Chime reports big user growth, but rival Varo questions numbers

Chime CEO Chris Britt says he envisions a scenario where his digital-only bank can grow to 25 million accounts in the next few years as it targets what he calls the “mainstream middle-income consumer.”

“We think there’s an opportunity for us to do that,” Britt said on Wednesday at CB Insights’ Future of Fintech conference.

Chime, which is based in San Francisco, added 1 million users in the last three months to bring its total to 4 million, CNBC reported Wednesday. Britt said Chime had 1 million users at this point last year.

Cayce Clifford/Cayce Clifford

Rivals like Varo Money are pursuing bank charters, but Britt said he doesn’t think Chime needs a full bank charter to meet its goals. Chime is content with its current partner, The Bancorp Bank, which holds its deposits, he said.

“We are working in an industry that is highly regulated. We take that very seriously,” Britt said. “We can continue to do that and grow to be a very large business without pursuing a bank charter.”

Competition in the fintech market is red hot. The U.K. challenger bank Monzo, with 2 million accounts, debuted in the U.S. Thursday.The Germany-based challenger bank N26 still is planning a U.S. launch later this year after a handful of delays. And Varo, based in San Francisco, continues to build momentum as it is seeks to become the first digital-only bank to receive a national bank charter.

When contacted by American Banker to comment on Chime's growth estimates, Varo CEO Colin Walsh said he was skeptical of them. “Be wary of anyone promising to scale mobile banking like a SaaS model,” Varo wrote in an email Wednesday. “Managing your money is a lot more complicated than simply downloading an app.”

Varo said in November that it had 450,000 members. Walsh did not provide an updated number.

In discussing Varo's strategy, Walsh said: “We are building trust customer by customer and are committed to doing things right with a full bank charter and growing at a sustainable pace."

Britt acknowledged the competition and said it is good for consumers. “It’s a great time for consumers and consumer financial services,” he said. “The services are great for consumers and keep the bigger banks on their toes.”