San Francisco-based Varo Money, a mobile-only banking startup, announced on Monday (May 2) that it raised more than $27 million in an investment round led by global private equity firm Warburg Pincus.
In a press release, the bank said it aims to help consumers improve their financial lives through tools that encourage positive spending, borrowing and saving habits. Varo Money will provide its customers with 24/7 access to digital financial coaches designed to help them achieve better financial outcomes, as well as debit card, deposit and lending products via a mobile app.
Colin Walsh, Varo Money CEO and cofounder, said:
“The U.S. banking market is undergoing a huge transformation, and Varo is ideally positioned to offer a unique and unrivaled banking service to our target customer base. We have the team, strategy, product vision and execution capabilities to change the way that people interact with their banks — empowering customers to achieve a better financial future. We are excited to partner with the Warburg Pincus team given their deep experience in both financial services and technology and look forward to the value they will bring to Varo.”
On Sunday (May 1), The Wall Street Journal reported that Varo Money may, one day, pursue the path of obtaining its own bank charter.
“The ultimate goal is to go seek a charter,” Michael Martin, managing director and head of the financial services group at Warburg Pincus, told WSJ.
The establishment of new banks within the U.S. market is a rare occurrence, as providing core banking has become much tougher since the financial crisis, WSJ explained.
But it seems as though Varo Money is willing to take the road less traveled and hopefully find success on the other side.
“Varo is an excellent fit within our industry thesis focused on the bank of the future,” Martin explained in the press release.
“We are at a tipping point in retail banking, and there is a real opportunity to build a new and differentiated bank model based on a mobile platform serving the needs of many people.”