Chime

Chime provides banking services to its customers via a web portal and a mobile app. The company provides no-fee mobile banking solutions, and offers savings accounts, checking accounts, and debit cards (with ATM access) to its customers. The company does not provide loans and does not charge monthly, foreign exchange, or overdraft fees (for transactions up to USD 200), and therefore primarily generates its revenue from interchange and ATM fees. The company claims that accounts can be created in as little as two minutes, and uses video identification to verify an individual’s identity. The company does not impose minimum balance requirements and mainly focuses on serving individuals who earn between USD 30,000-75,000 per year.

In June 2020, the company entered the credit card space by launching ‘CreditBuilder’. Despite being introduced as a credit card, the card has similar functionality to a debit card, which allows users to transfer funds from their checking accounts, and spend up to the transferred amount where Visa is accepted, reducing the tendency to overspend. At month’s end, CreditBuilder automatically pays off the credit card balance using the transferred funds and reports the payment to credit bureaus. The CreditBuilder card is primarily targeted at millennials and Gen Z customers, to aid in developing and building up their credit history.

Key customers and partnerships

Chime stands as the largest Neobank in the digital banking space in the US, with 12 million customers (reported as of February 2021). The company does not own its own banking license and provides its services under the licenses of Bancorp Bank and Stride Bank.

Funding and financials

In September 2020, the company raised USD 533.8 million in Series F funding backed by multiple investors such as Tiger, ICONIQ, and General Atlantic. In August 2021, the company raised a further USD 750 million, led by Sequoia Capital Global Equities, at a valuation of USD 25 billion. The funding is expected to be used to scale operations and expand its business reach. The latest round of funding is also expected to set the stage for a potential IPO in the future.

In January 2022, Reuters reported that Chime was to go public led by investment bank Goldman Sachs. Reports say that the company could aim for a valuation of almost USD 40 billion, which could be launched as early as Spring 2022. However, the company paused its IPO aspirations following the downturn in the IPO market.

The company claims that revenue and transaction volumes witnessed threefold growth between January and September 2020, owing to the impact of the COVID-19 pandemic. Over the same period, the company also stated that it was able to become profitable on an EBITDA basis.