Tue, Aug 1, 2017
Amidst debates over how fintechs should be regulated, a mobile-only financial institution has filed for a bank charter. A fintech called Varo Money announced Tuesday that it has filed formal applications with the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. to become a national bank. Varo joins another fintech, SoFi, that is seeking deposit insurance from the FDIC. That application has already garnered opposition from community bank groups.
Varo Money would not operate brick-and-mortar branches, but it intends to offer traditional bank services. It would take deposits, cash checks and make loans. Its core products would center around direct deposit and savings accounts, as well as unsecured lending.
With fintech charters still a controversial topic that has recently lead to lawsuits against the OCC, Varo is aiming for a traditional national bank charter. This will require approval from both the OCC and FDIC. But it is unclear whether regulators — particularly the FDIC, which has been slow to grant deposit insurance to new bank since the 2008 crisis — are ready for a mobile-only bank.
Varo, launched in October 2015, already has a risk and compliance adviser and head of banking products, who spent more than a decade at American Express.