Aug 3, 2020

Varo is granted its bank charter and a US FinTech milestone

Varo
Fintech
Office of the Comptroller of Currency
bank
William Girling
2 min
Digital bank
US FinTech Varo has become the first company of its kind to be granted full regulatory approval and gain a national bank charter from the OCC...

US FinTech Varo has become the first company of its kind to be granted full regulatory approval and gain a national bank charter from the OCC.

Seen by the company as not just a gain for itself or even the industry, Varo’s press release emphasises that the decision has the potential to “ultimately improve the financial health of the millions of Americans who have been overlooked and underserved by the traditional financial system.”

Indeed, CEO and Founder Colin Walsh called the achievement “thrilling”, as attaining a bank charter had formed an integral part of its vision to disrupt the financial services sector since the beginning.

“The ability to operate as a full-service national bank gives Varo more freedom to deliver the kind of innovation and allyship that many Americans have never had from their bank before. 

“We are excited to lead a new wave of financial inclusion by offering fair, transparent, intelligent, and comprehensive financial services to all,” he said.

Using technology to improve lives

Founded in 2015, the Varo app has been downloaded over 4.2mn times. Created to be a bank which would be attractive to millennials and other groups currently underserved by the traditional banking establishment, the company operates exclusively through its app, which it is constantly improving for optimal customer experience.

The bank currently offers three types of account - Current, Savings and Checking - and a host of incentives and benefits, including partner offers, no fee overdrafts, no hidden fees, high interest rates and more. 

With this latest development, Varo intends to expand its products and services range even further to provide affordable access to credit, easier management of cash flows and financial resiliency.

Brian P. Brooks, Acting Comptroller for the Currency (Office of the Comptroller of the Currency or OCC), called the landmark milestone an evolution in modern banking and an empowering prospect for US consumers. 

“I congratulate Varo founder Colin Walsh and all the people behind Varo Bank, N.A. on this important occasion and I wish them great success in meeting banking and financial needs of their community and customers.”

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.  

 

 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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