A Step Further in P2P

Technology is one of the driving forces behind the creative destruction occurring in the financial services industry; and how financial services will be delivered to customers in the future is no doubt going to change.  Person-to-person payment (P2P) platforms allow people to “informally” transfer funds or make digital payment transactions with others using the internet or a smart phone. Companies such as CashEdge, PayPal, Venmo and Zelle have already found a niche as disruptors on this area, but the environment and opportunity is huge for other players who wish to act as disruptors for existing banks and other incumbents.

On January 18, 2018, TechCrunch published an article called “Varo Money Raises $45 million for mobile banking without fees.” According to the article, the company is focused on disrupting traditional giants especially by offering cost-effective and easy ways for consumers to transfer money simply. Backed by giant Warburg Pincus, and being FDIC insured, Varo Money also provides loans and is focused especially on the millennial population and targeting their needs. The founders are aiming growth for the company and expect it to become a national bank in the future. Clearly, and in my opinion, this farfetched goal, speaks about the need for change in this space, and the disruption made by P2P.

After reading the article, I went into Varo Money’s website to understand how it works and try to identify the most relevant differences between the company and its closest competitors. The company is described as a no fee bank account. The previous success of P2P platforms was based on the plain understanding of the millennial population and the need for easy, convenient, and efficient money transfers. Varo Money seems to have taken this a step further and innovated into a more robust platform also adding a secure component and a financial backup.

While digital platforms become the primary source of payment and banking for consumers and traditional methods are stale or simply restrictive, convenience becomes a key player for the user. Digital clearly impacts the way users interact, and not only P2P platforms, but digital banks and wallets may eventually become building blocks for marketing as these sink into the daily lives of individuals.

Source: https://techcrunch.com/2018/01/18/varo-money-raises-45-million-for-mobile-banking-without-fees/

Source: https://www.varomoney.com/