New banks

Varo raises $241 million as it aspires to become the first fintech to become a national bank

  • Varo is poised to become the first fintech to receive a national bank charter in the U.S.
  • The challenger bank plans to use this money for growth and new product development.
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Varo raises $241 million as it aspires to become the first fintech to become a national bank

Varo Money announced it has closed a $230 million investment round, co-led by new investor Gallatin Point Capital and existing investor The Rise Fund, co-founded by TPG, U2 lead singer Bono and Jeff Skoll, a global entrepreneur and movie producer.

What’s going on: The fintech firm, which launched banking services in 2017, raised an investment round in anticipation of getting a national bank charter.

  • New investors joining the round include HarbourVest and Progressive Insurance.
  • Varo said the funds will be used to fuel its growth, as well as for new product development.
  • Varo has raised over $400 million with this most recent round of funding.

“In the midst of all the economic challenges people are facing right now, the digital economy can still be a force for good,” said Maya Chorengel, co-managing partner of The Rise Fund.

“Varo’s focus on financial inclusion and the support they offer people to help manage their finances and reduce financial stress really matters at a time when so many American families are struggling in a volatile economy. And that’s why RISE chose to partner with the team at Varo,”

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Helping customers during the crisis: Varo reacted during the crisis to help people access government relief funds.

  • Varo worked with customers by prioritizing the processing of electronic and paper check Treasury payments and providing individuals who have direct deposit early access to stimulus and unemployment relief funds.
  • The company increased both deposit and ATM limits and accelerated key partnerships that provided direct benefits to customers impacted by the pandemic, including with job platforms Steady and Wonolo.

Eyes on a banking license: Earlier this year, Varo received FDIC approval for its bank charter, clearing one of the last hurdles on the firm’s quest to become a bank.

  • Varo is in the final stages of its national bank charter application and pending completion of the conditions of the OCC, the FDIC and the Federal Reserve, Varo will receive approval to be a national bank.
  • It expects approval this summer.
  • Upon approval of its national bank charter, Varo will expand its services to offer credit cards, loans, and additional savings products.

“Since our inception, we have been laser-focused on becoming the first fully digital bank, giving us greater opportunity to deliver the affordable financial services that all Americans need today,” said Colin Walsh, co-founder and CEO of Varo.

“This new investment will enable us to complete the chartering process and leverage our modern banking technology to build on our track record of innovation.”

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