Last month, Varo Bank celebrated the two-year anniversary of obtaining its national bank charter. The move made Varo the first-ever all-digital nationally chartered U.S. consumer bank.

The startup launched its banking services in 2017, aimed at making younger consumers comfortable doing all their banking online. It has raised nearly $1 billion since its 2015 inception and was valued at $2.5 billion at the time of its last raise in 2021. Its backers include institutions such as Lone Pine Capital, Warburg Pincus and The Rise Fund, as well as U2’s Bono and NBA player Russell Westbrook.

Today, the startup competes with Chime, Current, N26, Level, Step and Moven, among many others. Varo's step to obtain a charter separates it from the pack in that rather than partnering with a bank, it became one.

A lot has happened since Varo took the complex, and costly, bank charter route. I caught up with Colin Walsh, the company’s chief executive and founder, to get an update.

This interview has been edited for clarity and brevity.

TC: Was it worth it for you to get a charter as a company? And if so, why?

Walsh: It was 100% worth it. It goes back to why Varo was created in the first place. For me, there was a huge opportunity in a space that the incumbents were not able to capture because a lot of it is the economics of their model and misaligned incentives.The world continues to unfortunately be made up of haves and have nots….There are a number of things you have to do to be able to give access to the system at lower cost: facilitate payments, and oftentimes in a faster way, for customers particularly who do not have a lot of money. Help people build credit and access to credit, and then over time, be able to provide access to things that create a real sense of ownership. As we move customers along on that journey, the only way to really accomplish all of that is to be a bank.

That also comes with a cost — there were no guarantees that we were going to make it through. We did but it was a difficult, lengthy process and costly process. There's a lot of oversight in being a real bank, not just a tech company partnering with a bank, and the flip side of that is it allows us to control our own regulatory destiny. If you're partnering with a sponsor, anything could go wrong with any number of those partners that could create a risk for the business and the business model. So we effectively eliminated an intermediary.