April 30, 2020

Trailblazing is hard work. It is not easy to carve out a path no one has followed before, knowing where you want to go but not precisely how to get there. That is exactly what today’s guest has done. Colin Walsh is the CEO of Varo, and Varo is the first fintech startup to become chartered as a national bank.

We’ve had Colin on the show before. I first met him shortly before Varo launched, during the first fintech innovation conference held by a US federal regulatory agency -- that was at the Federal Reserve Bank of San Francisco in, I think, 2015.  When we recorded a Barefoot Innovation episode about a year later, Varo was a promising young firm dedicated to expanding financial inclusion and consumer financial health. And today, it is provisionally approved to be a national bank -- not with the special fintech charter that the OCC proposed several years ago, but with a regular charter like any other full service bank.

In our conversation, Colin explains what Varo does and who it serves -- he describes popular features like no-fee overdraft, early-pay, and auto-savings, and touts the company’s very high net promoter score. He explains why he thinks Varo’s business model is the best of both worlds, better than either a typical fintech or a typical bank. He talks about the advantages of building a bank today from scratch using the newest technology, including the ability to massively leverage data and to set up what may be the most modern tech stack of any bank in the United States, or even the world.

And then Colin takes us along on Varo’s pathfinding journey from fintech startup to national bank. He describes the 5,000 page application they prepared and some lessons they learned, including how different the processes were for getting approvals from the OCC versus the FDIC. He offers advice for other fintechs that may want to travel the same route, sharing what it takes to get it done -- which is a lot.

I asked Colin to try to predict the future of the financial industry. I know you’ll be interested in his vision for it, as well as his advice for banks that, unlike Varo, are not starting from scratch. I was interested that he estimates Varo’s cost of serving a customer at about one-fourth the cost of a large bank. Those economics are going to reshape the industry in the coming years.

Last but not least, Colin has suggestions for the regulators, themselves, as they grapple with the industry redesign that is being wrought by technology, and as more fintechs seek to enter the banking system in one form or another.

I was talking recently with a very smart person about how the pandemic may change the financial sector and financial regulation. He said the only thing he’s sure of is that, coming out of it, we won’t have “alternative” finance. We’ll just have finance. There is a great deal of work ahead to figure out how best to take the best of the old, and the best of the new, and fashion the best imaginable models for financial companies, to make them stable, inclusive, affordable, innovative, and fair.

Speaking of imagining the future, please also watch for a very special series of podcasts we’re creating on the post-pandemic future of financial regulation. Our first guest is former Comptroller of the Currency Thomas Curry, and our second will be former Comptroller of the Currency Gene Ludwig. Those are coming soon.

More on Colin

Colin Walsh is the CEO and co-founder of Varo Money, which has become the first chartered mobile-centric national bank in U.S. history. Colin founded Varo with a specific vision: to help millions of people improve their financial lives.

Colin is uniquely positioned to lead the mobile-bank revolution, having more than 25 years of experience in consumer banking at large global financial institutions in the US and Europe. He led Europe’s largest credit and charge card business as an Executive Vice President at American Express. He also led the UK’s largest mortgage and savings businesses at Lloyds Banking Group and served as Managing Director for the firm’s retail bancassurance, credit, debit and merchant acquiring businesses.

Under Colin’s leadership, Varo now has more than 1M customers who are building their financial health with services like No Fee Overdraft, early pay with direct deposit, and auto-savings tools with high APY.

More for our Listeners

Please come to to check out our new AIR website. Also please follow me on Twitter and LinkedIn.

We have great shows coming up. We’ll talk with Albert Forkner, State Banking Commissioner of Wyoming and with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. And we’ll have a conversation with Shamir Karkal and Angela Wilson of Sila.

And again, watch for our special series on how the pandemic may impact the Future of Financial Regulation, starting with former Comptroller of the Currency Thomas Curry.

I hope everyone is safe and healthy.

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