fintech stories

Varo: the bank for those "disillusioned" by traditional banking

varo bank

Varo is an American digital, mobile-only neobank that’s based in San Francisco, California. The company provides critical financial services to its users through its Apple and Android app. As of 2021, it has over 1 million customers. 

Varo Bank was co-founded by Colin Walsh and Kolya Klymenko in 2015. Its target demographics are young people and millennials — individuals that have been disillusioned by traditional banks and their roster of services. Walsh and Klymenko’s product is only accessible through the Varo app, this ensures that customer experiences work well and are better managed by a close circuit of operators, not by branch employees that are not carefully supervised. 

As of 2020, Varo is one of the 3 largest neobanks operating in the United States, along with Chime and Simple. The biggest difference between Varo and some of its peers is that as of 2016 it applied for a banking licence in order to transform into a full-fledged financial institution/bank.

This was a monumental change in the way Varo operated, up until then the main banking backbone for its operations was led by Bancorp Bank. By becoming a licensed bank, Varo can now develop its own banking platform, independent of any other. This change would allow Varo to develop and market products that would otherwise be unavailable to a FinTech with an outsourced Banking partner. 

In July 2020, the Office of the Comptroller of the Currency, the OCC, finally granted Varo its licence. This would mean, that as of 2020, Varo is a full-fledged bank.

varo card contactless

Overview of Varo Bank

Like most neobanks that are online-only, Varo cuts back on fees simply because it has little to no operational overhead. This is a huge advantage over brick and mortar banks, and one that translates to more affordable services, even no-cost ones, to its client base. Varo Bank offers no-fee checking and saving accounts, as well as — something not too common in banks — no overdraft fees. It also provides its members key tools to help them keep track of their spending, budgeting, and financial objectives. 

Another great benefit is that Varo offers free ATM withdrawals through its Allpoint partnership. 

Features of Varo Bank

Let’s explore some features, pros and cons, of Varo bank — to give you a clear idea, with easy-to-understand bullet points, on some of its most pressing issues.

  • Varo bank has no fees for monthly maintenance, foreign transaction, transfer, or debit-card replacement. 
  • There is a no-minimum deposit policy. This means that members can apply to open an account regardless of their funding. 
  • Varo bank has one of the highest interest rates (annual percentage yield — APY) in the market — 0.50%. What’s even more impressive is that if you meet a couple of simple requirements each month, you can qualify for 3.00% APY. Those requirements are: Keep the account balance above or equal to $0.00 for the calendar month. Receive $1,000 or more in total direct deposit each qualifying period. Do not exceed the daily savings balance of $5,000 for the calendar month. 
  • Free ATM withdrawals from more than 55,000 machines nationwide. Varo is part of the Allpoint ATM Network. For all other ATMs, Varo changes $2.50.
  • Varo App allows you to link up all external bank accounts to its mainframe. This small little perk makes it easy for members to manage their money and have a balanced view of each of their accounts under one roof. 
  • $50 for referral bonus.
  • Two automatic savings features so you can plan and organize your spending objectives.
  • If Varo receives a direct deposit notification before your payday, it can actually deposit your money early — up to two days. 
  • You can add money to Varo through one of its retail partners — the Green Dot Network - such as CVS, 7-Eleven, or Walgreens. 
  • Clients can use the Varo Advance Feature to get up to $100 instantly. You’ll pay a flat fee for cash advances over the amount of $20 and have up to 30 days to repay it. 
  • Varo gives its users a Visa Debit Card licensed and protected by Visa U.S.A. It can be used everywhere Visa is accepted. 
  • All deposits are FDIC-insured up to $250,000.
  • Varo offers customer support — weekdays from 8 a.m. to 9 p.m. and on weekends from 11 a.m. to 7 p.m.
  • You can track your budget, your spendings, and your transactions through Varo’s mobile app.