Varo Bank

About Varo Bank

Varo became the first US neobank to receive a full national bank charter from the OCC in 2020. Founded by Colin Walsh in 2017, Varo raised over 1 billion from investors including TPG and Warburg Pincus. Varo offered no fee banking, high yield savings, and early direct deposit. Receiving a bank charter allowed Varo to hold deposits directly and lend, rather than relying on a partner bank. Despite the charter, Varo struggled with profitability. The bank burned through cash and underwent multiple rounds of layoffs. Varo raised emergency funding in 2023 to stay afloat. The company represents the challenges of the US neobank model: high customer acquisition costs, low margins on free banking, and difficulty generating sufficient revenue from interchange and lending.