It was Varo's second try with the Federal Deposit Insurance Corp., but it has now moved within a few steps of obtaining what has eluded fintech firms of late: a green light from banking regulators.
The challenger bank might use the proceeds from its latest funding round to buy other fintechs that would allow it to add more products and services, its CEO said.
A more practical approach for U.S. regulators on whether to bring fintechs into the banking fold might be ‘better the devil you know than the devil you don’t.’
Earlier this decade, a boom in low-cost prepaid cards undercut the firm's business model. Now the fiercest competition is coming from venture capital-backed startups that offer accounts with no overdraft fees.
The payment processor Galileo suffered what it described as an "operational incident" that caused more than 24 hours of outages at the fintechs Chime and Varo Money.
MoneyLion and Varo say familiarity with existing customers — whom they already offer savings, investment and personal finance products — will help them make smart credit decisions.
