: 5 questions with MoneyLion’s CEO Dee Choubey

  • MoneyLion's revenue increased 34% to $93.7 million in Q1 2023 from $70 million in Q1 2022.
  • Tearsheet spoke with MoneyLion's Dee Choubey about the increased revenue for the quarter, the advancing role of AI in banking, and how the banking crisis is affecting fintechs.
Sara Khairi | May 18, 2023
New banks

5 questions with Stash CEO Liza Landsman

  • Stash continues to grow, expanding its B2C offering while it expands into working via a B2B model.
  • We recently caught up with new CEO Liza Landsman about her new role and where the firm is headed.
Zachary Miller | May 04, 2023
New banks

Quick Take: MoneyLion partners with Column Tax – but how does the partnership align with the former’s product suite?

  • In order to provide convenient tax filing experience to its customers, MoneyLion has partnered with Column Tax. So how is this partnership in line with its product suite?
  • MoneyLion shareholders have had a rough ride lately as the firm’s share price tumbled 80% last year and 18% in February this year -- can the company gain ground in the long term on the strength of its underlying businesses?
Sara Khairi | March 16, 2023
New banks

Gamifying financial literacy is tough. Can Greenlight’s Level Up get it right?

  • Financial literacy games can be gimmicky and may fail to find the balance between “game” and “education”.
  • Level Up by Greenlight focuses on gamification in a manner that's sticky, but for the right purposes.
Rabab Ahsan | February 17, 2023
New banks

Rebundling banking services: Are fintechs trying to be more like banks?

  • Why are fintechs that have grown to a certain size continuing to pursue a banking license?
  • Luis Trujillo, CCO at Alviere sheds light on whether acquiring a license guarantees a successful banking business model for fintechs and if it constitutes a threat to banks.
Sara Khairi | January 09, 2023
More Articles