Colin Walsh On Raising Over $1 Billion To Build The First Customer-Oriented FinTech Platform In The US

In the rapidly evolving landscape of fintech, few stories stand out as vividly as that of Colin Walsh, founder of Varo Bank. He has had remarkable accomplishments, including raising over $1B and running a company with a team dispersed worldwide.

Varo Bank has attracted funding from top-tier investors like Warburg Pincus, TPG, HarbourVest Partners, Lone Pine Capital, and Gallatin Point Capital.

In this episode, you will learn:

• Colin Walsh’s journey from corporate banking to founding Varo Bank showcases resilience and a commitment to financial inclusivity.
• Varo Bank was the first U.S. consumer fintech to receive a national bank charter, emphasizing its role as a regulated, tech-first institution.
• Varo Bank focuses on serving the underbanked, offering fee-free accounts, instant transfers, and automated savings tools.
• The bank’s diversified business model includes strong unit economics and a focus on responsible lending practices.
• Colin raised over $1B for Varo Bank, demonstrating a solid foundation and investor confidence in the bank’s mission and market potential.
• Despite challenges during the COVID-19 pandemic, Varo Bank efficiently scaled operations and enhanced its product platform.
• A strong, customer-oriented company culture is central to Varo Bank’s success. The bank’s mission is to change lives through accessible financial services.

 

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About Colin Walsh:

Colin Walsh is the current CEO and Co-Founder of Varo Bank. Prior to this, they held various positions at Friends of the British Film Institute, American Express, Council of Mortgage Lenders, and Visa Europe.

Colin has always been passionate about finance and helping others, which drew him to their current position at Varo Bank. He has over 20 years of experience in the financial industry.

Colin started their career at American Express in November 2011 as EVP of Proprietary Card Services Europe. In this role, they were responsible for European Consumer and Small Business Card Issuing across European markets.

Colin was also a member of the American Express Global Management Team. They left American Express in March 2014 to pursue other opportunities.

In January 2011, Colin joined the Council of Mortgage Lenders as Chairman, holding this position until December 2011, when they left to join Visa Europe.

At Visa Europe, Colin served on the Board of Directors and was responsible for the P&Ls of the UK’s largest Retail Savings business. They also led Lloyds’s response to various regulatory challenges.

Colin left Visa Europe in September 2009 to join Varo Bank as CEO and Co-Founder. At Varo Bank, Colin has continued their passion for helping others achieve their financial goals.

Colin has helped grow the company into one of the leading online banks in the United States. Under their leadership, Varo Bank has served over 2 million customers.

Colin Walsh attended Cornell University.

Connect with Colin Walsh:

• LinkedIn
• The Org
• Crunchbase
• RocketReach

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty, hello everyone and welcome to the Deal Maker Show. So today we have a really amazing founder, you know a founder that day you know he has quite the story to tell. you know They are doing remarkable stuff, you know raised over a billion, 400 employees alone in the US, another 300 elsewhere. But we’re gonna talk about you know like what it feels to go from having under 15,000 people reporting under you to all of a sudden,

Alejandro Cremades: you know burning the midnight oil. We’re starting a startup and then also what inspired him to do this, ah how he raised you know all that money, um what differentiates them from other banks. you know Their solution is quite innovative. But again, riding a rocket ship and being able to talk about all the good stuff that we like to talk about, like building, scaling, financing, and so forth. So without further ado, let’s welcome our guest today, Colin Walsh. Welcome to the show.

Colin Walsh: Alejandro, it’s great to be on the show. Thank you so much. And I look forward to telling a little bit more about the borrow story.

Alejandro Cremades: So give us a walk through memory lane, Colin. you know You were born in Westchester. and So how was life growing up in in the New York area?

Colin Walsh: Yeah, it was a it was a great sort of place to grow up as a kid. And, you know, we the good schools and lots of lots of things going on. we We’re close to New York City. um You know, I worked from a very young age, actually. So so I was doing a lot of different jobs as a kid even as a kid. so ah But it was ah it was a very kind of vibrant place to grow up. and And then I went on to college in upstate New York. And so I stayed in the New York area for most of my early life. But then had the opportunity to branch out into the corporate world. I started with ah GE and and moved around a little bit with GE Capital. ah Did my first stint in at Amex in New York. and So back to New York. and and then um

Colin Walsh: I spent time out here in California, quite a bit of time with Wells Fargo, and it was a kind of exciting time to be at Wells. that was right after Actually, I came in right before the merger with Norwest. There was a lot of energy in the in the bank. I was growing businesses inside the bank, and so a little bit of a different world than from today. um And then I got the opportunity to go to London and and move to the UK.

Colin Walsh: spent almost nine years in the UK working at Lloyd’s banking group in the middle of the financial crisis and was able to do some really interesting I’d say challenging things at the time as as the ah banking industry was sort of teetering on the abyss and we had to buy our largest competitor and I played a big role in in integrating those two banks. and And then I got called back to Amex, and I did another tour duty at Amex, which was kind of my last role in the corporate world. But to your point, you know I was overseeing their European consumer business, had countries all across Europe that were ah

Colin Walsh: you know under my watch and it was an exciting interesting role but it was it left me with a real itch to do something that could help ah so many more people so I you know we were designing products for very affluent people in in Spain and in Italy and in Germany and and of and you know I wanted to figure out how to use technology in a way that could help the the so many millions of people that are just trying to make ends meet, that are they’re living paycheck to paycheck, that are trying to get more control over their lives. And so that ultimately is what inspired me to come back to the US and um and start borrowing. And we can pick up on all the nuances of that journey because it certainly has been exciting.

Alejandro Cremades: Absolutely. We will definitely you know dig dig dig into um the whole journey with Vara. Now, I guess you know before doing that, I’d like to ask, you know how do you think a really shaped you to be able to see the financial services world you know from different regions, from different locations? you know Because you were able to experience that in the US, also in the UK, working especially with Amex with different countries too. So how do you think that shaped your worldview and perspective?

Colin Walsh: Yeah, well, it’s certainly helped me understand um you a more nuanced understanding of different consumers in different markets, what they need, how the economics of these businesses work in different markets, how the regulatory structures work. ah But also at the end of the day, you know kind of build empathy for, regardless of where you are in the world, you know people have you know sort of fundamental needs. and and if you are able to help people kind of early on in their lives and and really at any point in their lives feel more in control of their money because that relationship with money is so essential to how people feel about themselves and kind of their own self-worth and and so being able to help provide the tools and the products and you know I had the Fortune of being good fortune of being able to build lots of different innovative products but they often tended to be for people who were already pretty well served and and so the piece that I felt like I could take all that years of Experience around how to make money in these businesses how to understand regulatory um You know how to navigate through regulatory structures

Colin Walsh: of understanding how to how to tap into sort of consumer interest and consumer demand to be able to do something that could really make a difference in many people’s lives. And so so I think it’s been it’s been wonderful to have had those experiences particularly early on in my career and being able to move into different geographies and different types of businesses. And so it gave me a strong foundation to to start this company.

Alejandro Cremades: so then So then let’s talk about a to ah going from 15,000 people to so no people. you know I’m sure that was quite a crazy you know shift.

Colin Walsh: ah trust

Colin Walsh: a lonely yeah exactly awakening when suddenly you know all your privileges of being able to you know fly in in in airport lounges and you know and and early boardings and all the other stuff, like you know all the trimmings and trappings of ah of a big corporate job but ah go away immediately. and Then suddenly you know you’re asking yourself, like wow, who’s going to who’s going to do this analysis? Who’s going to build this financial model? Who’s going to write code, who’s going to write policies, all of this stuff. You look you realize, like wow, you you really have to find that early team to do certain things, but you have to rely on yourself for so many things. And and you know fortunately, because I had those other experiences, I had a pretty broad network. And so I was able to reach out to people in my network, particularly as I was able to articulate what we were trying to do, the problems we were trying to solve, how we were going to go about it. um and then draw in both talent to kind of help get that early start, but also ah investors and and getting um finding folks that believed that the future of banking was going to be digital and that we were kind of writing history and on the right side of of history and and that the world was

Colin Walsh: but moving moving much more towards digital adoption, whether it’s the generational shifts with Gen Z’s or Millennials, or the the huge market of consumers that were just not being served well by the incumbent institutions. And so being able to tell that story, ah being able to demonstrate how that business could get traction by building a very fulsome product offering that was meeting the needs of of consumers much more broadly than just having a narrow app-based solution. And then the importance of of being in the regulated environment and and operating as a regulated institution. So all of those things were kind of in those early days, being able to tell that story, being able to get investors, get people ah excited about being part of the story and a part of the journey um we’re were kind of those first, I’d say the first year

Colin Walsh: uh, was very much, you know, just trying to kind of get all those pieces moving and, and, and go pointed in the right direction. So, and again, I can, I can unpack any part of that and, and then talk about sort of where we went from there. Once we actually had an MVP product, we had first investors in, um, and then how we started to scale the business.

Alejandro Cremades: So I guess for the people that are listening to to get it, what ended up being the business model viral bank? How do you guys make money?

Colin Walsh: Yeah, so we’re so we are of what I would call a challenger bank or a neo bank. I mean, we’re an all digital bank, but what differentiates us from um many of the competitors, particularly here in the US, is that we’re the first and still the only ah consumer fintech that is operating as what I would call a tech bank. So we’re tech first, but we are an OCC chartered national bank. We’re a direct member of the FDIC. We’re a direct member of the Federal Reserve. and We’ll talk more about why that’s important. um And we’re serving everyday American consumers, so people who are striving to get ahead um and and to get you to sort of feel more in control, have more agency in their lives. um And so our business model is about how to

Colin Walsh: create a platform that offers all the full suite of solutions. So if you think about banking, you know just having a bank account and having access to ah free services that you know you don’t have minimum balance fees, you don’t have overdraft fees, all the things that that have been fairly punitive to a lot of consumers. um Having payment options, so being able to move money quickly, and we have a range of ah ways to instantly move money in a secure and a free for fashion. um We offer savings products that are some of the best savings products in the country, so we have a base savings rate and then an elevated relationship rate ah that’s 3% and then it goes up to 5%. We have tools to help people automate their savings, so Save Your Change, which is a roundup feature, Save Your Pay. We offer credit building solution to help people who are either damaged their credit or just starting out and wanting to build their credit. And then we offer ah lending products and budgeting products, all integrated into a simple, seamless app solution. So we really have built

Colin Walsh: that full suite of ah products that a customer needs to get ahead. And as a result of that, we have very strong unit economics. So we make money on the flows. So when consumers deposit their paycheck, they tend to spend most of that money by the end of the until they get to the next paycheck. So it’s either going off the debit card or the credit rails.

Colin Walsh: um They tend to borrow because they might need a bridge or they might have an emergency expense. We also have a range of partners in our app where um folks can go for a number of different services that we might not offer directly so we monetize on the back of that.

Colin Walsh: So it’s a really quite diversified financial model. And over the last couple of years, we’ve been building out the lending side of the business, putting in place the right kind of risk management controls to be able to responsibly build lending. So that’s now a bigger part of our mix. And if you look at some of the other neo banks today, most of their revenue is coming on the back of merchant interchange and particularly debit interchange. um Whereas we have a much more diversified sort of source of monetization in the business.

Alejandro Cremades: What was that moment like when really you know like you felt like you guys had product market fit, where you know things were really working out and you were like, wow, I think that we’re into something here.

Colin Walsh: Yeah.

Colin Walsh: Well, and and in the early days, so we so I started the company. it was It’s going to be nine years ago at the end of October. ah But those first few years were um all about getting product into market. We worked with a sponsor bank. So we worked with a partner bank to be able to launch you know what was essentially a debit card with savings features and ah a range of sort of checking account features. And I almost would like to think of it as like a proof of concept, to be able to say,

Colin Walsh: you know my My hypothesis and the and the thesis was that there’s a large group of consumers who are going to benefit by having more of the low-cost banking solutions, you know all digital, you know available on their phone 24-7, want to have access to savings features.

Colin Walsh: um and that was very quickly adopted by consumers. And so that while we were in that sponsor bank model, we um you know continued to iterate on a number of features, but we could see that the product market fit was coming in pretty quickly because we were seeing the business scaling up. We had relatively low CAC.

Colin Walsh: um And so we knew that like there’s there’s a bear there, like right away. ah But also while we were in that phase of, you know, sort of let’s say testing the business through a ah partnership model, we went through a very rigorous process of applying to become a national bank. And that was a three and a half year process. And so so while we were scaling what I call borrow money at the time, we were building borrow banks. So not only did we have to to go through an approval process with all three regulators. We had to have the right level of staffing, building out the right risk management systems, and building out an entirely new tech platform. And so you kind of watch it got to watch what you wish for, because we got approved. you know And everybody in the world was like, oh, you guys are never going to get approved. But the regulators have never approved one of these. you know And and you know we had the right management team, the right understanding of what it takes to operate in a safe and sound environment. We had the capital backing. um And so we got approved. and then we had to

Colin Walsh: basically migrate that entire customer base onto the new platform while rapidly building out a lot of the product features that I’ve been talking about in terms of credit building and um lending solutions and budgeting solutions and payment solutions. And so all of that was has been built since we opened up our own.

Colin Walsh: in our own bank platform and had much more of that vertical integration. And the economics, the other advantage from the bank standpoint is that we were no longer sharing interchange or having the cost of having a sponsor bank. ah So it absolutely helped us very quickly um you know on the economic side.

Alejandro Cremades: So you guys have raised over $1 billion. dollars you know That’s ah a lot of zeros. So what had what was the journey of ah raising all that money like?

Colin Walsh: Yeah, well, like first, is having um strong conviction from investors who saw the importance of what we were doing and the role that we could play in the industry and the size of the TAM that we’re going after um and and really playing the long game. I mean, really understanding that this is ah this is a you know probably a 12-year journey to do this in in the in the best possible way to get the foundation in place, to get the regulatory ah approvals in place, to be able to build out a platform that could scale um and serving, again, this massive time of consumers. And so so finding you know strong early investors like Warburg Pincus and ah TPG and HarborVest and Lone Pine and

Colin Walsh: um Gallatin and we have a group of you know very impressive investors on our cap table that um are so they see the long term vision and the progress that we’ve been able to make as a company of now we’ve had to navigate through a lot of interesting sort of external.

Colin Walsh: ah factors So right as we’re getting our the final stages, we just got our FDIC approval. COVID hit. you know and Everybody went remote. Nobody knew what was going to happen. and know We saw a flurry of sort of competition because there was a lot of money flooding in for digital-only services. So we navigated not just through the pandemic, but sort of a period of hypercompetition where sort of CACs went up.

Colin Walsh: um And and that then you had this big change that happened you know at the end of 21 into 22 where the markets just really froze up. And so capital was ah you know much more scarce. There was the interest rates started going up. Then you had a bank crisis where several banks like SBB and um First Republic collapsed. and There’s like every sort of, should I say to the regulators, every stress scenario that we put into our original business plan we actually lived through.

Colin Walsh: And so kind of navigating through all of that, you know at one point, we scaled our marketing machine way, way back just to preserve capital and become much more efficient in terms of our acquisition economics, ah focused on our servicing. And we out outsourced and offshored a bunch of our servicing operations, went much more into chat-based and AI-based service operations. We embedded AI into pretty much every part of our customer lifecycle just to become highly efficient while we were continuing to build out this product platform that meets the full range of needs for the consumers we’re serving. And so so it really did take a lot of investment to get the business you know scaled up, build the platform, build the product set, build the technology suite um so that we feel like we are probably better positioned than ever um to become the next you know major player here at the US and in the digital banking market.

Alejandro Cremades: So the FinTech space you know definitely has a taken a lot of um excitement from institutional investors. know But obviously, there has been a lot of um ah lot a lot of newcomers, you know a lot of companies you know competing for the same dollars from those institutions. So I guess in your case, you know to be able to be able to ah to bring on board you know ah such caliber of investors How were you able to position yourselves ah different from perhaps other banks and other solutions?

Colin Walsh: Well, and I think the fact that we ah were bold enough to say that to win in the long run. you need to be inside the regulated system. like I think that was something that certainly resonated with our are big investors that they understood that you couldn’t really try to look for a regulatory arbitrage or have what you know I always described as a bit of an existential risk that if you’re working with a smaller bank and suddenly something happens to either that bank or another program that’s working with that bank,

Colin Walsh: that that then constricts or constrains your activities um for no fault of your own. like that is ah That is sort of an existential risk. And so we wanted to control our own regulatory destiny. We also understood the unit economics that you know by having more of that vertical integration about the tech as well as the banking, that we could deliver stronger unit economics. And yeah I don’t think there was any argument that there is just a massive TAM of consumers, both the folks that are in it sadly and this sort of the time frame that we’ve been doing this it’s only gotten worse for so many people who are living paycheck to paycheck trying to make ends meet they’re looking to lower their costs of banking they’re looking to access affordable credit options they’re trying to build small dollar savings to create more resiliency in their lives and this is just this is everyday americans everywhere i mean it’s the person that’s getting out of the

Colin Walsh: you know amazon delivery van it’s the person walking the dogs on the beach it’s the person stocking the shelves and walgreens i mean these are these are people everywhere in this country that need these solutions and so i think investors understood that there’s a real need here as well as you’ve got this sort of generational collision where you’ve got millennials that are now in their 40s, you’ve got Gen Z’s that are in their 20s that have grown up with a phone in their hands. So like, they’re they’re not going to go drive and wait in line to go to a bank branch. And so so that so that again, going back to the point I made earlier, like, this is kind of on the right side of history, like that, you know, borrow has been skating towards the puck from the beginning. And then just being able to support us to build out the solutions and the technology platform to be able to effectively serve these customers.

Alejandro Cremades: So you know along the same lines of of investors you know and talking about people, you guys have now 400 employees in the US s and then also 300 internationally. um Obviously, 300 is a lot you know outside of the you know where where you have the culture. right And then you have like all these different satellites of cultures you know going on. you know So how do you how do you manage that? How have you guys gone about having a united culture regardless of the location?

Colin Walsh: Yeah, culture is ah is such an important question to ask. And and you know for any founder, um you know regardless of whether you’re founding a company in your 20s or you’re founding your a company later in life, um you know it’s so important to get that right. Because you know for for me,

Colin Walsh: kind of having spent many years in other large institutions, you know, I could see the things that worked well, and the things that probably did not work so well and had an opportunity to sort of build something from the ground up that focused on a set of values that were very, very customer oriented. And so there’s, you know, our our number one value at, at borrowers customer first, and and then we, we talk about,

Colin Walsh: of taking ownership and having respect and and making it better, um continuing to stay curious and like sort of these are the sort of hallmarks and foundation of the culture we’ve built. And as we made decisions over the last couple of years to put certain pieces of our business in different parts of the world, ah being able to have, you know, culture carriers from from within the core of the company to kind of work with those partners to make sure that those values are still lived in those different operations those sort of more remote locations and i did a trip out to we have a group in india and i visited them actually right before the pandemic and they showed up they were all wearing borrow swag and they were like so excited about the things we were doing and that we were about to get the charter approved. And and so um I think it’s important, though, to make sure that regardless of where in the world people may work, that they feel very connected to the mission and the purpose and the values of the company. And that that is something that you know every founder has to work very hard to just make sure that that consistency is there at every step of the way. Because as I described before, you’re going to have lots of twists and turns. You’re going to get confronted

Colin Walsh: with a lot of challenges along the way that you know some you can anticipate some you cannot but it’s the culture that ultimately gets you through and that if you have employees that really believe in what you’re doing and they have a real strong sense of purpose that they are they can be very resilient.

Alejandro Cremades: Talking about believing what you’re doing. I mean, obviously that’s not just from employees, but then also that’s investors and that’s also customers. So if you were to go to sleep tonight, Colin, and you have this news of a lifetime, and you wake up in a world where the vision of VAR is fully realized, what does that world look like?

Colin Walsh: Yeah, to me that world is one where everybody… in this country and maybe at some point in other countries are asking themselves, why am I not on this platform? Why am I not using this solution? Because I think eventually, for me, it’s all about just that sort of mass adoption of of the solutions that we’ve built. Because you could look at our app, you go to the Apple app store, you know we’ve got a 4.9 rating. you know We have some of the best NPS scores in in the country of any bank.

Colin Walsh: um you know so You know, in Google, I think we’re at 4.7 rating. But the customers, you know, actually, it they will they’re telling us this is changing my life. And so when I wake up that morning and I think about what does the world look like, it’s everywhere you go, you see people using the product and excited about it and and, you know, raving about it. And that’s the piece that that that’s the excitement what gets me excited. And I feel like we’re we’ve come very far on that journey. And that’s kind of the next step for us.

Alejandro Cremades: So talking of the future here, I want to talk about the past because obviously you’ve been at it now for about nine years with the bar, which is a lifetime in the corporate world is like a hundred years. ah So let’s.

Colin Walsh: Keep in mind, wells fargo but Lloyd’s was around for 300 years. I think Wells Fargo is over 150 years when Amex, my other employer, is about 150 years. So so like it’s it’s a drop in the bucket and compared to some of these other institutions.

Alejandro Cremades: I hear you, I hear you, batte but hey, it’s ah it’s a long time to be the founder and CEO, like really you know steering the ship. Now, if I was to bring you back in time, let’s say to 2015 or 2014, where you were like starting to think about maybe doing something of your own, like entering the world of entrepreneurship. And let’s say you had the opportunity of having a chat with that younger Colin.

Alejandro Cremades: What would be that one piece of advice before starting a business that you would give to your younger self?

Colin Walsh: I would say it’s definitely not ever going to be a straight path. And to brace yourself for all the twists and turns that come with starting a business. And I think there are probably lessons learned around people. There are probably lessons learned around how to sequence a product build.

Colin Walsh: um Probably lessons learned around unit economics and what are the things that that will work faster versus things that might take longer. And so I think, you know, at ah there’s there’s probably a whole. I’ll write my book someday and you can read it. and You can see you got all all the lessons learned along the way. But ah but I think that the probably the biggest is just.

Colin Walsh: Prepare yourself for the long game and the long journey. And I think, you know, as I mentioned earlier, I think we’ve been very fortunate to have an investor group that that has a lot of belief in what we’re doing um and sees that long game and the long vision as well. but But I think that would probably be the biggest thing is that there’s no kind of, you know, maybe for some people there’s a quick, you know, you start something and then three years later you’re public. ah But I just don’t think that that’s the reality for most founders.

Alejandro Cremades: So calling for the people that are listening that would love to reach out and say, hi, what is the best way for them to do so?

Colin Walsh: Sure. i mean They can we think he first visit our our website at borrowmoney.com, um and they can check out our product and learn more about who we are and and and what we’ve been building. um And then you know I can be reached either through your platform or or through the colon at borrowmoney.com.

Alejandro Cremades: Amazing. well Hey Colin , thank you so much for being on the Dealmaker Show today. It has been an absolute honor to have you with us.

Colin Walsh: It’s been great chatting with you. Appreciate the opportunity.

*****

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