Varo Money in Salt Lake City is one step closer to becoming a national bank.

The fintech firm, which aims to lower the cost of banking through a mobile-only platform, recently received preliminary and conditional approval from the Office of the Comptroller of the Currency. Varo still needs approval from the Federal Deposit Insurance Corp. and the Federal Reserve.

Colin Walsh, Varo's co-founder and CEO, is optimistic that the company will be operating as a bank within a year. He characterized the OCC's decision as a pivotal moment for banking — one that shows regulators are more willing to consider nontraditional models.

Varo still faces challenges that include operating in a heightened regulatory environment and receiving FDIC approval, industry observers said. While regulators have expressed a willingness to work with bank organizers, it is unclear whether a fintech firm will pass muster.

Read more in American Banker.