Banks are pursuing growth in 2025 by exploring new products and services to help grow the organizations and its profitability. What products and/or services did they choose to focus on and why? CEOs of VeraBank, Equity Bank and Varo Bank report initiatives underway this year, and how they plan to measure success.
Like many community banks, VeraBank in Henderson, Tex., is eager to diversify its revenue stream.
As part of that effort, it offers treasury management and wealth management services, both of which are still more of an exception than the rule when it comes to offerings from most community banks.
The $4.3 billion-asset VeraBank aims to expand on those products and services over the coming year. It also plans to work on growing its payments revenue, particularly debit card interchange.
Brad Tidwell, its chief executive officer, says the noninterest income generated from these offerings makes for a more resilient bank. That’s why revenue diversification is not only the top priority for VeraBank in 2025, but has been a focus for years.
“Noninterest income typically has higher margins, less risk, and lower capital requirements,” Tidwell says, adding that noninterest income growth is one of the key ways the bank measures its success.
Expanding products and services is also a big part of the plan for Equity Bank and Varo Bank, as they aim to achieve their own growth goals this year.
Varo Bank, which has yet to post a profit, had hoped it might do so for the first time in 2024, as Colin Walsh, its CEO, told The Financial Brand in March 2024. The fintech-turned-bank did not make it into the black in the third quarter of 2024 and has not posted results for the fourth quarter yet.
Yet, it’s strategy to achieve profitability hinges on aggressive product development. One of the new products Varo Bank launched in 2024 is a line of credit for up to $2,000. It uses proprietary technology to underwrite customers based on their banking history with Varo, including their pattern of saving, and offers the possibility of access to higher limits for those who consolidate their other banking relationships at Varo.
Walsh did not disclose any specific products and services in the works for this year, but says the $427-million-asset bank will be initiating “various yet-to-be-announced partnerships.”
He founded what was then Varo Money in San Francisco in 2015, began offering accounts in 2016, and obtained a national bank charter in mid-2020. After growing the customer base aggressively and amassing millions of accounts, he dialed back on the big marketing expenses in recent years to preserve capital and focus on achieving profitability.
He intends to get Varo there not with radical changes but with more of what it has been doing — continuing to serve “everyday Americans, particularly those living paycheck to paycheck” with products designed for their needs.
“We see a clear gap in the market where traditional banks often impose fees and minimum balance requirements that can be burdensome for many Americans,” Walsh says.
Given its mission, metrics such as “improvements in customer credit scores through responsible use of our line of credit and other credit-building features” are one way that Varo Bank measures its success.
Equity Bank in Wichita, Kan., seeks to grow organically and through acquisitions. The $5.35 billion-asset bank has been an active buyer of branches and whole banks since its founding in 2002.
Its parent company, Equity Bancshares, closed its most recent deal — for Rockhold BanCorp in Kirkville, Mo. — last year, adding eight branches in that state. Now, Equity Bank operates more than 70 locations across four states.
Richard Sems, Equity Bank’s CEO, says it will continue to pursue M&A opportunities in 2025, while also looking for more ways “to empower the financial well-being” of its customers. That entails adding products and services — a roboadviser is one that launched last year — and elevating the customer experience.
To that end, the projects it has on tap for 2025 include having its entire website and its online banking available in Spanish.
Read on to learn how these CEOs intend to execute on the top priority for their banks.
Why Noninterest Income Drives VeraBank’s Strategy
Brad Tidwell
Chief executive officer
VeraBank (HQ: Henderson, Texas)
Asset size: $4.3 billion
What have you identified as VeraBank’s top priority for 2025?
Our top priority in 2025 is continuing to further diversify our revenue stream. We must remain focused on noninterest income growth and not being simply a spread lender.
Is there anything about the current operating environment, or your institution’s own journey, that pushes this priority to the forefront now?
Noninterest income typically has higher margins, less risk, and lower capital requirements.
The reality is that banks are simply spread lenders, meaning they are solely focused on lending, restrict their optionality, limit potential growth, and assume more risk than necessary.
Focusing on diversifying our revenue stream is neither unique nor new to VeraBank. Instead, it is a continuation of our philosophy for the last 10 to 15 years, and I don’t see that changing.
Please describe a few of the initiatives you’ll be executing on as an institution in support of that priority in 2025.
Our key 2025 initiatives are a continuation of existing efforts, including investment in treasury management products and services, investment in wealth management products and services, and growing payments revenue, particularly debit card interchange revenue.
Just as importantly, you can’t have great technology, products, and services without good, capable people to sell them. It’s imperative that we also invest in the right people to build meaningful relationships with customers and grow the bank. At VeraBank, we have done just that and will continue to do so.
Does your top priority represent a shift from 2024? Or a continuation?
This is the same strategy we have been following, but I think it’s more important than ever. So, while it’s not a shift, the emphasis on a diverse revenue stream only continues to be heightened.
How will you measure success in achieving this priority? If all goes well, what does that look like for VeraBank a year from now?
When comparing ourselves to peers (banks between $3 billion and $10 billion of assets), our goal is to be at or above the 85th percentile as it relates to noninterest income as a percentage of total assets.
While we certainly want to see annualized growth in noninterest income revenue sources of 7% to 9% a year, we look beyond year-to-year accomplishments. We aim to never be satisfied and will continue to invest in the right technology, products, services, and people to position VeraBank for sustainable, long-term success.
Taking Customer Experience to the Next Level at Equity Bank
Richard Sems
Chief executive officer
Equity Bank (HQ: Wichita, Kansas)
Asset size: $5.35 billion
What have you identified as Equity Bank’s top priority for 2025?
Our perennial goal is to achieve strategic growth, both organically and through acquisitions.
At the same time, we will continue to deliver on our mission, which is to empower the financial well-being of our clients and the communities we serve, grow our team members, and provide a strong return for our shareholders.
Is there anything about the current operating environment, or your institution’s own journey, that pushes this priority to the forefront now?
Our focus, first and foremost, is on our customers and the communities we serve.
From an operating environment perspective, we also see more opportunities within our markets to grow through M&A. We believe we offer a superior value proposition and plan to pursue growth opportunities that make sense and support our mission.
Equity Bank has completed numerous acquisitions since its founding in 2002 — a mix of whole banks, deposits, and branches. This includes at least 10 whole-bank acquisitions since its IPO in 2015.
Please describe a few of the initiatives you’ll be executing on as an institution in support of your top priority for 2025.
One example is implementing a program that centers around providing the very best customer experience in our banks. We want to drive customer satisfaction through the interactions between customers and our bankers.
To help make every interaction a positive one, we ask our team members to offer a friendly greeting, introduce themselves, smile, recognize what the customer needs, use the person’s name and say thanks. We introduced a step process for team members in the third quarter that is designed to make sure such details don’t get missed.
Additionally, we want to continue to offer exceptional digital solutions to customers and mix those with a one-on-one relationship approach. The digital offerings we are launching in 2025 include account opening in Spanish, online banking in Spanish, and a fully translated website.
Does your top priority represent a shift from last year? Or a continuation?
We consistently review our priorities and the progress we are making towards them, and are always looking for ways we can bring new products and ideas in order to deliver on our mission.
For example, among the offerings we rolled out in 2024 are SimplyInvest and EarlyPay. SimplyInvest is a roboadviser with a minimum of just $500, and EarlyPay facilitates access to directly deposited pay up to two days early. Both help empower financial well-being in different ways, while also presenting Equity Bank with growth opportunities, in that they can foster deeper relationships with existing customers and help attract new ones.
How will you measure success in achieving your top priority? If all goes well, what does that look like for Equity Bank a year from now?
We measure success through our progress toward our mission. We do this by aggregating data and utilizing scorecards that provide that extra layer of accountability. We also offer incentives to team members to reward their performance and ensure customers’ needs are being met.
Varo Seeks Profitability for Its ‘Financial Inclusion’ Strategy
Colin Walsh
Chief executive officer
Varo Bank (HQ: San Francisco, Calif.)
Asset size: $427 million
What have you identified as Varo Bank’s top priority for 2025?
Our top priority is to continue making banking products accessible for everyday Americans, particularly those living paycheck to paycheck. As the first all-digital nationally chartered bank in the U.S., we’re uniquely positioned to bring financial inclusion and opportunity to all through our no-fee banking model.
Is there anything about the current operating environment, or your institution’s own journey, that pushes this priority to the forefront now?
Our priority of serving everyday Americans stands out because it is at the heart of our mission of financial inclusion and opportunity for all. Our bank charter gives us unique capabilities that other fintech companies don’t have. Unlike fintechs that must work through partner banks, we can directly set our fee policies and create low-cost financial tools based on our built-from-the-ground-up technology, specifically designed for our customers’ needs. We see a clear gap in the market where traditional banks often impose fees and minimum balance requirements that can be burdensome for many Americans.
Please describe a few of the initiatives you’ll be executing on as an institution in support of that priority in 2025.
We’re executing several strategic initiatives, including refining the technology to deliver some of our products and initiating various yet-to-be-announced partnerships with businesses to help us deliver those products and more at scale.
Does your top priority represent a shift from last year? Or a continuation?
Our 2025 strategy represents a continuation of our core mission. We’re maintaining our focus on eliminating traditional banking barriers and fees while expanding our impact through our comprehensive suite of banking products.
Here are two examples:
One partnership Varo announced in December — with both Green Dot Corp. and CVS — allows customers of the digital bank to deposit cash in their accounts at participating CVS pharmacy locations. There is no fee for this service.
Another partnership — with Column Tax — allows our account holders to prepare and file their federal and state tax returns through the Varo Bank app. The free service automatically pre-fills some info on the forms, and those with simple returns can be finished in as little as 15 minutes. It launched in January 2024, so this is the second tax season that it’s available.
How will you measure success in achieving this priority? If all goes well, what does that look like for Varo Bank a year from now?
Financial access metrics:
- Customer savings on fees
- Growth in customer base, particularly among Americans who previously faced barriers to traditional banking
- Usage of our zero-fee services and banking products
- Customer retention rates
- Overall deposit growth
Impact metrics:
- Improvements in customer credit scores through responsible use of our line of credit and other credit-building features
- Growth in average savings balances per customer
- Increase in account dollar values across our customer base
- Expansion of banking services within low-to-moderate Income (LMI) populations
- Higher participation rates in our Save Your Pay program among LMI customers
- Number of customers transitioning from paycheck-to-paycheck to maintaining consistent savings
Success a year from now means Varo Bank will be one step closer to profitability while maintaining our commitment to our mission of financial inclusion. By focusing on our core strengths and continuing to serve everyday Americans with innovative, no-fee banking products, we’re building a sustainable business model that proves financial inclusion and business success can go hand in hand.
Source: THE FINANCIAL BRAND
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