Subscribe
Logo
Logo
  • Topics Icon Topics
    • AI Icon AI
    • Banking Icon Banking
    • Blockchain/DeFi Icon Blockchain/DeFi
    • Embedded Finance Icon Embedded Finance
    • Fraud/Identity Icon Fraud/Identity
    • Investing Icon Investing
    • Lending Icon Lending
    • Payments Icon Payments
    • Regulation Icon Regulation
    • Startups Icon Startups
  • Podcasts Icon Podcasts
  • Products Icon Products
    • Webinars Icon Webinars
    • White Papers Icon White Papers
  • TechWire Icon TechWire
  • Search
  • Subscribe
Reading
Varo Breaks New Ground With FDIC Approval For National Bank Charter
ShareTweet
Home
Peer to Peer Lending
Varo Breaks New Ground With FDIC Approval For National Bank Charter

Varo Breaks New Ground With FDIC Approval For National Bank Charter

Fintech Nexus Staff·
Peer to Peer Lending
·Feb. 11, 2020·3 min read

While there are always interesting things happening around fintech there is not often news which moves the needle for the entire industry. Because of the regulatory environment in the U.S. the digital banking startups have partnered with banks in order to offer banking services. While the digital bank may offer some compelling features and a user friendly interface, it is more of a skin on top of the actual bank which holds the funds and operates the core banking platform. At the end of the day it is the bank calling the shots, which is potentially frustrating for a nimble startup. Many fintech companies were holding out hope for the OCC Fintech Charter, but this potential opportunity was shut down by a federal judge in 2019. One of the options that remain is a national bank charter, though it comes with its own set of challenges.

In July 2017 it was reported that Varo was pursuing a National Charter. Varo first started operating their digital bank offering through a partnership with Bancorp Bank but their goal was always to be able to act as a standalone national bank. In fact CEO and Co-Founder of Varo Colin Walsh shared in our 2018 podcast episode that they started conversations all the way back in 2016 which demonstrates his clear vision for the future:

…Actually in the 4th quarter of 2016 that we started the conversation with the OCC and we said to them that we’re not interested in the ILC charter or state charter. We’re not really interested in the fintech charter because we’re collecting deposits, facilitating payments and making loans and that’s what national banks do and so we were very clear that we really wanted a full national bank charter.

Varo was given preliminary approval for their national bank charter by the OCC in September 2018, but subsequently withdrew their application with the FDIC to make revisions. Their latest application was refiled last summer and yesterday we learned that the FDIC has officially approved their application for deposit insurance, a first for a digital bank in this country. The company will still need to get final approval from the OCC through a pre-opening examination and the Federal Reserve for their bank holding application.

What makes a national charter so special is that Varo will be able to make loans in all 50 states without having to worry about state by state licensing which can be an arduous process. They will also be able to act as a standalone bank, not tied to their partnership with Bancorp bank. This includes checking and savings accounts along with other loan products.

However, their longtime desire to achieve a national bank charter came with significant cost. In an American Banker article Colin Walsh revealed that the process cost them an estimated $100 million. In addition they must capitalize the bank as Walsh shares:

The agency, as part of its Feb. 7 approval, is requiring Varo to provide about $104.4 million in capital to the bank.

The process was rigorous with the FDIC requiring detailed information on everything from their executive hires to their core banking platform to stress testing scenarios. From there, examiners visited Varo’s offices and obviously this has all been going on over the last several years.

This news sets Varo apart from any fintech operating in the United States. Not only was this a big risk for the Varo team but also for their backers such as Warburg Pincus, The Rise Fund and TPG who were willing to provide the capital for Varo to see the process through. When you’re breaking new ground in an area like this there are certainly no guarantees. It is hard to fathom the amount of time that went into this process and to contrast it with other regulatory schemes such as the UK where dozens of digital banks operate. Walsh noted that Varo opened 150,000 accounts in January but stopped short of disclosing their entire customer base. Varo has always been one to keep an eye on in the digital banking space but now they are the company that I’m sure many peers will be looking up to. Congratulations to the entire Varo team.

If you’re interested in reading more Colin Walsh shared a blog post titled Varo to Become America’s First Digital National Bank.

  • Fintech Nexus Staff
    Fintech Nexus Staff

    This piece was created by one of our content team members. Reach us at [email protected]

    View all posts
Tags
digital bankingFDICNational Bank CharterOCCVaro
Related

The Bank Charter Gold Rush: What’s Really Happening and What it Means for Banking

Rory O’Reilly, Co-Founder and CEO of Knot, on connecting cardholders to merchants

Nico Simko, Founder & CEO of Clair on a different approach to earned wage access

Anthony Sharett, President of Pathward, on how to do banking-as-a-service right

Popular Posts

Today:

  • Private Fintech Has Quietly Become Bigger Than Public Fintech. Now What?Private Fintech Has Quietly Become Bigger Than Public Fintech. Now What? May. 28, 2026
  • NY Tech WeekOverheard on X: New York Tech Week Jun. 18, 2026
  • FUTURE NEXUS IMAGE TEMPLATES!! (2)OCC Hints at Trouble for Charters Jun. 18, 2026
  • Ram PalaniappanIn 2026, Your Wages Should Not Be On a Two-Week Delay Aug. 20, 2026

This month:

  • FUTURE NEXUS IMAGE TEMPLATES!! (2)OCC Hints at Trouble for Charters Jun. 18, 2026
  • Dr. Devi Parikh“Too heavy of a hammer”: How Yutori is beating AI giants at building the web’s future Sep. 10, 2026
  • Ryan WigginsMercury’s Ryan Wiggins on Building Customer Trust: Lessons from a Decade at Facebook and WhatsApp Jul. 2, 2026
  • Ethan ChanAllium CEO Ethan Chan on making blockchain data usable Sep. 3, 2026
  • Santiago SuarezInside Addi’s mission to build a fairer financial system in Colombia Feb. 19, 2026
  • Dr. Jean NehmeHardware as a durable moat & the former surgeon’s bet on “soft robotic cells” Aug. 27, 2026
  • TitoEscaping the demo: The founders building the foundation for medtech physical AI Jul. 23, 2026
  • FNMerge CEO on building the pipes behind AI, and starting with zero code May. 21, 2026
  • Ram PalaniappanIn 2026, Your Wages Should Not Be On a Two-Week Delay Aug. 20, 2026
  • 197Renton’s Take on Loan Model Risks Nov. 4, 2025

More News
  • About
  • Contact
  • Disclaimer
  • Privacy Policy
  • Terms
Subscribe
Copyright © 2026 Fintech Nexus
  • Topics
    • AI
    • Banking
    • Blockchain/DeFi
    • Embedded Finance
    • Fraud/Identity
    • Investing
    • Lending
    • Payments
    • Regulation
    • Startups
  • Podcasts
  • Products
    • Webinars
    • White Papers
  • TechWire
  • Contact Us
Start typing to see results or hit ESC to close
lis digital banking USA Lending Club UK
See all results