No-fees mobile bank Chime raises $70M Series C, valuing its business at $500M

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    Chime, the San Francisco-based challenger bank known for its consumer-friendly the characteristics and absence of fees, has raised $70 million in Series C financing, led by Menlo Ventures. The round, which also included existing investors Forerunner Ventures, Aspect Ventures, Cathay Innovation, Northwestern Mutual, Crosslink Capital, and Omidyar Network, brings the company to over $100 million in total funding to date and values the business at around $500 million.

    The startup is one of several challenger banks gaining popularity with a younger, millennial audience who learns no need for a bank with physical branches, and who are sick of being penalise by hefty fees for things like overdrafts or plummeting below a minimum balance- costs that take advantage of consumers at their most vulnerable points in their fiscal lives.

    As Chime points out, traditional banks accused customers over $ 34 billion in costs in 2017. Its service, on the other hand, plummets the consumer-facing fees.

    There are no monthly fees , no minimum balance fees , no overdraft fees , no international transactions costs, and it has a network of virtually 40,000 free ATMs Instead of gouging customers, Chime generates revenue from an interchange-based business modeling involving its accompanying debit card, where it earns about 1.5 percent in interchange revenue from Visa.

    While the no-fee arrangement is a huge describe for customers, Chime is popular also for its innovative feature defined. Thanks to a founding squad with a combination of the two startup and finance experience, the app looks like something built by a engineering corporation , not an old-fashioned bank.

    Chime’s co-founder and CEO Chris Britt previously ran at Flycast, was an early comScore employee, and did day at Visa and Green Dot; co-founder and CTO Ryan King hails from Plaxo and Comcast.

    ” I started this company because Green Dot was actually focused on the unbanked and under-banked people who couldn’t get bank accounts because they had bad credit or bad checks- that sort of thing ,” explains Britt.” It was truly not a full-featured bank account. And so what I wanted to do with this corporation was create a product that would serve more mainstream customers- people who actually had accounts at[ Bank of America] and Wells Fargo, but simply aren’t especially satisfied with those guys for variety of reasons- probably first, and foremost, the style they structure the products are quite punitive ,” he says.

    Chime launched to customers in mid-2 014, but didn’t offer the suite of features that would allow people to use Chime as a primary bank account until early 2016, Britt says.

    Today, that feature set includes an automatic savings option that will round up acquisitions, and one that socks away 10 percentage of your paycheck into your Chime savings account. It also has a popular no-fee paycheck improvement feature that will construct your direct deposited paycheck available to you early- as soon as the deposit is initiated by the payroll provider and the bank is alerted.

    This feature set and no-fee arrangement has attracted a number of young professionals from all over the U.S. to switch. The corporation passed over a million accounts a couple of weeks ago, and is now adding well over 100,000 new bank accounts per month. It has also produced over $4.5 billion in transaction volume to date, and expects to reach $10 billion by year-end.

    With the additional funding, Chime plans to scale the business further , not only with marketing and new hires to expand its nearly 80 -person team in San Francisco to over 100, but also in the types of products it will offer and other new features.

    ” We belief the next phase for us is going to be helping our members manage their credit and loans more efficiently ,” says Britt.” We think we can play a role in providing short-term lines of credit and helping members oversee their indebtednes .” Nonetheless, he declined to share product details on that front.

    Chime also has some bargains in the works which will see the bank working with employers most directly, but couldn’t speak to the specifics at this time.

    Along with the new round, Chime has added Shawn Carolan of Menlo Ventures to its board.

    ” The bank account is at the center of “peoples lives”, critical to both financial and emotional well-being ,” Carolan told, want me talking to Menlo’s investment.” We love how Chime’s business growth aligns with helping more members save more money for themselves rather than being gouged by hidden bank fees. This business model shift in financial services is inevitable and Chime is contributing the behavior, ” he added.

    Read more: https :// techcrunch.com/ 2018/05/ 31/ no-fees-mobile-banking-service-chime-raises-7 0m-series-c-valuing-its-business-at-500m /

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