Colin Walsh, the founder and CEO of Varo Money Inc., envisions a day where the local bank branch is a relic of financial history.
Rather, people will do all of their banking transactions online. Whether it is paying a bill, depositing a check, or applying for a loan, Walsh argues all one needs to manage their finances is a computer or smartphone with access to the internet.
"You don't have to wait in line at a branch and pay a lot of fees," said Walsh.
He launched Varo nearly three years ago to offer people an alternative to traditional banks like Wells Fargo and Bank of America. The company, which is based in San Francisco, has raised $78 million to date, led by the investment firm Warburg Pincus.
"I thought there was a huge opportunity to create a bank that really had people's back," said Walsh, a gay man in his late 40s who lives in the city. "We are using modern technology to improve their financial health."
Last year, the company unveiled the Varo app for iPhones, which has since been downloaded more than 250,000 times, and will soon make one available for Android phones. Walsh, however, would not disclose how many people are active users.
Those who do sign up with Varo have a bank account offered through Bancorp Bank and deposits are FDIC-insured up to $250,000. Through the company, customers not only have access to checking and savings accounts but also can apply for loans.
Unlike more traditional banks, Varo does not charge users fees.
"Banks often succeed when people make mistakes, like with overdraft fees. They made $34 billion last year on overdraft fees. To me, I think that is wrong," said Walsh, who early in his career worked for global financial institutions, including American Express and Wells Fargo. "People need a bank in this world to do good and help people out. That is what was my motivation to start the bank."
Advising Walsh and serving on Varo's board of directors is Caryl Athanasiu, 58, a lesbian who is a former executive vice president at Wells Fargo. The San Mateo resident, who has two children and is in the middle of divorcing her wife, had retired from the San Francisco-based bank early due to family issues.
Looking for a new opportunity that didn't require a fulltime commitment, Athanasiu was introduced to Walsh by a mutual friend and agreed to advise him on launching Varo. She joined the company's board last spring and now chairs its audit and risk committee.
While mainstream banks aren't going to disappear anytime soon, Athanasiu sees Varo as being on the vanguard of where banking is headed. As the company's billboards around the city note, "'Let's go to the bank,' said no one ever."
"I think it is going to be a long time before the big banks give up all their brick-and-mortar locations because they are so invested in it. And they are invested in using it as a sales opportunity," she said. "We think it is a much better answer to have a simplified, customer focused, fee-free, pocket banker, and that really is the direction customers want."
Because Varo doesn't have to lease retail locations and hire the employees needed to oversee branches, it doesn't need to charge its customers all sorts of banking fees, Athanasiu pointed out. It is also able to offer a higher annual percentage yield, currently at 1.35 percent, on savings accounts.
"When you put everything on the phone and don't have a ton of real estate to support, you have a much lower cost structure. You can pass those savings on to customers in a way that is really sustainable," she said. "We don't give you no fee to start with and charge you in a year, or offer you a teaser rate to start with and then charge you more."
The company aims to turn a profit, instead, from the interest rates it charges Varo users who take out loans.
"There is no need to charge consumers a fee," said Andy Bandyopadhyay, 29, Varo's director of research and insights sine March. "You only need a small fraction of users to take out loans to make a profit as a business."
Nor does Varo charge its users who pay off their loans earlier than expected, noted Bandyopadhyay.
"We can offer them to pay down their loans early and faster without penalizing them. It makes good business sense and good customer sense," he said. "I don't see why you wouldn't do it."
The transgender man, who is bisexual, had worked for Salesforce when he first moved to the Bay Area in 2014 and then was hired at Facebook. Unhappy with having to commute out of the city, Bandyopadhyay applied for a job with Varo in early 2016.
He transitioned after being hired and said the support he received from the company and his co-workers during that time was "actually amazing."
While Varo does not yet offer Bandyopadhyay and his husband the ability to create a joint account on the app, Bandyopadhyay is using it for most of his financial transactions.
Athanasiu has a debit card and bank account through Varo that she uses on a daily basis. She uses the account aggregation feature Varo offers to manage her accounts with various banks - be it checking, savings, or her auto loan through a credit union - all at once and move money between them via the app.
"I can see my whole banking picture in Varo. I can't do that with Wells Fargo but can do that with Varo," she noted.
One thing Athanasiu has not used Varo for is to deposit cash into her accounts. To do so, users need to go to a retail location that is part of the Green Dot network, such as a Safeway or Walmart, and make a deposit at the cash register. Locations are listed on its website at www.greendot.com; the company charges a transaction fee of $5.95 or less for doing so.
Varo users can take money out at numerous ATM locations for no fee via the Varo debit card; however, the ATM operator may charge them a fee. The app offers an ATM locator to find the nearest one.
Checks can be deposited via the Varo app by taking a photo of them. And Varo recently rolled out a feature where it will automatically round up a purchase to the next dollar amount and put the difference in users' savings accounts. A $4.12 coffee purchase, for example, would see .88 cents be deposited into savings.
"Within 48 hours, 2,000 people had signed up for that," said Walsh. "We are helping lots of customers improve their financial health and encourage your readers to switch their bank to Varo."
To find out more about Varo and how to sign up for an account, visit www.varomoney.com.
Got a tip on LGBT business news? Call Matthew S. Bajko at (415) 829-8836 or e-mail [email protected].