SAN FRANCISCO–A fintech start-up here, Varo Money, could in the future also seek its own bank charter.
The Wall Street Journal reported that New York-based investment firm Warburg Pincus is leading an investment round of more than $27 million for the company, funds which might be used in part to underwrite a bank charter.
Varo is led by former financial services exec Colin Walsh and is currently developing a mobile-banking app offering deposit accounts connected to budgeting tools and other digital financial services. It is also seeking to partner with a bank to provide accounts.
According to The Wall Street Journal, Varo plans at first to rely on the banking partner to back the accounts to which its software will provide access.
“But what sets the company apart is its willingness to even consider seeking its own bank charter so it can offer the deposits itself,” the Wall Street Journal reported. “That would be a shift within the financial-technology industry, which has steered away from traditional banking with its heavy regulations.”
The Journal said that Varo plans to begin live testing of its app with customers later this year, as it seeks a multiyear sponsor-bank arrangement before exploring setting up its own bank.
Rather than charter their own banks, a number of other fintech start-ups have partnered with banks, instead.