Chime is an American technology neobank company which provides fee-free financial services through a mobile app.
History
Chime was founded by Chris Britt and Ryan King in 2013 in San Francisco, California as an alternative to traditional banking. The company launched publicly on April 15, 2014 on the Dr. Phil Show.
FDIC
Chime bank accounts are insured up to the standard maximum deposit insurance amount of $250,000 through its partners, The Bancorp Bank or Central National Bank, which rebranded itself as Stride Bank, N.A. in 2019, Members FDIC. Accounts are also owned and managed by either The Bancorp Bank or Stride Bank.
In April 2020, in response to the financial strain of COVID-19 Chime announced a pilot program to provide users who e-filed tax returns with the IRS a $1,200 advance on the Economic Stimulus Payment via SpotMe, Chime's fee-free overdraft product, after talks with Mark Cuban.
On April 10th 2020, Chime announced the successful processing of over $375,000,000 in stimulus payments 1 week ahead of the scheduled government disbursement date.
Partnerships + Acquisitions
In Q3 2018 Tech Crunch reported that Chime had made its first acquisition for Pinch, a startup focused on helping millennials and young adults build their credit scores by reporting on-time rent payments to credit bureaus. Pinch's co-founders joined Chime's team as a part of the acquisition.
In January 2020, Chime announced a partnership with the Dallas Mavericks as their jersey sponsor as a part of a multi-year deal.
Chime CEO Chris Britt, Mavs owner Mark Cuban, and Mavs CEO Cynthia Marshall discussed the partnership at a press conference on January 17th. Mark Cuban is also an investor in dave.com, a Chime SpotMe competitor, which provides fee-free overdraft services.
Business Model
In contrast with traditional consumer firms, Chime has no physical branches and does not charge monthly or overdraft fees. Account-holders are issued Visa debit cards and have access to an online banking system accessible through chime.com or via the mobile app for Android or iOS. Chime earns the majority of its revenue from the collection of interchange. Interchange is the fee that banks charge to the merchant who processes a credit card or debit card payment in order to cover the costs associated with the authorisation and processing of card transactions. An interchange based revenue model means that profitability is contingent on successfully incentivizing customers to regularly make card purchase transactions.
Growth + Development
Account growth
In May 2018, Chime reached one million accounts mark.
As of December 2019, the company had 6.5 million accounts.
Feb 2020 Business Insider reported "Chime has hit 8 million account mark."
Product Suite
According to Business Insider, "Chime offers a core suite of fee-free products, including a checking account with no minimum balance, an automated savings feature, and early wage access."
In September 2019, Chime launched SpotMe, a fee-free overdraft service as an alternative to the traditional $35 overdraft fee charge levied by traditional American Banks. Customers can overdraw their accounts up to -$100 without incurring an overdraft fee; once the overdraft limit is reached, purchases will be declined but no traditional negative balance fees charged.
Chime CEO Chris Britt stated that Chime plans to launch a fee-free credit card in early 2020 that aims to help customers build credit. The credit card product is in beta testing as of January 2020.
Funding Rounds
Series A:Crosslink Capital and Aspect Ventures both led Series A rounds for $9M and $8M respectively
Series D: In March 2019, Chime raised which brought their valuation to and Unicorn status.
Series E: CNBC first broke the news that Chime had secured its series E funding round in December 2019 of $500 million at a valuation of $5.8 billion. According to Crunchbase, Chime has raised $808.8 million to date.
Growing Pains
On October 16, 2019, Chime experienced a service outage leaving users without access to their deposits. The issue was resolved the next day.
