LENDTECH
The first challenger to be granted a national banking licence in the US, Varo is reaching out to the millions of Americans who still don’t have access to mainstream financial services. Chief Risk Officer Philippa Girling explains how it’s going about it Not every company can legitimately claim to have made history, but being the first US consumer fintech to get full regulatory approval to become a national bank is certainly one for the record books. Three-and-a-half years and multiple rounds of applications later, San Francisco-based Varo Bank was finally granted a national bank charter in July. It now plans to vastly expand its services for the benefit of the millions of Americans who are financially struggling, and to lead what it calls a ‘new wave of financial inclusion’. Because, even in one of the biggest democracies in the world, 22 per cent of adults are either unbanked or underbanked. According to a 2018 report by the US Federal Reserve, they either don’t have a bank account, or have an account but still go outside the banking system to make ends meet. It found that 28 per cent borrowed money using an alternative financial service product, which could include payday, pawn shop or auto title loans. According to an earlier Federal Deposit Insurance Corporation survey of financially excluded households, more than half of those questioned said they simply didn’t have enough money to keep in an account, while a massive 30 per cent said they simply didn’t trust banks. “These are the people we’re trying to help,” says Philippa Girling, chief risk officer at Varo Bank. “There are a lot of people who have not managed to successfully open a bank account; they may have had a prepaid card, or been
Land of the (financially) free 82
ThePaytechMagazine | Issue 6
www.fintech.finance