San Francisco-based Varo Money Inc. has gained final approval from the Federal Deposit Insurance Corp. to obtain deposit insurance, marking a historic step on its way to becoming a full-service banking institution. 

The regulatory approval follows preliminary approval in September 2018, when it obtained permission to become a de novo national bank from the office of the comptroller of the currency. 

Colin Walsh, co-founder and CEO of Varo Money told Mobile Payments Today that the new approval signifies a changing regulatory environment that is embracing new technologies and a more even playing field.

"This is incredibly significant for Varo as it is the last major hurdle before we become the first-ever digital bank to have a national bank charter," he said via email. "This news underscores a bigger shift in the banking industry towards technology-driven experiences, as well as a new regulatory commitment towards financial innovation and inclusion."

Varo Money offers high-yield mobile bank accounts with no monthly minimum balance requirements or monthly fees. Customers with direct deposit can access their earned income two days early, and they can overdraw their accounts up to $50 without incurring fees if they make five qualifying debit card transactions per month or get payroll or government direct deposits of at least $1,000 per month. 

Varo also provides free ATM access through the Allpoint network of 55,000 machines worldwide. 

Walsh said the OCC charter should be completed by the second quarter of 2020, and several new products are on the menu, including the addition of credit and lending solutions, as well as joint accounts and additional savings account options. 

Walsh participated in a panel on digital banking startups in October at Money 20/20 in Las Vegas.