Varo Money: The Future Of Banking With Colin Walsh

Everyone in this modern day and age want to improve their financial life. This is specifically what Varo Money is advocating. Today, Dr. Diane Hamilton talks to Colin Walsh, the company’s CEO and Cofounder, about its goal to become the first mobile-centric national bank in US history. Colin talks about their business model and explains how Varo Money makes each transaction more flawless and convenient by creating innovative solutions around credit. Be informed about the future of banking and see what Colin and his company can offer you and your financial needs!

TTL 688 | The Future Of Banking


I’m so glad you joined us because we have Colin Walsh here. He is the CEO and Cofounder of Varo Money. This is a very unique and new company that’s on track to become the first mobile-centric national bank in US history. I’m excited to talk to Colin about what they’re doing there. They have a whole new platform and this is a great time for this.

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Varo Money: The Future Of Banking With Colin Walsh

I am here with Colin Walsh, who is the CEO and Cofounder of Varo Money, which is on track to become the first mobile-centric national bank in US history. Colin founded Varo with a specific vision to help millions of people improve their financial lives. It’s so nice to have you here, Colin.

It’s great to be on your show. Thanks for having me.

I have been looking forward to this. It was nice of Mike Dulworth to connect us. He’s doing some amazing things and he told me you’re doing some amazing things. I wanted to look into it because I used to be a loan officer. I worked in subprime. I did all kinds of bank-related stuff and real estate. You had led UK’s largest mortgage and savings business at Lloyds Banking Group. I saw that and I’m like, “We’ll have plenty to chat about.” Can you give a little background for people who don’t know you and maybe don’t know about Varo? What exactly is it that led you to this and what do you do at Varo?

Before we start off, I would want to recognize that we are certainly living in an interesting unprecedented time that’s full of its fair share of volatility and uncertainty as things start to unfold. For me, I’ve spent my whole career in financial services. One thing I’ve learned more than anything is that customers want institutions they can trust and they can rely on and they feel safe. That’s even more so in these uncertain times. The work we’re doing at Varo has never been more important to help customers navigate through this period of uncertainty.

I started my career at GE Capital way back doing some interesting things. I was put on a project right out of college to help set up the first industrial loan bank for GE and create the first corporate procurement card. It was certainly interesting and ended up being a huge business that ultimately was sold to one of my future employers American Express. I then went to work for American Express in the early days and I was in the small business area before it was now. It’s called Open which is one of the largest providers of small business payments and financial services around the country. At the time, we were called Small Business Services and we were trying to figure out a whole bunch of things. One of the projects I worked on was helping to connect consumer and business data in order to create more credit solutions and payment solutions for small businesses. That was one of the exciting things that helped to spark the growth in that business being able to integrate some of those solutions at a very early stage of that business.

I went on to Wells Fargo, where I had the opportunity to do a whole series of interesting things at a time when Wells was a very different bank. It was certainly at a relatively young age. I had quite a bit of responsibility and helped create the first online consumer credit business in the home equity space. We went from a PowerPoint presentation to a $2 billion business in one and a half years. That was when I’m like, “This is fun, creating things and building it.”

I extended out my career by heading overseas and spending a number of years at Lloyds Banking Group, right before the financial crisis and throughout the financial crisis. On the other side of it, I oversaw the mortgage business. I also had responsibility for the deposits business and all the cards and payments businesses while I was at Lloyds. I was cutting my teeth in a variety of different capacities and the deepest economic cycle that we’ve experienced globally and for quite some time. That helped me not only understand how to navigate through tricky times, but build credibility with regulators. It also exposed a lot of the things that ultimately motivated me to start Varo where I was seeing practices that were very focused on helping optimize business outcomes, sometimes at the expense of customer’s well-being and financial health.

I don’t think there was any ill intention. It was some of the pressures that are inherent in some of these institutions. I left Lloyds and have to go back to Amex. People I knew there asked if I would come back and help run their European consumer business because it was fractured into a lot of different markets and provide a little bit more oversight and leadership to all of that. It helped spur growth in bringing digital innovations and finding avenues to grow. One of them was small business. We introduced small business into the UK and we helped catalyze some of the businesses we had in Italy, Germany and France.

It’s interesting, but I was getting frustrated at the slowness of some of these bigger companies in terms of making decisions and then going back to the point I was making around. Some of these businesses are great if you have money, but if you don’t have a lot of financial assets, a lot of these big institutions struggle to help consumers. That’s starting to become more and more evident throughout the course of my career working in these institutions. I was thinking that if you could create a new bank that was all on digital technology, using the latest mobile cloud, AI, big data in ways that could reach lots of consumers in powerful ways, at a substantially lower cost structure. You could do some things that could move the needle for people that were feeling quite left behind. I started to think about like, “Where would I do this?”

The United States made the most sense. To come back to the US and figure out a way to help many of these people that are everyday Americans that have seen their housing and medical expenses go up, crushing amounts of student debt, but not much in the way of real wage growth. They were struggling to make ends meet and the banks are charging them hundreds of dollars a year in fees and charges. Could you create something that it can make a difference in these people’s lives? That’s where Varo was born and I’m happy to say we’re off and running and growing very rapidly. We’re looking to dig in deeper into any of those areas.

You said you don’t charge a lot of the fees and you’re helping the consumer who isn’t super wealthy. How do you make it work if you don’t charge the fees? It’s a business and there’s a certain amount that we have to do. We know that Wells got into issues because they were pushing so much for the sales that people are doing unethical things. Without pushing so much, without charging too high a fees, how do you make this business model work and still have conscious capitalism and all that?

Our cost structure, particularly once the bank opens, we built a modern technology platform that will be operating the bank. I’m a little biased, but it’s probably going to be the most modern tech platform of any bank in the world. Our costs are estimated to be about 25% of big banks.

Is there an actual bank or is it all online?

It’s 100% digital. It’s all on your phone and you can access services on the web. There are no branches. There’s no cash handling. We don’t own ATMs. The technology that these banks are operating on are 30 to 40 years old. It’s legacy server farms and coded in COBOL and Fortran. There aren’t even any programmers left for these languages. It’s riddled with issues like trying to comply with regulatory requests when data is trapped in multiple silos and all these things.

[bctt tweet=”Customers want institutions they can trust and rely on and that they feel safe. ” username=””]

Even right now, we were able to convert our workforce into work at home. Everybody at Varo, the customer service agents and engineers in 24 hours. These banks, their employees don’t even have laptops or desktops. Their data is not in the cloud. They’re struggling to get their workforce at home. All of these things make us much nimbler and the ability to deliver services without all the fees and charges. We earn our money every time someone swipes on their debit card, then we’ll have credit cards and charge cards and other forms of payment vehicles.

There’s a modest little bit of fee revenue that’s very transparent. There are no hidden fees. Because our technology is quite sophisticated, we have a group of partners that we’ve allowed into our platform to help people find gig work, to help them repair their credit or to access some insurance products. We’re able to use information to help customers match them up with these opportunities and that’s been very successful for us as well. There’s some commission revenue associated with that, then we’ll have lending. We do have quite a diversified way of making money and still being able to support that fundamental value proposition of helping customers make their money stretch further by not paying those fees. We give customers their paycheck two days early. We give them a little bit of cushion before the next paycheck arrives. If they need to go into overdraft, we don’t charge them a fee.

We give them tools to save. We pay a lot of interest on the savings. They both have the tool and the incentive to save, which is super important because basic financial resiliency is something many consumers lack. A crisis like what we’re living through now is exposing that. People are scared because they lose their job. If they’re working a gig or work on an hourly wage and that goes away, how do they get by? If Varo can help people start to build some basic savings when they have some steady income flows coming in. It helps protect them in these hard times.

As we’re worried about all this, I’m imagining you have the same guarantees and insured funds that all the other banks have.

We have a partner bank. We’re FDIC insured through our partner bank, but we received approval from the FDIC. As we open up the Varo National Bank, the FDIC will insure us directly. It won’t be through a partner bank. All the deposits up to $250,000 the consumer has with Varo will be insured by the FDIC.

You mentioned no cash, so what if they needed cash? How would they get it?

We have a partnership with a company called Allpoint that is in every CVS, Walgreens, Rite Aid, Walmart, where you can go to their ATMs. There are 55,000 ATMs which is larger than Bank of America, Wells Fargo and Chase combined. It’s all in the app. It’s super easy to go in under the Move Money tab. You tap on, “Where is an ATM near me?” It uses geolocation and shows you all the ATMs in your neighborhood or wherever you are.

You do mortgages as well?

Not yet. That’s something we’ll look at after we open the bank. The key problems that we’re trying to help solve right now for the everyday consumer is, first and foremost, helping you make your money work harder and stretch a little bit further. Secondly, building basic financial resilience. It’s giving the tools and the incentives to help people save. Help people put a little bit of money away. If you’re using Varo on a regular basis, if you’re putting $1,000 a month into Varo and using the debit card five times a month, we’ll pay you 2.8% on your savings. It’s the best in the country. It’s intended not to help rich people get richer, it’s intended to give people an incentive to save like, “This is rewarding,” and customers love it.

I imagine a lot of people wish they had saved a little bit more now because of the situation. Is it bad timing or good timing to start this? How does that impact you?

I don’t want to capitalize on other people’s hardship by any means, but this is a good time to be a digital bank. Being a modern technology driven bank that is very focused from top down to helping customers succeed financially. We’re authentic ethos around customer’s well-being and there’s never been a better time to be in this space, working with our customers and providing solutions to help them. You don’t have to walk into a branch, our service is reliable. We were able to very quickly execute our business continuity plan and get everybody working from home, answering calls, responding to emails. You talk about withdrawing cash and you can deposit cash in many of these locations. We have a relationship with Green Dot, but not even using cash. Some of the experts are saying stay away from cash. You can connect Varo to Venmo, PayPal and Cash App, so you can move money electronically.

We have a Varo to Varo feature where Varo customers can send money to each other instantly electronically. There are a lot of ways to use digital channels to pay your bills and to manage your money without even having to touch cash. Quickly going back to the key problems that we’re solving because you asked about mortgages. We talked about stretching your money and building financial resilience. The other area that our customers are telling us they want help with is helping to build and repair credit. People are feeling very financially squeezed and particularly people that have large student debts and some of them have slipped a little bit behind. The cost of having poor credit in this country is huge. Whether you want to get a phone or you want to lease an apartment, or you want to get an auto loan, everything becomes more difficult.

We’re working on a whole series of solutions, particularly once we open the bank to help people in that area. We’ll make a meaningful difference in people’s lives, particularly younger people, but also people of all ages that are looking for solutions to help them. The last area that we’re going to focus on as we work through our product roadmap is homeownership and helping people get on the housing ladder. We’re thinking about solutions to help people from a housing finance perspective. In that scenario, I have a lot of experience from my past career.

I was thinking about low credit. Is 620 still the breaking point of what you’ll consider is what you’d want to have for a loan anymore? What’s considered a bad credit at this point?

TTL 688 | The Future Of Banking
The Future Of Banking: Varo not only frees up more cashflow and gives people more capacity to save, it also takes away a lot of stress and anxiety.


It varies. If you’re talking about a $10,000 or $25,000 loan, I think that you’re going to see cut-offs. The thing that I’m trying to think about myself and helping my team think about is how do you not rely on the traditional credit bureau like a FICO score? How do you think about the relationship in its entirety and how to help people access credit, and make better decisions and give them information to make better decisions about their credit, without necessarily being tied to a FICOs cut-off? If you imagine it’s your first-time using credit or you’re new to the country and you don’t have a credit score, how do you access credit? There are a number of tools that can help people and so we’re thinking about ways in which we can bring some innovation to that space.

It’s going to be interesting to see as we’re talking about housing if there’s going to be any mortgage relief for everything that’s going on. How is this going to impact the regular banks when people can’t pay these mortgages?

It’s mortgages and personal loans. Without naming names, there are a number of companies that have grown very quickly over the last decade, focusing on giving consumers unsecured personal loans. Having spent 30 years in financial services, I can tell you, and I’ve been through a few cycles, that doesn’t always work out so well. You look at it from the consumer perspective, many consumers are going to need help to bridge those expenses and not put themselves in a situation where they’re damaging their credit and then they suffer the consequences of that. Even also staying in their homes and being able to find ways to make it work during the period where they might have disruptions in their income. I absolutely think there’s going to need to be some assistance that will come from the banks themselves, but it also probably going to have to come from the government as well.

I was talking to a friend of mine who’s a loan officer. She does a lot of reverse mortgages. She says every rich person she knows is calling her right now to do a reverse mortgage. That’s one way to get the money out. She was saying they’re worried about the appraisers going to the houses and they don’t want to go if they’re supposed to not go around other people and all this stuff. It will be interesting to see what happens with that. I can’t imagine that would be the bottleneck because of an empty house or whatever. That was an interesting conversation I had with her. You were talking about some of the things that banks didn’t do when you were watching what they were doing to help consumers.

Take overdraft, for example. To me, this is like a pet peeve of mine. I hate overdraft fees. They’re so awful. Banks would look for ways to put people in overdraft to charge them that $35 fee. They’re changing payment hierarchies. When certain transactions would post so that the payments would come in last and then the expenses would come in first, which we then drop. There were investigative reports that uncovered some of this stuff. Why do you have to charge $35 if somebody is buying a bag of groceries and they go $2 and some negative? To me, it makes no sense. The average overdraft in this country is $50, and it’s repaid in three days. That’s why we offer that $50 cushion with no fee. We don’t charge the fee and customers love it because it could be a tank of gas if you’re an Uber or Lyft driver and you need that extra tank of gas to keep working and your paycheck or your payment hasn’t come in yet. It helps create that little bit of a bridge. The industry made $35 billion in 2019 off of these fees.

There are many people that are getting taken advantage of as you’re talking about this. I want to get your insight on the those payday loan places because it seems so awful.

The other thing that I can’t stand is the minimum balance charges. Is that a subsidy that poor people are helping rich people because if you don’t have a minimum balance then you have to pay $15 a month but somebody who does have that money doesn’t? Things like that don’t make any sense to me, but these fees cost people. The reality is this is America. This is not some marginalized group of consumers. There are many people in this country that are trying to make ends meet and they’re paying all these fees and charges. A bank like Varo comes in and eliminates that. Not only does it free up more cashflow and give people more capacity to save. It also takes away a lot of stress and anxiety. That’s my piece on that. There’s a lot of societal good that can be done along those lines.

Talking about paydays, that’s another one. It takes advantage of people who desperately need access to cash and to some funding. They’ll justify it by saying, “If we didn’t exist, what would these people do? They get kicked out of their homes and all the rest of it.” I absolutely think this is a space that some good actors and banks themselves could do more to help people with bridging those cashflow gaps. Now you have a whole group of digital players that are emerging that I scratched my head a little bit in question like, “Are they that much better than the brick and mortar payday lenders?” They’re charging monthly fees and transaction fees if you want instant. They’re asking for tips and all this other stuff.

You add it all up and you say, “For $75, did this customer pay $10 or $12, and this is going to get paid back in a few days?” You start to calculate the APR of some of that stuff. You say to yourself, “That’s not that much better than going down to a payday lender.” Those are things that a company like Varo and other digital banks that can have that low-cost structure and can generate revenues through a number of different sources could do some interesting things to help these consumers.

Do you think you’re going to be able to capture these extra funds the way American Express charges a little bit extra from the customer? Are you still at the same level as the other Visas and that type of thing?

We get it through the Visa Network. We’re on the right card so we get big and we can move markets someday, that might be a different conversation. For now, we’ll participate in the Visa Network.

I’m all for not having cash at all. The thought of touching other people’s money when everybody’s sick and things.

You also have to think about people that live in a cash economy. They get paid in cash and they get tips in cash and other things. There is a part of the economy and that’s how they manage their expenses. That’s how their income comes in. Being able to provide ways for people to deposit that cash or to access cash when they need it is going to be important. I would love to see a world where that wasn’t necessary. Instead of being handed cash, you could send somebody instant money transfer through an app or have other ways of getting that money in people’s bank accounts.

We’re definitely seeing more of that, which I like, and I’ll be interested to see how much more of that we’ll see. It’s been a rough time for banks with everything going on. Are you worried at all that this whole virus situation will close down the banks or have an impact? You’re saying it’s good for you but for some other banks, what’s going to happen?

[bctt tweet=”Customer service is a huge part of what differentiates banks and different industries. ” username=””]

It’s so hard to tell. It’s uncertain how this is going to play out. I definitely think it’s a wakeup call for all of us and a number of fronts. One is we talked about putting away money in some form of savings to be able to protect against uncertainties. How do you use technology in ways that allow you to be nimbler, respond and reduce the reliance on cash? There are a number of things that we’re going to take away from this, but it’s going to be choppy waters. There’s a lot we don’t know and we’re learning every day. From my standpoint, what’s most important is that we keep our people safe and ensure that they’re doing the right things so that they’re not exposed and that we’re available for our customers. We’re able to demonstrate to our customers that their money is going to be safe, that we’re going to be a reliable partner, that we’re going to help them through this time. To me, those are the most important priorities.

It is going to be interesting to see what happens in general with how banking prepares people. How much preparedness we’re going to have for crisis management now because of this. Tracking things is going to be another interesting area as far as blockchain technology. How does that impact you? Are you involved in any of that research?

We’re keeping a close eye on the technology as a potentially interesting future technology. I don’t think it’s something that for right now, we have put a lot of effort into. We’re watching it as some of those use cases evolve as they scale to be able to handle more transaction throughput. It takes the blockchain much longer to process transactions at scale than it would like a Visa or MasterCard payment network. We’re keeping a close eye on that and will participate in that broader ecosystem over time. For right now, we’ve used the latest technologies to help us architect our banking platform and using real-time systems that have the ability to scale. We’re using the latest security technologies to continue to make sure that our customers’ money is safe. That’s where we put our attention on the short-term.

Customer service is going to be such a huge part of what differentiates different banks and different industries. Since you had experience with American Express, I always thought they did a pretty good job from the consumer angle. I’ve been trying to cancel a trip because of everything going on. Even with American Express, it’d be on for two and a half hours and then get disconnected. I never could get through.

It’s so overloaded.

You don’t think of that from such a company that has such great normal operations. You don’t think of the unethical Wells thing ever happening because you think they wouldn’t do it some place like that. Were you surprised that happened at Wells? Do you think that a lot of these banks have situations that no one knows about? I’m looking at it from a sales perspective. I was in banking and sales, and I know how much pressure they could put on you.

I’ll take both of those. One is the service angle and then on the sales practices. On the service side, you mentioned this point around business continuity and thinking about how do you scale service operations in a time of crisis? This is something that is going to be a valuable learning for many companies, but particularly companies that are at the heart of this cancellation of travel and hotel bookings and all of these things. The whole world is trying to do exactly what you’re doing.

I’m sure it will bring a next generation of servicing technologies around AI and automation. Being able to transact with systems where the AI is interacting with customers to be able to fulfill the transaction that you’re asking for without having to rely on either the capacity of live agents. This is going to probably accelerate some of these technologies, particularly in these large companies that have big service operations. When you get into this once in a lifetime spike in volume, how do you deal with it? That’s going to open up a whole new frontier around how tech can help these businesses through these volatile times.

On the on the sales side, I’m disappointed because I was at Wells for nine years. It was a good company that did care about its customers and it was trying hard to stay by what it stood for in terms of its values. It lost its way as it got so big. To your point, there’s much pressure that was being pushed down on these people to hit sales targets that it forgot who it was and what it stood for and the role it played in the consumers’ lives. When culture start to fray like that, it’s hard to bring it back. I know people are working hard at Wells to try to restore that but it’s all about trust. Trust is hard-earned and it’s easily lost.

As I started my company, I would say time and time again, the biggest currency that we trade in is trust. In everything we do, we have to reinforce to customers that we’re there for them, that they’re safe, that the systems are secure, and that they can trust us to do the right thing. Data is another fascinating topic. We have a lot of data. We’re super ethical around how we use that data and how we think about that data. We have strong data governance policies to make sure that doesn’t ever go the wrong way. We’re protecting customers data and we’re keeping their data private and secure. If you do the wrong thing, you will erode trust. Facebook and others have demonstrated what happens when customers no longer feel safe, that their information isn’t being protected.

It’s scary with the dark web and everything else when you hear about all the things that can be shared and what directions things are going. Do you feel like you have control over the data? Everybody thinks that they can hack everything.

We have good people and good systems. As a digital bank, this is a huge priority for us.

It’s such a hard thing. As you were talking about Wells, I teach a lot of business courses where we talk about what happens in codes of ethics and where the culture problems start. Do you see that more of an upper leadership or mid-management level like the lack of control to many levels? Where do you think the blame lies?

Accountability is throughout the system, but a lot of it is tone from the top. I say a lot in my own organization that the leaders set the tone for the organization. The things that they say and do matter. The things that they do matter more than the things that they say. Because people watch your actions and if there’s not consistency or if it’s the wrong things, others will follow. That’s where they take their cues. I’m a big believer that the accountability or the buck stops at the top of the pyramid.

TTL 688 | The Future Of Banking
The Future Of Banking: Varo Money has a lot of data, but is super ethical around how to use that data and how they think about that data.


You’re at the top of the pyramid where you are. I know you have raised close to $180 million and serving 1.6 million registered customers. The last thing I had read. How do you do that? How do you get everybody to go, “I’m going to trust this bank?” How do you get the exposure and the reach for people to know about you? That has to be very challenging.

The timing is right in terms of consumers years ago would have been a lot more skeptical around doing business with a digital bank or putting their paycheck into a digital bank. Things have evolved and there’s greater awareness that this is a credible alternative. We find that customers come to us and find out about our service. I’ll give you an example. A 31-year-old single mom who works hard to pay all the bills. She has a creative job at night and constantly on the go whether it’s dropping kids off at school or getting to work. She finds out about something like Varo. It’s like, “I don’t have to pay these hundreds of dollars of fees. They’re giving me my paycheck early. I can have a little bit of cushion if I have a gap before the next paycheck arrives. They’re giving me tools to put money away. They’re paying me 2.8% of my savings. I can do peer to peer transfers to Varo.” All of a sudden she’s like, “This is incredible.” They start telling their friends.

Is it a generational thing? Do you think younger generations are more apt to adapt that, “This is cool. I love technology. I’m going to share this?”

It’s interesting because when I started the company, I thought that it was going to be your very typical urban Millennial type of consumer. That has not been the case at all. They use it but we are in almost every town and city across the country. 40% of our customers are older than Millennials. They’re Gen X and Boomers. We have customers that are in their 80s and 90s that are using Varo. It’s amazing. We’re finding that it starts in communities where people start using it and talking about it.

The other thing that we’re finding is that in this country, you’ve had a lot of communities that have branches close. The bank that was always there was no longer there. People find out about something like Varo. They download it and start using it. As long as there’s a Walgreens in town and you can get cash or deposit cash, then you don’t need a bank branch anymore. That’s another phenomenon we’re seeing that’s taking place all over the country. One of the things I was probably most surprised about is the amount of activity we see in small towns. People are using Varo because it’s their bank. For me personally, how would I measure success of this company? If we can create this iconic culturally relevant brand that is riding the back of the society. What are the struggles that people are facing in society that we can be a solution to that and we can do societal good? That to me is the biggest victory and being culturally relevant and aware of what’s going on.

I think banking is going to change so much and you’re ahead on the curve. I’m curious about the regular things you think about with banks. You get checks, you have LLC accounts, whatever it is. Do you do all that too? Other than mortgages, what don’t you do?

We don’t issue checkbooks, but you can send a check through the Varo app. We don’t have business accounts yet. We don’t have mortgages yet, but pretty much after we open the bank, we’ll have joint accounts and household accounts so families can have accounts with us. The big things that we’re not doing and don’t plan in the short-term are going to be business accounts. We’ll do mortgages in a couple of years.

Why not business accounts?

There’s so much for us to do on the consumer side. I wouldn’t say we would never do it. I have a lot of experience with small business and it will probably be more small business than big business. It’s an area that is also vital to a healthy economy, but we can only do so much in a short period. We’ve got to focus and do what we’re doing well and create remarkable experiences for customers in the areas that I mentioned that are real pain points for consumers. Over time we’re looking at how we can help small businesses as well.

You’re set up like a traditional company. Do you have a board of directors?

I have my board. I have a former CEO and Chairman of Bank of America on our board. I had the former General Counsel for the OCC on our board. It’s a pretty impressive group of people.

Where are you based out?

San Francisco and Salt Lake City. The bank will be based physically in San Francisco. The bank where we open will be Salt Lake City.

Is there anything that I didn’t ask you about what you have planned for the future for this bank? You said mortgages are coming up, eventually, maybe small businesses. Is there some area you see expansion in that you haven’t expanded yet that you’d like to?

[bctt tweet=”Building trust is a two-way street; you’ve got to listen to what your customers are saying and then respond. ” username=””]

Creating some innovative solutions around credit is an area that we’re going to be able to do a lot of good for consumers after we open the bank. Those are sticking to the core focus of the consumer that we could help well and then continuing to drive a series of innovations that can make a difference in their lives. The other thing that I would mention that we’re looking at is how to give this very large group of customers a voice and a platform where they can be heard and they can interact with us as a community. They can interact with each other as a community on a digital platform. These are things that we’re thinking about as well to take borrow beyond core banking, but something that is more meaningful to people in their daily lives.

Are more of your customers accessing through an app or through their computer?

We get millions and millions of logins every month through the app in Android and iOS.

People who don’t have a ton of money who are waiting maybe at the cash payday loan place. I guess everybody has a phone these days. Is that an issue for anybody or are you finding that’s not a problem?

Most Americans, particularly anyone under the age of 40, it’s 88% or 90% of people have a smartphone. There are some people that are still online. We do offer the ability to access your account online and we’ll be continuing to enhance some of those services. Almost everyone now has access to a smartphone and will be able to have access to our app.

It’s interesting to know where banking is going. Some of the best training I’ve ever had in all my career was underwriter training when I worked in the subprime industry many years ago. A lot of banks aren’t in business anymore because of not having foresight and not looking at what makes sense. It sounds like that’s where you’re focused.

Listening to your customer. That’s the thing. I give Amex a lot of credit for training me to be very customer-centric. I have a number of former Amex people on my team as well. We obsess about what our customers want and take a lot of time to listen to what they’re saying and building the things that they’re asking for. Because we’re a modern tech company and we’re on a very nimble platform, we can do things very fast, which is another huge competitive advantage for us. If you’re going to build trust, it’s a two-way street and you’ve got to be listening to what your customers are saying and then responding.

Where are you now? Seed funding, you passed that. Are you going to go IPO?

We’re getting ready to open the bank. We raised some more capital. We’re on Series D and then we’ll be looking at being profitable in the coming years. The company is growing very rapidly. It’s monetizing quickly and then we’ll look at where the markets are, but probably look to IPO at some point in a few years.

Chris Yeh has been on my show and I know that he wrote that book.

Mike has a relationship with Chris and Reid.

I was curious if you’re in that Scaling group.

One of our big investors is The Rise Fund and its big on social impact. Reid is on the founder’s board. It’s a small world.

I’m so glad Mike introduced us because I’m on the board on Flerish, his work. Are you doing anything with Flerish?

TTL 688 | The Future Of Banking
The Future Of Banking: Be really obsessed about what your customers want. Take a lot of time to listen to what they’re saying and to build the things that they’re asking for.


I was on Mike’s old board a few years ago. He and I keep in close contact. I haven’t done anything with Flerish yet, but I know he and some of my people are talking about a partnership opportunity at some point.

It’s fun to work with him and I’m so glad that he introduced us. I could tell this was an interesting conversation. I’ve had everything from blockchain to banking and everything else on the show. You’re the very first one to get to this level of having a digital bank like this. It’s going to be fascinating to see what happens to the old institutions as you succeed. I’m sure your competitors will start wanting to ramp up more and it’s going to be an interesting industry to watch.

It’s been interesting working with the regulators too, because they see the role that Varo will play in the banking landscape. Many of these banks struggle to profitably serve this group of customers. A bank like Varo could bring a whole new level of financial inclusion into the banking system in terms of being able to allow people to have affordable, high-quality banking services across the board regardless of what their income is. It’s been interesting as the regulators have gotten closer and closer to our business. They’ve developed a lot of conviction that this is going to be the type of business model that can do a lot of good in American society.

Do we need the physical building? Why do they still hang on to that?

I’ll let someone else come onto your show and argue for that. I personally don’t think that we need it anymore, but others might have a different point of view.

If I don’t have to go to a bank, I’m very happy. I do everything I can digitally and so I could see that this is a wonderful opportunity for many people to save some money and to learn more about what you guys do. I’m glad you’re here to share this. A lot of people are going to want to know how do they find out about the bank or contact you or find out more?

It’s pretty easy. Go to the Apple App Store or the Google Play Store. It’s Varo mobile banking and you can download the app or you can go to and learn more about us on our website.

Is there a minimum deposit?

Absolutely not. No minimum deposits required and no minimum deposit fees either.

That’s nice. The fee thing, I get very annoyed by that. It’s been interesting to learn about what you’re doing and I think that this is going to be successful. I was excited to talk to you about it. Thank you, Colin, for being on the show.

Thank you so much, Diane. I enjoyed it and I look forward to staying in touch.

You’re welcome.

I’d like to thank Colin for being my guest. This was a fascinating conversation. I get so many great guests on the show. You learn so much from everybody who’s on here. What Colin is talking about is the future of banking and it’s fascinating to me to learn what everybody’s coming up with these new business ideas. I love the curiosity behind all the exploratory areas of what people can do. I’ve interviewed many different people. Sometimes I interview 2, 3, 4 or 5 people in a day. We’re talking and learning about more unusual things. It’s such a time where companies can reposition the way we do things. You’ve heard how Uber changed driving and the transportation industry. We’re talking about how the education industry is ripe for reinvention. The banking industry is going to get a lot of attention for some negative reasons because of the coronavirus. We’re also going to see that we need to change how we do a lot of this. We’re going to start to see a lot of different virtual ways of doing things that we used to do in person, which is all fascinating to me.

In my research in curiosity, I discovered that there were certain things that kept people back from being curious and one of them was technology. Sometimes it’s over or underutilization of it. There are a lot of times that we underutilize what we could do and we rely on technology without truly understanding it. We have an opportunity here to take the technology for what it can do for us and best utilize it. Colin is connected to some of the people I respect the most so I was excited to having him on the show to talk about how they foresee banking, with a background working at Wells and American Express. It’s an interesting stuff.

I love the fact that he’s working on helping people to make their lives better, especially in times when we could use a little bit of help. It was all a very fascinating show. Thank you to Colin. Thank you to all my guests. I hope you take some time to go through some of the past shows. I know a lot of people are home, bored and wanting to do something. There are 400 to 500 shows that are on iTunes alone. There are many experts in many different areas that you can take this time to learn and explore some of the areas where maybe you didn’t have time before. I’ve been learning a lot from everybody and I hope you take some time to do that as well because everybody’s sharing so much free information. It’s the greatest time to take advantage of technology of what it offers. I enjoyed this episode and I hope you join us for the next episode of Take The Lead Radio.

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About Colin Walsh

TTL 688 | The Future Of BankingColin Walsh is the CEO and co-founder of Varo Money, which is on track to become the first 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 and has more than 25 years of experience in consumer banking at large global financial institutions. He led Europe’s largest credit and charge card business as an Executive Vice President at American Express. Colin 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 and with an experienced team, Varo is building the best banking company in the country for consumers looking to build their financial health. The team recently launched No Fee Overdraft, the first-ever service of its kind to remove fees on overdrafts.

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