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- Varo Bank initially partnered with The Bancorp Bank to offer banking services.
- In 2020, Varo became the first fintech company to receive a national bank charter.
- Varo now operates as a fully independent national bank, not under any other bank.
- A national bank charter allows Varo to provide its own FDIC-insured services.
- Varo can now issue loans, manage deposits, and innovate freely without third-party restrictions.
- Varo’s independence sets it apart from other neobanks like Chime and Current.
- Varo’s autonomy positions it for future growth in offering more banking and financial products.
Varo Bank has emerged as a notable player in the rapidly evolving financial landscape, particularly in the world of neobanks. Known for its streamlined, mobile-first approach and user-friendly services, Varo has drawn considerable attention from both the public and financial analysts alike. But one of the most frequently asked questions about this institution is, “What bank is Varo under?”
In this blog post, we will dive deep into this question, exploring the foundational details of Varo Bank, its banking license, the broader neobank industry, and what makes Varo unique compared to traditional banks.
What Bank is Varo Under?
In recent years, fintech companies and neobanks have increasingly disrupted the traditional banking industry by offering digital-first services that focus on convenience, accessibility, and innovation. Varo Bank is a prime example of this shift. Founded in 2015, Varo’s mission has been to redefine how people interact with their finances, particularly focusing on underbanked or unbanked individuals.
Despite its success and growing user base, many people still wonder, “What bank is Varo under?” This question stems from the fact that most neobanks operate under a partnership with an existing, federally chartered bank. These partnerships allow fintech companies to offer banking services such as holding customer deposits or issuing loans while relying on the regulatory framework and FDIC insurance of a partner bank.
However, Varo Bank’s story diverges from this model in a significant way. Unlike many other neobanks, Varo Bank no longer operates under a third-party bank’s charter. This blog post will explore Varo Bank’s journey, its regulatory standing, and how it manages to provide banking services directly to its customers.
The Early Days of Varo: Partnering with The Bancorp Bank
When Varo first launched, like many other digital-first financial institutions, it did not possess its own banking license. Instead, Varo operated under a partnership with The Bancorp Bank, a federally regulated entity that provided the back-end support needed to offer core banking services. This setup was typical for neobanks at the time. The Bancorp Bank held Varo’s customers’ deposits and ensured that accounts were protected by FDIC insurance up to $250,000, an essential feature for gaining public trust.
By using The Bancorp Bank’s charter, Varo was able to grow its user base rapidly. Customers appreciated Varo’s innovative approach, such as offering fee-free banking, high-yield savings accounts, and robust financial management tools, all accessible from a mobile app. Despite this, Varo’s long-term vision involved moving beyond a reliance on another institution. As the company grew, it sought to break free from this model and become a fully independent bank.
Varo’s Historic Milestone: Becoming a Fully Licensed National Bank
A defining moment in Varo’s history—and the answer to the question “What bank is Varo under?”—came in 2020. After a long and rigorous process, Varo became the first fintech company in U.S. history to receive a national bank charter from the Office of the Comptroller of the Currency (OCC). This achievement was groundbreaking, as it allowed Varo to operate as an independent bank rather than relying on a third-party charter.
With this new national bank charter, Varo Bank now directly offers banking services to its customers under its own name, without the need for a partner bank. This independence provides a more seamless and integrated experience for users, while also allowing Varo to innovate more freely. It also underscores Varo’s commitment to transparency and regulatory compliance. The company can now be held to the same regulatory standards as traditional banks, offering peace of mind to its customers.
What Does It Mean to Be a National Bank?
Receiving a national bank charter is a significant achievement, but what does it actually mean for a financial institution like Varo? A national bank charter allows Varo to operate as a federally regulated bank, meaning that it is subject to oversight by regulatory bodies such as the OCC, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve. This not only brings increased accountability but also allows Varo to offer services like direct deposit, savings accounts, and credit cards, all without relying on a third party.
Furthermore, as an independent national bank, Varo can issue loans, manage customer deposits, and hold capital reserves, all of which make it a fully autonomous financial institution. It no longer needs to operate “under” another bank, which answers the question “What bank is Varo under?”—Varo Bank operates under itself.
The Implications for Consumers
For Varo’s customers, the transition to becoming a fully licensed bank means several important things. First, customers benefit from the fact that Varo is no longer tied to an intermediary bank. This reduces some potential friction in customer service and allows Varo to respond more quickly to customer needs. Moreover, having a national bank charter ensures that Varo Bank is operating under the same stringent regulations as any traditional bank, giving customers a sense of security.
Additionally, because Varo is now independently regulated by federal authorities, it can expand its product offerings more easily. For instance, Varo recently introduced its “Varo Believe” program, a credit-building product that is designed to help users with thin or no credit history improve their scores. This is one of many innovative services that Varo is likely to expand upon in the future.
Varo vs. Other Neobanks
When considering the question “What bank is Varo under?” it’s helpful to compare Varo with other neobanks. Many other neobanks, such as Chime and Current, still rely on partnerships with traditional banks to offer FDIC-insured accounts. While this model works well for these companies, it limits their ability to offer a full range of banking services independently.
Varo, on the other hand, stands apart from these competitors due to its bank charter. This independence allows Varo to operate as a complete financial institution, giving it the freedom to innovate in ways that partner-dependent neobanks cannot. This could give Varo a significant competitive advantage in the long run as it can expand its product offerings without the constraints of relying on a third-party bank.
The Role of FDIC Insurance
FDIC insurance is one of the most important factors when it comes to consumer trust in banks. The Federal Deposit Insurance Corporation (FDIC) insures deposits at U.S. banks up to $250,000 per depositor, per bank, in the event of a bank failure. When Varo operated under The Bancorp Bank, customer deposits were insured through The Bancorp Bank’s FDIC coverage. Now that Varo is an independent bank, it directly offers FDIC insurance under its own charter.
This shift further solidifies Varo’s position as a legitimate and safe institution. Customers can be assured that their deposits are protected, and Varo is held to the same rigorous standards as any other U.S. national bank. This offers customers the same protections they would expect from larger, more traditional banks, combined with the convenience and modernity of a neobank.
What Does the Future Hold for Varo?
Now that we have answered the question “What bank is Varo under?”—the answer being that Varo is its own bank—the next question is, what comes next for Varo Bank? The future looks bright for this growing institution. As more consumers gravitate toward digital banking options and away from traditional brick-and-mortar banks, Varo is well-positioned to capitalize on this shift.
Varo’s ability to offer innovative products tailored to its customers’ needs, such as early direct deposit, no-fee banking, and credit-building tools, sets it apart in a crowded field of digital-first banks. Moreover, Varo’s full control over its banking operations will allow it to expand more rapidly into new areas like loans, investment services, and expanded credit offerings. The potential for growth is significant as Varo continues to attract younger, tech-savvy consumers who prefer managing their finances via their smartphones.
Frequently Asked Questions
Here are some of the related questions people also ask:
What bank is Varo under?
Varo is no longer under any bank. In 2020, Varo became a fully independent national bank after receiving a national bank charter from the Office of the Comptroller of the Currency (OCC).
Is Varo Bank FDIC insured?
Yes, Varo Bank is FDIC insured. Since becoming an independent bank, it directly offers FDIC insurance, covering up to $250,000 per depositor.
Did Varo Bank start as a neobank?
Yes, Varo Bank started as a neobank in 2015, initially partnering with The Bancorp Bank to offer services before becoming an independent bank in 2020.
How did Varo Bank get its national bank charter?
Varo Bank went through a rigorous application process and, in 2020, became the first fintech company to be granted a national bank charter by the OCC.
Is Varo a real bank or just a fintech company?
Varo is a real, fully licensed national bank. It began as a fintech but now operates independently under its own national bank charter.
What services does Varo Bank offer?
Varo Bank offers checking and savings accounts, early direct deposit, no-fee banking, credit-building tools, and more, with plans to expand into additional financial products.
How is Varo different from other neobanks like Chime?
Unlike Chime, which relies on a partner bank, Varo operates as a fully independent bank with its own charter, giving it more flexibility in offering banking services.
Why did Varo seek a national bank charter?
Varo sought a national bank charter to operate independently, avoid relying on third-party banks, and offer a more integrated and secure banking experience to its customers.
What is the significance of Varo becoming a national bank?
Varo’s national bank charter allows it to provide banking services directly, issue loans, and offer FDIC insurance, marking a major milestone for fintech companies.
The Bottom Line
In conclusion, when people ask, “What bank is Varo under?” the answer is that Varo Bank is no longer under any bank. Since obtaining its national bank charter in 2020, Varo has become a fully licensed, independent financial institution. This shift has allowed Varo to operate as a national bank, offering the full range of banking services without the need for a third-party partner.
This development has important implications for both Varo and its customers. It enhances customer trust, allows for greater product innovation, and positions Varo as a leader in the neobank industry. As more consumers seek out digital-first financial solutions, Varo’s independence and ability to offer FDIC-insured services under its own charter will likely make it an attractive option for those looking for a modern alternative to traditional banking.
By understanding Varo Bank’s unique position in the financial landscape, it becomes clear that this neobank is not just another fintech relying on a partner. Varo’s full independence as a national bank sets it apart and allows it to offer a truly integrated and secure banking experience to its growing customer base. The journey from partnering with The Bancorp Bank to becoming its own entity is a testament to Varo’s vision of redefining what banking can be in the digital age.