What is Varo Money? Varo Money Review, Features

Founded in 2015, Varo Money is a user-centric mobile banking startup.

About Varo Money

• The company is committed to giving users greater ability to manage their personal financial lives. Through VaroMoney, users can aggregate information from multiple bank accounts of different types, and enjoy real-time online spending analysis and budgeting. VaroMoney also offers debit cards, savings, loans and other products.
• Founder Colin Walsh has decades of experience in banking, and his team members come from well-known financial or Internet companies such as American Express, Apple, Wells Fargo, Facebook, Instagram, Lending Club, Morgan Stanley, Lyft, TaskRabbit, Earnest, Providian, Schwab, Motif, Accenture, and Monitise.
• Varo Money received a $27 million private equity investment from Warburg Pincus in 2016. It is expected to complete another $160 million in financing by the end of this year.

Business Model

• Varo Money is a personal mobile banking app. Unlike fintech companies such as Paypal, Varo Money positions itself as a mobile financial company rather than a technology company. Currently, Varo Money mainly provides financial management services to users, including helping users save money for emergencies, setting up financial plans, and providing reasonable suggestions for users' daily expenses and savings. Currently, Varo Money does not charge any fees, and in order to improve its competitiveness, it will provide more competitive interest rates than banks in terms of loans.
• Users can deposit funds on Varo Money debit cards and bind other bank cards on the APP. Varo debit cards actually use the license of its associated Bancorp bank. In addition, Varo Money also has its own loan licenses in dozens of states in the United States, providing loans to users who need to borrow money. In the future, Varo Money also plans to provide other services such as student loans and remittances.

Development Status

Varo Money was launched on the Apple Store in June 2017 and currently has several thousand users. The Android version will be launched next year. The official promotion of the product will be in October this year. During this period, Varo Money also applied for a banking license to the Office of the Comptroller of the Currency (OCC) on July 25, 2017, and applied for deposit insurance to the Federal Deposit Insurance Corporation (FDIC). If the application goes smoothly, Varo Money will become the first mobile bank with a banking license in the history of the United States. The company has a similar development path to Europe's Number 26, both of which are committed to creating a full range of financial services provided by traditional banks to individuals. Number 26 has obtained a banking license in Germany.

Q&A

Q: How does Varo Money complete loan review? Does it use other data such as social data as a reference?

A: We obtain credit reports and credit scores from credit bureaus such as Huanlian. For customers who meet the standards, we combine the transaction situation on our platform to give a judgment result. The entire judgment process is completed entirely by machines. We do not use alternative data at present. Based on experience, the effect of using alternative data is not as good as expected, but it will lead to many regulatory issues.

Q: What kind of regulation is Varo Money subject to at present?

A: Currently, the company is only regulated by the federal government. However, as the business develops in the future, it may be subject to other supervision.

Q: What is the approximate customer acquisition cost of Varo Money?

A: At present, the company's business is still in its early stages and has not been officially promoted. Currently, there are several thousand users, and the cost of acquiring each user is less than US$20. Our future target customers are users born after 1980. According to many of our related surveys, many customers have expressed their great expectation to have such a bank, and I believe that many people will be willing to use it in the future.

Q: The company currently has only one partner bank. If that bank has problems, has Varo Money considered remedial measures?

A: First of all, we have done our own due diligence on the banks we work with. In addition, this is indeed a risky issue. Therefore, we are also working hard to apply for our own banking license so that we don’t have to rely on other banks.