Fintech Recap: Regulator Shuffle, Varo's Struggles, and BNPL's Dark Side

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Mar 5, 2025

Tune in for a dive into the latest regulatory upheavals affecting fintech and the potential consolidation of banking supervision. Varo's struggles as a once-promising bank underscore the challenges of balancing responsibility with competition. The dark side of Buy Now, Pay Later comes to light, revealing its impact on subprime borrowers. Also, hear insights on the skepticism surrounding cryptocurrency and the humorous critiques of lawmakers during congressional hearings. It's a whirlwind tour through the complexities of the modern financial landscape!

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INSIGHT

Project 2025's Impact

Project 2025 aims to reshape financial regulation by consolidating agencies and easing restrictions on banks' non-banking activities.
This includes creating new charters for fintech and payment firms, potentially impacting the regulatory landscape.

ANECDOTE

Dogecoin Protest

Alex Johnson witnessed protestors outside the CFPB headquarters, demonstrating against Elon Musk and Dogecoin.
This highlights the unexpected intersection of politics, finance, and internet culture in the regulatory landscape.

INSIGHT

Varo's Challenges

Varo Bank, the first fintech with a de novo charter, faces challenges like financial losses and a shrinking customer base.
Its struggles highlight the difficulties of balancing responsible product development for underserved communities with regulatory compliance.

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Welcome back to the Fintech Takes podcast. I’m Alex Johnson, and as always, I’m joined by my partner-in-crime, Jason Mikula. Today, we’re unpacking the chaos around regulatory shifts, fintech's shifting landscape, and the not-so-rosy reality of BNPL.

First up, we're diving into the latest news coming from D.C. The Trump administration is considering consolidating bank supervision under the OCC, with reports of employee transfers from the FDIC and CFPB in the works. The possible gutting of agencies and the shifting regulatory approach isn’t exactly a surprise, but we’re seeing this transition go from theoretical to action. What’s at stake for banks and fintechs?

Next, we dive into Varo’s challenges as the first fintech to snag a de novo bank charter during fintech 1.0’s big promises. Once a leader, Varo is now facing financial losses and a shrinking customer base, while rivals like Chime scale quickly. Varo’s struggles highlight the tension between building responsible products for underserved communities and navigating complex regulatory oversight. Its de novo charter has tied its hands, making it harder to compete in a fast-moving market where flexibility is key.

The January CFPB report on Buy Now Pay Later (BNPL) brings eye-opening insights. Despite its claim to help those without credit, 45% of BNPL loans go to deep subprime borrowers, not credit newbies. The data also shows users stacking loans across providers, with rising credit card default rates. The takeaway: BNPL’s shiny promises don't align with its impact. Plus, we’re keeping the BNPL convo going with a rapid-fire round of updates.

Finally, we wrap up with a few rants you won’t want to miss—like the transparency crisis in financial services and crypto. Powell’s vague responses to Synapse’s failures highlight a deeper issue: accountability. Meanwhile, crypto’s obsession with meme coins is sinking to new lows. Where have all serious players gone? We're diving in.

00:04:50 - Washingtonian Recap

00:26:41 - Varo’s Charter Conundrum

00:40:59 - BNPL News, Grab Bag Style

01:07:45 - Can’t Let It Go

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