Chime CEO says the pandemic is driving torrid development as conventional banking turns into a ‘relic of the previous’
Chime, the start-up that delivers banking services via mobile phones, has emerged as a major winner during the pandemic and its CEO believes the change is here to stay.
“Covid and the pandemic has just accelerated the trend that was already in motion. There’s an increasing willingness to provide and manage your finances through a mobile app,” Chime CEO and co-founder Chris Britt said at the CNBC Disruptor 50 Summit on Wednesday. Chime is ranked No. 25 on the 2020 CNBC Disruptor 50 list.
“Particularly for the younger generation, the notion of going in to fill out forms, to get basic financial services is really becoming a relic of the past,” said Britt.
The fintech company has seen strong growth during the coronavirus pandemic where people sought to avoid going to branch banks and pivoted to online banking services. Chime has more than tripled its transaction volume and revenue this year.
“People have a lot of anxiety around their money and we think that starts with not charging you a fee on your checking account, and letting you go overdraft without charging you a $35 overdraft fees, and giving you access to your paycheck a few days early. That combination of services has driven a lot of growth for us especially during Covid,” said Britt.
In September, the San Francisco-based unicorn closed a fundraising that valued the company at $14.5 billion, making it the most valuable American fintech start-up serving retail consumers. Chime more than doubled its valuation from December. The company crossed over into being profitable during the pandemic, Britt previously told CNBC.
Chime, which was founded in 2013 is a so-called challenger bank, taking on the institutional players by giving customers no-fee mobile banking accounts. Chime hones in on Americans who earn between $30,000 and $75,000 a year. However, Britt also said its demographic has expanded during the pandemic.
“It really boils down to short-term liquidity, were giving people access to their paychecks early, letting you go overdraft if you’re low on money…and credit building,” Britt added.
Despite the economic ramifications from the pandemic, Chime is seeing spending levels on a per-member basis increase year-over-year as customers use their Chime cards as their primary banking method.
“People are doing a lot of their nondiscretionary spend on their Chime cards. They’re doing more Door Dashes and Instacarts and Amazon transactions,” said Britt.