It’s a bank account and debit card built for the digital age.
Chime is raising $18 million in Series B financing for its mobile-first approach to banking. Cathay Innovation led the round with participation from Northwestern Mutual Future Ventures, Crosslink Capital, Forerunner Ventures, Homebrew and others.
Without monthly fees or overdraft charges, Chime tries to appeal to the millennial generation, touting its affordability and easy-to-use app. Since launching in 2014, Chime has signed up 500,000 customers, who are typically in their late 20s and making between $50,000 and $70,000 per year.
CEO and founder Chris Britt claims that Chime’s goals are more aligned with its customers than a traditional bank. “The last thing we want to do is encourage reckless spending,” he says. Chime is “only making money if they’re actually using the product.”
Chime gets its revenue from the accompanying debit card, where it earns about 1.5 percent in fees per transaction.
Chime touts its optional automatic-saving tools, which can set aside a pre-determined amount of money or round-up to the next dollar on transactions, putting the spare change in savings.
“Chime is the company best positioned to disrupt the core banking relationship in the U.S. market,” said Dennis Barrier, co-founder of Cathay Innovation, about why they invested. The startup is “determined to bring to Americans a healthier banking experience, which is a great need today.”
Chime isn’t the only online bank. Most veteran banks have apps these days, and there are also newer entrants like Simple.
Satya Patel, partner at Homebrew, says that Chime “has serious growth and strong unit economics, unlike other banking startups that have failed to build a sustainable business.” He believes the startup is “building the bank of the future.”
Chime says it expects to reach $1 billion in transaction volume by the end of the year. Up until now, it’s primarily grown by word-of-mouth, but they plan to use the new funding to raise awareness.