The bell’s tolling for banking dinosaurs: Chime CEO
Much has changed over the two years since I last interviewed Chime CEO Chris Britt, and thankfully it’s all good news.
In 2016 the mobile bank account and debit card company was progressing nicely since its on-stage debut at the 2014 Money20/20 conference. Chime had attracted more than $11 million from a group of early-stage VC firms, launched a new automated savings product and surpassed 100,000 total members.
Fast forward to the present and the changes are coming much faster. Now Chime adds more than 100,000 bank accounts every month. They employ more than 150 people, up from 20.
‘Reached our stride,’ Chime CEO
“The scale we’re operating at is much larger,” Mr. Britt said. “We’ve really reached our stride.”
In the midst of all this growth Chime’s core purpose hasn’t changed, Mr. Britt said.
“We have a mission of trying to help members lead healthy financial lives.”
And technology makes that easier. Chime’s iOS app, available on Google Play and the App Store, has received almost 2,000 five-star reviews. The Chime Visa Debit Card is accepted wherever Visa debit cards are.
When paired with Chime’s Automatic Savings program, it allows users to build savings account by having every purchase rounded up to the next dollar and deposited into that account. Users can also have ten per cent of each paycheck automatically placed there.
The Chime Spending Account is designed for everyday purchases and lets users monitor balances, view transactions and analyze spending habits.
Four years of experience helping hundreds of thousands of people has yielded a few useful insights, Mr. Britt said. They suspected their members needed help getting into the rhythm of saving and that hypothesis was correct.
“Look at the statistics on savings rates and you find 60 per cent don’t have $1,000 in savings,” Mr. Britt said. “Even more, roughly 75 per cent, live check to check. It’s very difficult to establish savings when there’s no extra slack.”
Only 30 per cent are saving
It’s not that people are unaware of the importance of saving, Mr. Britt cautioned. Ninety per cent of young people know that. Yet maybe 30 per cent are doing it, he estimated.
Chime recently released its 2018 Milestones and Trends infographic that includes statistics on total transaction volume ($2.5 billion), potential overdraft fees avoided ($225 million), and total savings by Chime members ($72 million).
It also contains some interesting nuggets on Chime members (mostly millennials), such as they invest four times as much in cryptocurrency as they do in the stock market.
“The good news is much of that investment happened early in the year (before recent drops), so they’re probably getting a better ROI than me and you,” he said with a laugh.
With most of Chime’s membership still in their twenties, we’re not talking huge investments, as most are paying off debts and getting established. First get spending under control, establish an emergency savings fund and obtain reasonable loans and credit at decent interest rates. Then it’s safe to invest for your retirement, Mr.Britt advised.
And in this new ear, you should be able to mix and match services from what ever blend of service providers and institutions you want, Mr. Britt said. Chime has no problem with that, but plenty of the old-timers do.
“To find a routing number with them you need an instruction manual,” Mr.Britt said
Chime’s business model is specifically designed so they don’t have to rely on service fees and high-interest products offered by less-than-ideal partners, Mr. Britt said.
No devil deals
“Any additional products we offer must pass the filter of will it help to improve our members’ lives in some way.”
That is a stark contrast from many fin-tech apps that, if they even have a business model, need devil deals to stay afloat.
Such apps, and bank branches too, are in trouble, Mr. Britt suggested. The latter have limited value beyond serving as a sales office. Younger people prefer apps, online chats and genius bar-style appointments uniquely designed to deliver specific value.
“There’s many ways to deliver value and advice,” Mr. Britt said.
People are getting wiser to institutions that bury both benefits and costs under pages of fine print, and as mobile finance matures, people will also become wary of apps serving as electronic middlemen as they charge fees to let users know when they’re in danger of overdraft.
“Why not just get a bank that will actually help you, one where you don’t pay a fee at all?” Mr. Britt asked.
This approach has Chime leading the way as a leader in America’s challenger banking sector Mr. Britt said. And Chime is far from finished.
“It’s our intention this year to continue our healthy growth and to provide an alternative to these old dinosaurs that haven’t been Amazoned yet,” Mr. Britt said.