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MOBILE & TELECOMMUNICATIONS | Mobile Software & Services / Asset & Financial Management & Trading
varomoney.com

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Founded Year

2015

Stage

Series D - II | Alive

Total Raised

$481.33M

Last Raised

$63M | 5 mos ago

Mosaic Score

+10 points in the past 30 days

What is a Mosaic Score?
The Mosaic Score is an algorithm that measures the overall financial health and market potential of private companies.

About Varo Money

Varo Money provides customers with tools to develop positive spending, borrowing and savings habits and to achieve better financial outcomes. It offers debit card, deposit and lending products via a mobile app and will be built around a 24/7 digital financial coach that will give proactive insights, analysis of spending and real-time budgeting.

Varo Money Headquarter Location

222 Kearny Street 9th Floor

San Francisco, California, 94108,

United States

877-377-8276

Latest Varo Money News

Banking-as-a-Service (BaaS) Empowers Any Brand to Offer Financial Services

May 17, 2021

External | what does this mean? This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. Banking-as-a-Service (BaaS) Empowers Any Brand to Offer Financial Services 14 May 2021 Embedded finance opens new opportunities, but secure data exchange is essential Digital banking is not new – major banks began to offer internet banking services in the mid-1990s. However, the traditional banking industry is facing significant pressure from rapidly shifting consumer expectations, changing regulations and increasing competition from digital-native disruptors. Younger Gen Z customers are more apt to use alternative transaction methods such as mobile wallets or P2P payments (e.g., PayPal or the Dutch payment appTikkie), and businesses are beginning to favor real-time digital payments to improve efficiency, reduce cost and better manage their cash flow. Moreover the ongoing global health crisis is accelerating the movement toward real-time  contactless digital payments . Fifty-six countries are now live with real-time payments, and six countries more than doubled their volume of real-time payments in the past year. [i] Due to a joint implementation of the major banks led by the Dutch Payments Association (Betaalvereniging Nederland), the Netherlands is a European leader in terms of the adoption of real-time payments. [ii] In the midst of this fast-changing landscape, new business models are arising as digital-natives, FinTechs and incumbent banks partner to offer new banking and payment services in the cloud. One example is Dutch Cobase – a subsidiary of ING Group that bundles business accounts – which recently signed a cooperation agreement with the Nordic bank Nordea and the French Crédit Agricole. Amsterdam-based banking platform Five Degrees supplies its technology to banks such as ABN Amro, Van Lanschot and Knab, among others. Collaboration like this is spurring further innovation as these  digital ecosystems  expand, attracting new participants. But successfully delivering these new digital services requires the direct and secure, low-latency, reliable exchange of data between partners that interconnection can provide. BaaS needs FinTechs AND banks FinTechs born in the cloud have the IT infrastructure, skills and agility to deliver digital banking and payment services on-demand. They can also offer these BaaS capabilities to any brand who wants to embed financial services in their customer experience. Sometimes referred to as “embedded finance,” BaaS enables businesses to create new products and services along the customer journey as the diagram below illustrates. However, FinTechs typically lack the assets and regulatory license to fulfill financial transactions, and that’s where banks come in. To ensure that deposits and money transfers stay safe, banks are heavily regulated and often insured up to a certain dollar amount for each depositor. This combined with a longer history with customers means that banks have an advantage when it comes to perceptions of how safe and secure a financial transaction will be. As a result, there are a few collaboration paths that FinTechs and banks generally pursue to bring BaaS services to the market: The FinTech buys a bank that already has a license such as Jiko purchasing Mid Central National Bank in the U.S. or Raisin GmbH buying MHG-Bank AG in Germany. The FinTech partners with a bank to borrow their license such as Chime partnering with Stride Bank, N.A. and The Bancorp Bank. The FinTech acquires its own license (a lengthy process that could take up to three years) such as Railsbank in the U.K. or Varo Money in the U.S. The bank partners with a FinTech to launch BaaS services such as Deutsche Bank partnering with Traxpay to integrate supply chain financing technologies and solutions within its own offerings. Regulations are shaping the partnering model The regulatory environment may also impact the partnering model. For example,  open banking  laws in the European Union and the U.K. require banks to open APIs to third-party developers, making it easier for FinTechs to gain access to bank data. Regulations like these are helping to reduce uncertainty for startups and accelerate innovation in the European banking system. Challenger banks such as U.K.-based Revolut have also benefitted from special licenses that allow them to directly accept deposits, process payments or lend. In the U.S., the Durbin Amendment is accelerating partnerships between small-medium banks and FinTechs in a different way. The Amendment, which has been in effect since 2011, aimed to lower prices for consumers by reducing the fees that retail stores pay to banks when customers use debit cards. In reality, banks just responded by increasing the fees that consumers pay to make up the lost revenue. However, the Durbin Amendment exempts financial institutions with less than $10 billion, making them ideal partnering candidates for FinTechs. How BaaS actually works The diagram below illustrates a hybrid digital architecture for BaaS with a mix of on-premises, colocation and public/private cloud elements. In this example, the bank is the license holder partnering with the FinTech BaaS provider to deliver embedded financial services to a Brand (such as a retailer or transportation business). The bank has also partnered with other FinTechs for real-time and cross-border payments, although it handles any card transactions in-house. Interconnection will be critical for ensuring secure, low latency data flows between the partners and digital infrastructure across the regions where the BaaS is offered. Partnerships like these are steadily growing into ecosystems of digital exchange around financial services that include clouds, networks, banks, FinTechs, payment rails, fraud detection and other service providers. By placing their digital infrastructure close to these ecosystems, leveraging an interconnection approach, banks and FinTechs alike can maximize their competitive advantage. Interconnection provides a more scalable, reliable, secure approach to moving data between members of the value chain than the public internet. With an interconnection strategy, banks and FinTechs can deploy a digital core, extend across edge locations and enhance their capabilities through digital exchange to create new BaaS markets for any brand. And, on Platform Equinix®, you can interconnect physically and virtually to digital ecosystems of more than 1,800 networks, 2,900+ cloud and IT service providers and 1,250+ financial services companies across 63 metros. To learn more about how BaaS will transform the banking landscape and enable innovative banking and payments services to be launched rapidly, watch the Nimbus Ninety webinar “ Future Focus of Banking-as-a-Service.” [i]  Fidelity Information Services (FIS), Flavors of Fast 2020: The global real-time payment trends transforming money movement,  press-release  and  report , Oct 2020.

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Research containing Varo Money

Get data-driven expert analysis from the CB Insights Intelligence Unit.

CB Insights Intelligence Analysts have mentioned Varo Money in 4 CB Insights research briefs, most recently on Apr 28, 2021.

Expert Collections containing Varo Money

Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces.

Varo Money is included in 6 Expert Collections, including Banking.

B

Banking

620 items

W

Wealth Tech

991 items

A category of financial technology that is digitizing & streamlining the delivery of wealth management. Included: Startups that offer technology-enabled tools for active and passive wealth management for retail investors and advisors.

P

Payments

1,483 items

Companies and startups in this collection enable consumers, businesses, and governments to pay each other - online and at the physical point-of-sale.

F

Financial wellness

245 items

Track startups and capture company information and workflow.

F

Fintech

6,974 items

US-based companies

F

Fintech 250 (2020)

250 items

250 of the top fintech companies transforming financial services

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