America's first digital-only bank gets licensed.
The Federal Deposit Insurance Corporation (FDIC) has accepted San Francisco–based Varo Money’s application for insurance, clearing a major hurdle in the fintech firm’s three-year quest to accept deposits and become a full-fledged bank. The only step remaining is to receive a charter from the Office of the Comptroller of the Currency (OCC).
While it would be the first so-called neobank to be chartered in the US, Varo joins Germany’s N26 as well as Britain’s Atom Bank, Revolut and Monzo, as fully licensed, digital-only banks. Chime, Robinhood and other competitors operate without the FDIC credential by partnering with institutions that do have it.
Varo was among the neobanks that considered becoming a depository institution via the OCC’s proposed special, streamlined charter for fintech firms. A combination of court challenges and an unwillingness of applicants to be first through the door stalled the process, and the OCC shut it down before charters could be issued. Switzerland, Hong Kong and South Korea are among the countries that grant neobank licenses.