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08.25.17

Top 5 Best Challenger Banks: Varo Money

We recently asked Paybefore.com visitors to vote for the Best Challenger Banks—the ones shaking up the status quo with a legitimate chance to become the preferred accounts for their target consumers, not just a stepping stone to the big banks.

For the next few weeks, we’ll be sharing our spotlight articles on these challengers, so you can evaluate them for yourselves. Get to know more about our No. 2 on the list in their own words, Silicon Valley-based Varo Money.

Company Name: Varo Money Inc.

Location: San Francisco and Salt Lake City

Opened for Business: Colin Walsh founded the company in October 2015. Pushed to the App Store in June 2017

Banking License: Submitted application for a national bank charter in July 2017

Investors: Warburg Pincus led $28 million Series A investment round (the second-largest series A for a U.S. fintech company)

Flagship proposition: Varo is an all-in-one banking solution with four primary financial products: checking, savings, flexible credit and installment loans integrated with tools to help customers manage cash-flow, track spending, set goals and automate savings. Varo combines multiple technologies and platforms behind the scenes to create a seamless experience for customers and offer automated solutions for everyday financial problems with a few taps.

Secret Sauce: There’s a reason that the bank of the future hasn’t been created yet—it’s extremely difficult and requires a team with deep expertise in both banking and consumer technology. Our team is uniquely positioned to both understand the security, compliance and regulatory complexity of starting a bank AND create a beautiful, user-friendly product that consumers love. Varo’s integration of traditional bank products with modern technology (predictive analytics, machine learning, contextual alerts/notifications, visualizations) is the key differentiator. We have applied for a national bank charter (and a de novo charter hasn’t been granted in 8 and half years), which would enable us to deliver a full suite of products through an even more integrated, seamless and trustworthy nationwide banking platform.

Target customers: “Hands-off” millennials. 75 percent of millennials are “hands-off” with their finances, meaning that they would rather be doing almost anything else than creating a budget, categorizing transactions or analyzing their spend. They often run into trouble because their mental spending model doesn’t match unexpected life events, which creates a vicious cycle of depleted savings and high-interest debt that prevents customers from achieving their goals.

Active customers: Growing by thousands per week.

Growth strategy: We’re focused on profitably acquiring new customers, providing an incredible experience from day 1, and helping them access the products and features that will make a difference in their financial lives. Long-term, we believe the happiness and word-of-mouth from our growing customer base will be our primary channel for acquiring new customers. Additionally, the best funnel optimization strategy is one that aligns with customers’ needs and gets them where they want to go with as little friction as possible.

Why do you deserve to be on this list? Varo was founded with a specific vision: to help millions of people improve their financial situations. We want to shift expectations on what the banking experience can be. We are creating a more affordable banking solution that offers real tools to help customers manage their money and achieve their goals. Banking today has become largely transactional—banks help you move funds in, around and out, but do not help you get more from your money. Varo is different, helping customers solve everyday financial problems in just a few taps.

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