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American FinTech Varo Money receives FDIC nod of approval

Varo MoneySan Francisco-based Varo Money Inc. has received final approval from the Federal Deposit Insurance Corp. to obtain deposit insurance. The FinTech considers it to be a crucial step on its way to becoming a full-service banking institution. Last year the VC-backed startup received preliminary approval from the Office of the Comptroller of the Currency.

With the approval, Varo will have the right to control its deposits, and it will be able to use them to fund loans.

“From a regulatory perspective, this is a recognition that technology-driven banking is now mainstream. This has been a three-year process, and we’ve spent tens of millions of dollars on it. That’s something of a moat for us. It’s hard to find investors willing to put that kind of money upfront without the certainty of reaching the finish line,” said Colin Walsh Founder and CEO at Varo Money.

The startup is expecting to receive its final approval on its way to becoming the “de novo national bank charter” in Q2. It will then start transferring accounts from Bancorp, Varo’s current partner bank. The FinTech states that once it receives customers’ data and money, it will start being able to offer new products like credit cards, joint accounts and certificates of deposit.

Founded in 2015, Varo’s mission is to redefine banking, so it’s easy for everyone to make smart choices with their money. It offers a mobile banking account with high-yield mobile bank accounts, direct deposit, and no account fees. The FinTech has raised $78M to date, led by Warburg Pincus and The Rise Fund/TPG Growth.

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