It has been a year since Varo Money broke ground by becoming the first fintech to secure a national bank charter without buying a bank. Bank Automation News recently checked in with Varo Bank’s Wesley Wright, chief commercial and product officer at the San Francisco-based startup, which was founded in 2015 and has raised $482.4 million in funding. Wright leads customer care, operations and strategic partnerships for the $247.8 million Varo Bank.

While Varo Bank may be a new kid on the block, Wright brings more than 25 years’ financial services experience to the bank, which he joined in 2016. Prior to Varo, he served as a senior vice president in the digital payments unit at American Express, where he led the launch of multiple digital payments products, including a mobile banking partnership with Walmart. Wright also led Amex’s prepaid travel payments business globally, which had employees based in more than 15 countries.

Wright detailed what’s new with the digital-first bank, including its recent selection of Quantifind, a solution that automates financial screening and investigations.

Bank Automation News: In an ever-growing, crowded field of digital-first or challenger banks, how is Varo Bank working to distinguish itself?

Wesley Wright: Varo is the first and only digital bank with a national charter. This enables us to deliver a full set of financial services in a tightly integrated fashion without needing to rely on third-party sponsor banks to deliver our services.

For example, our cost of funds for lending is lower because it is based on consumer deposits and not in raising money from investors. We also have access to a broader range of data that we can use to underwrite credit decisions and give our customers the best possible rate for their risk profile.

BAN: Varo Bank recently selected Quantifind, a software-as-a-service platform provider, to help the bank automate financial risk screening and investigations. How will Varo use its AI-powered risk assessments and investigation tools in Quantifind’s data analytics platform, Graphyte, to spearhead your enhanced due diligence (EDD) and anti-money laundering (AML) initiatives?

Wright: Quantifind is an industry leader in providing access to open-source unstructured information in a quick and easy-to-read format for use by its clients, and has an over 10-year history in providing these solutions to both the public and private sectors. Quantifind is helping Varo accelerate the time it spends on due diligence, ensuring that only the most accurate information is presented for review.

BAN: The Quantifind product is AI-enabled and uses open-source data for AML programs. How exactly does this work at the bank? What processes are you automating and how was this work previously accomplished?

Wright: While I can’t talk specifics about our AML program, I can say that automation is a key element of Varo’s offering. This includes allowing our customers to self-service as well as automating back-office functions to eliminate unnecessary human work and to reduce error rates, friction, et cetera. This is an area that we’re focused on across all aspects of the business. It is part of our DNA and our commitment to continuous improvement.

BAN: Challenger or neobanks are seeing strong growth, and it appears that traditional banks are watching their app numbers slightly fall off. Why do you think that is? Do you think the profile of a neobank customer differs from the profile of a traditional banking customer?

Wright: A large number of people in the U.S. are not well served by traditional banks. These banks have long charged unnecessary fees, do not give early access to direct deposits, offer little to no credit opportunities, and often make it harder, and more expensive, to access your money when you need it.

This has led to a new revolution in banking, with customers flocking to digital-first banks that can offer better opportunities. At Varo, we focus on an intuitive, customer-centric experience that makes it easier for individuals to manage their personal financial futures. The digital-first experience is popular because it meets customers where they are with what they need.

The customer profile of a neobank user has historically been lower income individuals or those establishing their financial footprint, but we are seeing that change as more and more customers are looking for greater flexibility and a premium digital experience.

BAN: Analysis from Apptopia indicates that Varo Bank’s app was the third-most downloaded digital-first app in the U.S. in 2020.What do you think accounts for that? And what is the bank doing to come out No. 1 this year? Any new products in the works?

Wright: There were a lot of different things that impacted Varo’s growth last year. Due to the pandemic, we saw overall consumer behavior across multiple industries shift as people were at home. A lot of big banks reduced staffing, closed physical locations, and people did not want to physically go to a bank. The idea of banking from home became more and more appealing, and a new reality for a lot of people.

Similar to tax season, when stimulus payments started to hit, a lot of people were looking for a place to get their payments deposited. We saw significant organic growth when stimulus payments were starting.

This year we have been seeing more growth compared to last year. We now have the bank charter, our partnership with [National Basketball Association MVP] Russell Westbrook, and for the first time have started investing in up-funnel brand campaigns. [Editor’s Note: Westbrook led a $63 million funding round for Varo in February.]

We launched national TV in April, and in Q3 are planning on increasing that investment. As our share of voice and brand awareness grows in the market, we are seeing an increase in our paid conversion rate and we are able to increase scale with no increase in cost.

This year we have launched Varo Advance, Varo Perks, and are soon launching Varo Believe, which has already gotten a lot of interest. Once we officially launch this product, we expect it to be a big driver for growth.

The Bank Automation News webinar on automation technology for exceptional bank cybersecurity and ID verification takes place on Thursday, Sept. 9, at 11:30 a.m. ET. Register here. Attendees will be able to ask questions via chat.