The neobank that went through the pain of getting an actual bank charter — and is still trying to prove it was worth it. Varo was the first consumer fintech to earn a national bank charter, which should be a massive competitive advantage. It lets them keep deposits, lend directly, and avoid partner bank fees. But the regulatory burden is enormous and they've burned through nearly $1 billion without reaching profitability. The thesis is sound: be a real bank for people real banks ignore. The execution timeline is the question.
Founded
2015
HQ
San Francisco, CA
Total Raised
$992 million
Founder
Colin Walsh
Status
Private — first consumer fintech with a US national bank charter
Website
www.varomoney.comTHE ORIGIN STORY
Colin Walsh spent 25 years in traditional banking (American Express, Lloyds, Wells Fargo) and saw firsthand how banks profited from overdraft fees, minimum balance requirements, and hidden charges that punished low-income customers. He built Varo as a neobank for the underbanked — no minimum balance, no monthly fees, early direct deposit, and cash advances without predatory interest rates.
WHAT THEY ACTUALLY DO
Banking revenue: interchange fees on debit card transactions, interest income from lending, subscription fees for Varo Advance (cash advances), and interest from deposits invested. Revenue approximately $200 million in 2024.
THE PRODUCTS
Varo Bank Account (no-fee checking), Varo Savings (high-yield), Varo Advance (cash advances up to $250), Varo Believe (credit-building secured card), Early Direct Deposit (up to 2 days early), No-fee ATM network.
HOW THEY GREW
Using the bank charter to offer more profitable products — personal loans, secured credit cards, and savings accounts. The charter lets Varo lend directly (higher margins than partner bank models).
Also building credit-building tools and financial education to deepen customer relationships.
THE HARD PART
Becoming the first US consumer fintech to receive a national bank charter (achieved in 2020). The charter gives Varo advantages (can hold deposits directly, lend its own balance sheet) but also imposes heavy regulatory requirements.
Profitability remains elusive — the bank has burned through most of its $992 million in funding.
WHO BACKED THEM
Warburg Pincus, The Rise Fund, Gallatin Point Capital, Progressive Insurance, HarbourVest Partners
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