The news: The US neobank Varo just raised $123.9 million in its Series G round. The company, which has been focusing on credit products, generated $547 million in lending volume in 2025—including paycheck advance and personal line of credit products.

Why it’s worth watching: Varo applied for a national bank charter in 2017, which the Office of the Comptroller of the Currency granted in 2020. It was the first consumer fintech to receive such a charter. Reports at the time said chartering cost nearly $100 million. It was part of a plan to cut the long-term costs of working with sponsor banks.

That was a lot of money that could have been spent on customer acquisition. Indeed, by 2022, Varo was in a perilous financial position. It raised $510 million in 2021, but fintech funding contracted. At the time, Varo laid off 10% of its staff, slowed hiring, and cut its marketing spend. It has since rebounded from its lows by raising more venture capital and expanding its product line from basics, like a checking account and debit card, to several lending products.

Zoom out: Varo faces US-based competitors, including banks of all types as well as fintechs. The neobank market has consolidated into a few major players: Cash App, SoFi, Chime, and Robinhood. The US also has plenty of large, licensed traditional banks with compelling digital offerings, according to our US Mobile Banking Emerging Features Benchmark 2025.

Implications for banks: Varo’s story shows how the “fintech threat” from an upswell of consumer finance apps before 2021 has turned into a fight among mega-fintechs, large potential fintech entrants, and traditional financial institutions.

With the near-term competition clear, banks know they’re dealing with a smaller field of fintech competitors that are busy fighting each other—not just a hundred neobanks, any of which could turn into a threat.