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'Banking in America is broken:' The CEO of $5.8 billion challenger bank Chime wants to put the customer first during the coronavirus crisis

Chris Britt Photo 12_19
  • Fintech challenger bank Chime, founded in 2013, has grown to more than eight million customers in the US as it looks to disrupt "broken" American banking. 
  • The company was recently in the news after it announced plans to advance stimulus checks from the CARES Act to customers early as part of an extension to its popular SpotMe feature. 
  • "The mission of the company is helping customers to receive financial peace of mind," Chime CEO and cofounder Chris Britt told Business Insider in an interview. 
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The rapid emergence of tech-led alternatives to traditional banking in recent years has been, in part, an attempt to use digital tools to provide better customer engagement and service.
Putting the customer first is the key pillar for fintech challenger bank Chime. Founded in 2013, the startup has grown to more than eight million customers in the US as it looks to disrupt "broken" American banking. It's part of a broader reassessment of how people use financial services, as many are forced online by government lockdowns.
A BBVA study in 2015 on millennial disruption found that banking was the sector most at risk of disruption in the US and that 71% of respondents would rather visit the dentist than a bank branch. It's not just millennials who are now seeking digital alternatives or tech-led solutions though. Challenger banks are now the fastest-growing fintech segment worldwide, per CB Insights.

Chime advanced $200 to customers affected by slow CARES Act payouts, triggering a flurry of signups

Chime was in the news recently after it announced plans to hand a $200 advance to customers as part of an extension to its popular SpotMe feature. That's after the government announced the CARES Act, a $2 trillion package to provide aid to businesses but also individual stimulus checks.
It's estimated that 93% of Americans were eligible for stimulus benefit, but the delivery of funds has been slow with many people still waiting for physical checks in the mail.
"We saw what the government was doing with regards to stimulus but our customers wanted it quicker," Chime CEO and cofounder Chris Britt told Business Insider in an interview. "We gave customers early access to their stimulus checks and increased overdraft limits for people who were waiting for their checks. Our super power is around creating relevant products and services to help customers and reduce anxiety."
Chime, valued at $5.8 billion in its last funding round, saw record signups as a result and has added more than 200,000 customers in recent weeks.
The challenger has already made waves by offering its customers a fee-less checking account, a rarity in the traditional US banking market. The biggest US banks each make around $1 billion a year in fee-related revenues, something that Chime is seeking to disrupt. PNC Bank, the US's ninth-largest bank, made a whopping $1.7 billion in fee revenue last year alone.
Thanks to the likes of Chime, fee culture may not last forever. Over the next three to five years fee income for US banks is likely to drop by around 7%, as a result of pressure from challenger banking competitors, according to Business Insider Intelligence.
"We believe that banking in America is broken, particularly for everyday Americans. That population segment has a lot of anxiety around their money, living paycheck to paycheck," Britt said. "The mission of the company is helping customers to receive financial peace of mind." While the top 20% of US society will have access to a good pot of savings, some 69% of Americans has less than $1000 in savings, according to GOBankingRates' annual savings survey.
Customers and investors have so far been impressed with the company's offering. Hailing from the world's tech mecca, San Francisco, Chime now has more than eight million customers and has attracted funding from major VCs including, DST Global, Dragoneer, Menlo Ventures and Cathay Innovation with $879 million raised to-date.
Alongside the fee-less checking account Chime also operates a peer-to-peer (P2P) lending system without fees which the company claims has been popular to date. The startup's overdraft feature allows users to extend their negative balance to $100 without fees.

Fintechs like Chime could emerge stronger from the crisis

Fintech could prove to be one of the most resilient sectors during the coronavirus pandemic with people drawn to digital banking options in the absence of access to traditional operators, as people are unable to visit physical branches.
Britt believes the trend toward digital alternatives is now accelerating. "People aren't going to be rushing to a bank branch or ATM after this," he said.
Chime's growth was impressive prior to the pandemic, but Britt wants to continue the momentum during and after the crisis. The startup has hired 25 people in the past month and Britt claimed the company was highly profitable.
"It's really a time for us to show our true colors as a brand, to walk the talk," Britt said. "We want to make sure our members know we are going to help them, we will continue to hire aggressively, and show there is a better way of doing things."
Part of Chime's growth story to-date has been engagement with customers, according to Britt.
"There is a bias in Silicon Valley and amongst investors to create products for yourself, but the needs of a high-earning Google engineer are different to our customers who live all over America," he said. "Financial services should be an advocate of yours, we want to be human and have your back no matter what. I'm proud of how our team mobilized to make this [stimulus] money available."
Despite a bevy of European challenger banks, such as Monzo, Revolut, and N26 entering the US market, Britt says the company's geographic focus is unlikely to change.
"Our geographic focus is a competitive strength because consumer needs are different in each country," he said. "Rather than grow to 10 new countries a year, we are thinking about keeping costs low, rather than add fees and metal cards or whatever." (Revolut and N26 both offer metal cards to premium users).
The conversation around advancing stimulus checks appears to be something of a nod to the company's next steps.
While the company doesn't lend money, credit is an area of interest for Britt going forward. "The next leg of the stool is credit, not lending as such but how can we help users with their credit," he said.
SEE ALSO: Monzo, one of Europe's hottest neobank startups, wins 200,000 customers a month without marketing. Now it's coming for the US.
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