Amid plenty of artificial intelligence buzz, establishing a robust foundation for responsible AI innovation is essential, said Rathi Murthy, the new chief technology officer at Varo.

Implementing new technologies only where they deliver genuine value to customers is crucial in Murthy’s eyes.

“I have a strong belief that technology is not built for the sake of technology. Technology has to have a purpose,” Murthy told Banking Dive. 

After joining Varo, Murthy saw the need for two critical roles within the company: a chief architect to ensure the technology architecture remains scalable and secure, and an engineering strategy and operations executive. She hired FS Nooruddin and Payal Carpenter as Varo’s chief architect and engineering strategy and operations executive, respectively. Both executives previously worked with Murthy at American Express, Gap and Yahoo and are helping her establish necessary diligence and structure at Varo.

The San Francisco-based digital bank has been using data and AI for its underwriting, fraud detection and risk compliance, while also incorporating personalization across the customer’s journey. 

Responsible AI makes the “right nudges [to] this huge opportunity…to make this experience about you and me,” rather than cookie-cutter, she said. This is an area that Murthy wants to explore and closely monitor.

Still, Varo executives don’t rush into new technologies unless they provide “meaningful impact” to its customers, she added.

Murthy took the helm of the technology unit at Varo in March. She replaces Sachin Shetty, the former tech chief who left the company in August 2024.

In April, Varo’s former CEO, Colin Walsh, handed the baton to Gavin Michael. 

Murthy spoke along the lines of Michael, who also emphasized the importance of AI and machine learning in underwriting for the neobank’s low-dollar loan offerings, fraud prevention and detection, and in delivering data-driven customer experiences with enhanced personalization. 

“We are building out a leadership team around Gavin that can help us go faster and smarter and build a team that is bold in their thinking and responsible risk-taking, and curiosity to take advantage of innovation where it matters,” which she referred to as “a change.” 

Leveraging experience

Murthy was CTO and president at Expedia for about three years before joining the bank. She’s also been CTO at Verizon Media and Gap, and chief information officer at American Express. 

At Varo, Murthy plans to leverage her experience at Expedia, which partnered with OpenAI as an early adopter of ChatGPT plugins. The team she headed at Expedia built models on top of existing systems to ensure security and governance and used AI to solve customer problems, like summarizing thousands of hotel reviews. 

“I'm always looking at smarter ways that we can take advantage of modular technology to build faster,” Murthy said. She wants to focus on building differentiators for Varo. 

“Data and AI is our secret sauce,” she said, adding that Varo’s charter is also its winning formula, “protecting [the charter] and making sure we focus on going as fast to deliver value through our partners, through buying the right technology and building the areas that matter.”

Varo became the first nationally chartered all-digital consumer bank from the Office of the Comptroller of the Currency in July 2020. 

Varo, built as a digital-first platform, has an edge over other banks trying to maintain legacy systems while balancing innovation and creating new features, she asserted. It’s a “trade-off that is very challenging” for those banks, Murthy said. 

Varo’s cloud-native technology differentiates it from its competitors, while its modular architecture helps the bank to focus on “being purposeful” in what and how it’s building, according to Murthy. 

The platform’s modular architecture helps to break down the banking software into smaller, independent components, while each component handles specific business functions and can be updated independently. 

Varo intends to lean on things like its partnership with Visa to offer “friction-free” services to its customers, she said. Varo may add other services to support its core banking aim, such as lending products with faster decision-making, Murthy said. 

Good customers vs. bad

Customer feedback is also important, and Murthy is keen to listen to customers to understand the patterns that draw more “good customers” and keep the bad ones at bay. 

“The better our models get, the better our data gets, the more you are able to take in more signals,” Murthy said. “You can determine fraudsters proactively and make it friction-free for the ones who are coming with the right intention.”

She wants to ensure Varo’s tech strategy prizes customer experience, addressing their needs through in-house innovation or partners whose services enhance customer experience.

Varo seeks to embed security protocols and automated compliance within its technology, using identity management and data protection tools while enhancing monitoring capabilities. The bank is working to mature its Supernova model, the in-house decision-making platform, to better interpret customer responses. 

“We just need to keep feeding the engine and maturing the engine as we go,” Murthy said.

Murthy has established an “architecture guild” at the company that reviews all new features, technologies, and tools; it includes participants from across product and engineering teams, not just leadership. The team is tasked with flagging any security concerns for additional testing.

“We are continuing to lean in on building out the products that we have, and continue to drive those products in an exceptionally well manner,” Murthy said.