On February 10, 2020, mobile banking company Varo Money, Inc. announced that it has received approval from the Federal Deposit Insurance Corporation (FDIC) to offer federal deposit insurance, bringing it one step closer to becoming the first federally chartered all-mobile bank in the United States. Varo received preliminary approval for a national bank charter from the Office of the Comptroller of the Currency (OCC) in 2018 and must still be approved for Federal Reserve System membership before obtaining final approval from the OCC.
The FDIC has not yet approved deposit insurance applications for a FinTech or mobile bank, notwithstanding applications that have been pending. With this approval, the FDIC may be signaling that it is ready to approve other FinTech companies, such as those with ILC charters, for deposit insurance, as well.
Varo CEO Colin Walsh said that “receiving an official bank charter has been part of Varo’s vision from the very beginning,” and that the national bank charter would give the company “greater opportunity to deliver products and services that positively impact the lives of everyday people around the country.”
If Varo is successful, it could pave the way for other all-mobile banks to follow. While the OCC’s special purpose national bank charter has been held up due to legal action taken by state regulators, an OCC approval for a full bank charter, combined with deposit insurance, would allow those financial services firms to provide a full suite of lending, payment and deposit-taking products.