Varo Money is in the “last leg of the race” in getting a banking charter, according to founder and CEO Colin Walsh. The mobile banking startup announced a $241 million Series D today and expects to have a bank charter sometime this summer. 

“We have the FDIC approval, and we’re going through the final examination process with the [Office of the Comptroller of the Currency],” Walsh said. “This capital raise certainly is a very strong final condition. It’s meeting one of the final conditions we have to open a bank.”  

San Francisco-based Varo was founded in 2015, and has spent the past three years trying to obtain a bank charter to graduate from challenger bank to full-fledged digital bank. With a charter, Walsh said, Varo can offer a wider set of financial products, including credit cards and loans, giving the company an edge over neobank competitors that have long offered the table stakes options of direct deposits, money movement and savings envelopes.   

Varo received conditional approval for a national bank charter from the OCC in August. To raise the company’s appeal to regulators, Varo added Amy Friend, former chief counsel and senior deputy comptroller at the OCC, to its board and Deven Bhatt, former chief information security officer at the OCC, as its own CISO. In February, the company received approval from the Federal Deposit Insurance Corporation. With a bank charter, Varo would no longer rely on a partner bank that takes fees. The company currently partners with the Wilmington, Del.-based Bancorp Bank. 

Walsh said Varo has close to 2 million customers. Once the company becomes a national bank, he said, it will be able to offer products that help customers build their credit, in addition to joint accounts, household accounts and wire transfers. 

“When you compare that to a fintech, which is really limited to what the sponsor bank will allow them to do, it’s a big difference,” Walsh said. “From an investor lens, being a bank is a much more sustainable business model. We’ll be able to fund our lending from our deposits. We’ll be able to migrate onto a highly modern technology stack and operate at a fraction of the cost.” 

See also: Varo crosses 1 million customers, with plans to become a bank by 2020

Gallatin Point Capital and The Rise Fund led the Series D. HarbourVest Partners and Progressive Insurance also participated. To date, Varo has raised more than $419 million. Walsh said the regulatory approval process requires Varo to have capital on hand, as regulators want to see that Varo is cash flow positive and has the capital to meet the regulatory ratios to meet its business plan. Today’s announcement of $241 million far exceeds the $150 million the company set out to raise. According to Walsh, Varo’s deposits are up 350% since the start of the year. 

Julie Hill, a professor at the University of Alabama School of Law who focuses on banking and commercial law, previously told Bank Innovation that Varo’s path could have larger implications for the industry. “This is just more evidence that the FDIC these days is more flexible in its thinking in the types of business plans that are considered safe enough,” she said. “It doesn’t mean every fintech can get a charter, but at least some of them can get through.”