This strategic duality reflects Revolut’s position in the US as a foreign entrant up against stiff competition from both native incumbents like Chase and homegrown neobanks like Chime and Varo. To stand out from competitors, Revolut will need to make its offerings as attractive and frictionless as possible. Hiking the caps on fee-free services is a strong start.

Varo advertises its savings account offering in the center of the app’s account landing screen. Rather than placing an “open a new account” button hidden away inside a menu or on another page, Varo puts its account opening capability front and center so that a new savings account is a few taps away. To further reel in customers, the next screen highlights account benefits.

In July 2020, Varo became the first neobank to receive a charter from the OCC. Per Deloitte, the approval allowed the neobank to:. Offer a full spectrum of banking services without paying a licensed partner. Avoid certain banking regulations that vary from state to state—enabling it to offer its customers more unified products.

Neobanks such as Chime, Current, and Varo won’t have to confront a behemoth with the digital prowess to cut into their digital-only value propositions. Banking as a service (BaaS) companies that offer front-end solutions have more reasons to be wary: The tech company may launch its own offering for their own small-bank customers.

“[It’s all] about taking and using data,” said Wesley Wright, chief commercial product officer at neobank Varo. “Think about Spotify generating music for you, showing you stuff you’d be interested in based on what you like, exposing you to new things.”.

In the 13 months since obtaining its national banking charter, Varo has doubled its total accounts to 4 million, and the neobank is currently weighing options for eventually going public and expanding overseas, Varo CEO Colin Walsh told CNBC. He also told TechCrunch that he predicts Varo will reach profitability in approximately two years.

The features are being offered by neobanks like Chime and Varo, along with incumbents such as PNC and Fifth Third Bank. The bigger picture: BofA’s product reflects a growing trend by established banks, blunting what has been a competitive advantage for digital challengers. In recent months, incumbents have taken actions against the fees:.

In February, neobank Varo announced a partnership with NBA star Russell Westbrook—who also led its $63 million investment round—which involves creating an impact platform to assist underserved communities. In 2019, NBA star LeBron James partnered with Chase on a podcast aimed at destigmatizing talking about finances.

More on this: Chime, Current, and Varo rounded out the top 3 on the list, but Chime’s 6.4 million downloads put it well ahead of the competition. In fact, Chime had almost as many downloads as the second, third, and fourth spots combined:. Current was a distant runner-up at 2.7 million downloads. Varo and Step were virtually neck-and-neck at 1.95 million, and 1.94 million downloads, respectively.

Neobanks like Chime and Varo will grow by nearly 19 million US account holders between 2021 and 2025, per Insider Intelligence projections. By the end of 2025, close to 40 million US adults will hold accounts at digital-only banks. More like this:. Report: The Banking Digital Trust Report 2021. Article: Varo Bank launches cash-back rewards in strategy pivot.

OCC charters: Varo was the first neobank to get a national charter when it won Office of the Comptroller of the Currency (OCC) approval last August. However, the process was long and costly for Varo, taking three years and $100 million due to capital requirements.

Examples of such products include early paycheck access offered by challengers like Varo and Chime, and PNC’s Low Cash Mode, which provides users with advance warning of low balances. Competitors could also capitalize on the negative publicity by emphasizing their user-friendliness, such as how their accounts don’t require minimum balances or monthly fees.

Challengers that were early comers to the feature including Varo, Chime, and Current. Early paycheck access is becoming less of a competitive differentiator as a growing list of incumbent banks is co-opting it. Huntington is the latest US incumbent bank to offer early paycheck access. Two other incumbents recently unveiled the same feature.

Neobanks like Chime, Varo, and Current have promoted their overdraft protection as a key differentiator between them and legacy banks. If incumbents also adopt more lenient overdraft policies, the challengers lose a competitive advantage. Another special feature closely associated with neobanks—early direct deposit—has also started popping up among incumbents, including Capital One and Fifth Third.

In the US, native neobanks like Chime and Varo will offer stiff competition.

Rounding out the top four players is Varo, with 2.7 million users this year. By 2025, it will grow its user base to 6.4 million, equaling that of Aspiration.

Potential winners include US-based challengers like SoFi, which is planning to go public by June 1; Varo, which received a national banking charter last September; and Chime, which recently closed a $485 million funding round.

The last decade also saw the slow but steady rise of online-only neobanks, like Chime and Varo Money, that by nature are digitally savvy. These factors are leading incumbents to accelerate digital innovation as part of their strategy to adapt other channels to an increasingly digital market.

Unlike other financial services firms named in the article, Varo has never charged overdraft fees.

However, client interest led us to collect information on various other institutions, such as NFCU, Chime, and Varo, and we have added those results to the appendix. Survey Demographics. Appendix. See the charts below for additional insights from our survey:. Read Next.

Crypto trading is Venmo’s latest in a slew of new features that move it closer to competing with neobanks like Chime or Varo—even though it eschews the label and prefers to call itself a “digital wallet.”. Venmo rolled out a credit card in October in partnership with Synchrony, and in January unveiled mobile check cashing, available to debit card or direct deposit users.

Some of the most visible US neobanks—like Chime and Varo—have been operating in the country for the better part of the last decade. Operating exclusively in North America, Chime has an estimated 12 million+ US customers and has indicated it would consider a national banking charter.