A lot can change in a year... and for once, we're not not talking pandemic/lockdown/recession. Mobile banking app Chime is now worth nearly 10X more than it was 18 months ago. Since just December, Chime has doubled its valuation:
- Chime is now worth $14.5B after a $485M fundraise, making it the most valuable American consumer fintech company.
- Chime plans to be "IPO ready" within 12 months, setting it up to compete on the public market against digital banks like Ally and OG banks like Chase.
But don't call it a bank... Chime partners with banks to offer checking/savings accounts. "We’re more like a consumer software company,” according to Chime's CEO. It's no surprise that he'd like that rep to land. Software companies are thriving, while Big Bank stocks are down over 30% for the year on expected loan defaults.
- Unlike actual banks, which make bank on loans and penalties, Chime makes most of its $$$ from your card transactions.
- It's especially popular with people who make $30K-$75K/per year, thanks to no monthly account fees and a credit builder card.
Chime's value increased thanks to the pandemic... at least in part. You're not going into your local branch to get cash and free coffee with powdered cream. Many people who didn't feel comfortable with banking online before have now gotten used to it. The move away from cash means that Chime cards are getting swiped/linked more often (again, their core biz). Throw in massive unemployment, and Chime’s no-fee banking seems even more attractive.