Fintech and Neobanks

On 31 July 2020 the Office of the Comptroller of the Currency gave final approval to Varo Bank, N.A., making Varo the first consumer fintech to win a new, full-service national bank charter, with FDIC insurance and Federal Reserve approval for its holding company. Its founder, Colin Walsh, a former Lloyds and American Express executive, had applied in 2017. His argument was that a charter would let Varo keep the whole economics of its customers: the debit interchange it would otherwise share with a partner bank, the spread on deposits, and the interest on loans made from its own balance sheet. The company raised more than $1 billion, including a $510 million round at a $2.5 billion valuation in September 2021.

The bank lost about $265.5 million in 2021 and about $236.5 million in 2022 (call reports, reported). Its total bank capital fell to about $54 million in the third quarter of 2025, and it lost about $92 million that year before a $123.9 million funding round led by Coliseum Capital and Warburg Pincus in early 2026. Chime, founded in 2012 with almost the same mission, never applied for a charter. It kept its customers' money at two small partner banks, listed on Nasdaq in June 2025 at $27 a share, about $11.6 billion fully diluted, and reported its first GAAP-profitable quarter in the first three months of 2026. This chapter explains how American fintechs are built, why the same customer can be profitable for one and ruinous for another, and why business-card companies built on the same interchange produced such different results.