What is Varo Money? Varo Money Review

Varo Money is a mobile banking platform in the United States that is committed to giving users greater ability to manage their personal financial lives. Through VaroMoney, users can aggregate information from multiple bank accounts of different types and enjoy real-time online spending analysis and budgeting. VaroMoney also offers debit cards, savings, loans and other products.

Varo Money Description

Founded in 2015, Varo Money is a Chinese mobile banking startup based in San Francisco, USA. The company's main businesses include smart financial management, automatic deposits, debit cards, credit cards, etc.

Founder Colin Walsh has decades of experience in banking, and his team members come from well-known financial or Internet companies such as American Express, Apple, Wells Fargo, Facebook, Instagram, LenDINg Club, Morgan Stanley, Lyft, TaskRabbit, Earnest, Providian, Schwab, Motif, Accenture, and Monitise.

Business Model

Varo Money is a personal mobile banking app. Unlike fintech companies such as PayPal, Varo Money positions itself as a mobile financial company rather than a technology company. Currently, Varo Money mainly provides financial management services to users, including helping users save money for emergencies, setting up financial plans, and providing reasonable advice for users' daily expenses and savings. Currently, Varo Money does not charge any fees, and in order to improve its competitiveness, it will provide more competitive interest rates than banks in terms of loans.

Users can deposit funds on Varo Money debit cards and bind other bank cards on the APP. Varo debit cards actually use the license of its associated Bancorp bank. In addition, Varo Money also has its own loan licenses in dozens of states in the United States, providing loans to users who need to borrow money. In the future, Varo Money also plans to provide other services such as student loans and remittances.

Varo Money analyzes user spending and uses reinforcement learning (rEINforcement) algorithms to guide users to save and interact with them intelligently. This allows users to make more targeted and informed decisions to optimize a specific financial goal. Because many people cannot save money to deal with future emergencies, Varo currently saves money for users' emergency expenses and helps users reduce spending on specific expenses to deal with future risks. In terms of technology, Varo uses technology provided by Kasisto, a company specializing in banking intelligent chatbots. The intelligent robot "Val" will guide users' spending in a more humane way.

Varo Money hopes to do banking well while providing a very good user experience. Currently, the functions of Fintech companies and software on the market are too single and scattered. A survey of 25 million users shows that the average number of financial management software used by individuals is 4-8. Varo Money plans to merge the functions of these 4-8 software into one software. It provides financial management advice functions similar to Mint or Simple, automatic deposit functions like Digit, and P2P transfer functions similar to Venmo or Square Cash.

Development Status

Varo Money was launched on the Apple Store in June 2017 and currently has several thousand users. The Android version will be launched next year. The official promotion of the product will be in October this year. During this period, Varo Money also applied for a banking license to the Office of the Comptroller of the Currency (OCC) on July 25, 2017, and applied for deposit insurance to the Federal Deposit Insurance Corporation (FDIC). If the application goes smoothly, Varo Money will become the first mobile bank with a banking license in the history of the United States. The company has a similar development path to Europe's Number 26, and both are committed to creating a full range of financial services provided by traditional banks to individuals. Number 26 has obtained a banking license in Germany.

After the business is launched, the company will go through a long process of continuous learning and iteration. How to properly prompt or warn users without disturbing them, the content of prompts, the frequency, etc. will be studied in depth later. In the future, the company hopes to start another round of financing of US$160 million and also hopes to attract global investors outside the United States.

Financing experience

On May 2, 2016, it received a strategic investment of US$28.4 million, led by Warburg Pincus.

On January 15, 2017, it obtained US$5 million in debt financing from Silicon Valley Bank.

On January 20, 2018, it received US$45 million in Series B financing from Warburg Pincus and The Rise Fund.

On June 3, 2020, it received US$241 million in Series D financing from investors: Gallatin Point CAPItal and The Rise Fund.

Frequently asked questions

How does Varo Money complete loan review? Does it use other data such as social data as a reference?

We obtain credit reports and credit scores from credit bureaus such as Huanlian. For customers who meet the standards, we combine the transaction situation on our platform to give a judgment result. The entire judgment process is completed entirely by machines. We do not use alternative data at present. Based on experience, the effect of using alternative data is not as good as expected, but it will lead to many regulatory issues.

What regulations does Varo Money fall under at present?

Currently, the company is only regulated by the federal government. However, as the business develops in the future, it may be subject to other supervision.

What is the approximate customer acquisition cost of Varo Money?

At present, the company's business is still in its early stages and has not been officially promoted. Currently, there are several thousand users, and the cost of acquiring each user is less than US$20. Our future target customers are users born after 1980. According to many of our related surveys, many customers have expressed their great expectation to have such a bank, and I believe that many people will be willing to use it in the future.

Currently the company has only one partner bank. If that bank has problems, has Varo Money considered remedial measures?

First of all, we have done our own due diligence on the banks we work with. In addition, this is indeed a risky issue. Therefore, we are also working hard to apply for our own banking license so that we don’t have to rely on other banks.