Varo Bank in Salt Lake City has received preliminary and conditional approval from the Office of the Comptroller of the Currency to become a national bank.
Varo Money, a mobile-only financial institution that aims to lower the cost of banking, had applied in 2017 with the OCC and Federal Deposit Insurance Corp. for a national bank charter.
Although Varo Money is considered a fintech firm, this application is separate from the fintech charter that the OCC recently started considering.
Varo Bank still needs approval from the FDIC to obtain insurance and Federal Reserve membership before it opens.
The OCC said Varo Bank must raise $104 million in initial capital within 12 months to open. Varo Money raised $45 million in Series B funding in January.
The OCC also approved Varo’s proposed executive officers, directors and organizers. Colin Walsh, who previously worked for American Express and Wells Fargo before entering the fintech sector, is Varo’s co-founder and CEO.
Varo does not plan to open any branches or offices outside of its main office in Salt Lake City. Banking industry advocates have expressed concern over how online banks could meet Community Reinvestment Act requirements.
Varo plans to include the Salt Lake City combined statistical area as its geographic area for CRA compliance. The OCC said in its decision letter that Varo organizers understand the CRA requirements and are working on building a plan, which needs to be completed before receiving final approval.
