Bank of the West exec bolts for startup, sees chance 'to redefine retail banking'

Thibault Fulconis, who until recently was chief operating officer of Bank of the West, has joined the fintech digital banking startup Varo Money as its chief financial officer.

Varo Money is a mobile-first challenger bank that aims to help Americans achieve financial health. It is in the same league as Chime, Digit, Moven, MoneyLion, Qapital and N26.

Thibault Fulconis, CFO of Varo Money.

Varo provides checking and savings accounts, direct deposit, online bill payment, a debit card, predictive forecasts of cash flow, lines of credit and unsecured loans through its app. There are no minimum balance requirements, and Varo does not charge foreign exchange or overdraft fees.

In traditional banks, “there’s a reliance on overdraft fees, minimum balance fees and things that are quite punitive for people who are just starting out and don’t have lots of money,” CEO Colin Walsh said in an interview in January, when the company received $45 million in funding from investors including U2 lead singer Bono.

The startup made headlines in June 2016 when it applied to the Office of the Comptroller of the Currency for a national bank charter and to the Federal Deposit Insurance Corp. for deposit insurance. In the meantime, it provides bank accounts through The Bancorp.

Company executives say they believe it will not be long before they get a bank charter.

“I don’t know exactly, and with regulators you never know, but I think we’re close,” Fulconis said.

Regulators like the support Varo Money gets from its investors Warburg Pincus and The Rise Fund (the latter is a global impact fund led by the private-equity firm TPG), according to Fulconis. The PE firms have provided $79 million so far.

They also like the company’s message of helping the underbanked.

“Regulators are trying to find solutions for this type of population and that can help a lot,” Fulconis said.

The regulators also like the fact that Varo has many ex-bankers on its staff, including Walsh and Fulconis.

Fulconis was drawn to Varo Money because it is building a complete bank and not just a single product.

“I think it’s a fantastic opportunity to redefine retail banking,” he said. “We have a great team of bankers, a great tech team, and the combination is really impressive.”

Traditional banks are coping with a loss of public trust, aging legacy systems and big branch networks that are getting used less and less.

“We are coming into the sector with a completely different approach: mobile only, which is what the new generation is looking for,” Fulconis said. ”We don’t have that high cost structure so we can offer no-fee banking.”

How does it feel to go from a $90 billion-asset bank to a fintech?

“It’s intellectually challenging, because you have to go from high-strategy issues down to minute details several times a day,” Fulconis said. “In my previous positions, I was more on the strategic side and I had a lot of people working for me. In a startup, you have to do it yourself in a number of instances because you don’t have 1,000 people behind you.”

He also likes the entrepreneurial spirit in startups.

“In a larger bank, the decision process is much longer,” Fulconis said. “Here it’s very quick. We ask, what do we see, what’s happening, what are clients telling us, how are we reacting to that? And very quickly we can answer questions or comments from our client, which is much more difficult in a larger institution.”

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