Chime grows to 1.7M customers, acquires credit scoring app Pinch

Anyone who thinks the challenger banks are too small to pose a threat to incumbent banks should take a look at Chime.

The San Francisco neobank recently surpassed 1.7 million accounts and it’s growing at a steady pace of 150,000 customers a month.

“We will get to 2 million by the end of the year. I suspect we’ll blow through that and get to about $10 billion of transaction volume,” said founder and CEO Chris Britt. The company is moving to a larger office because it’s run out of space.

Chris Britt in office

Chime offers basic mobile banking, with checking and savings accounts held at The Bancorp Bank. It offers automatic savings and person-to-person payments and charges no fees.

“Lack of fees is the starting point” for potential customers, Britt said. “People don’t think they should have to pay to give an institution their money. Low fees is the ante to having a competitive offering.”

Chime also targets people who have a preference for paying with debit cards because they want control, they want to know where they stand, and they don't want to spend more money than they have, Britt said. The app provides notifications throughout the day on their transactions.

The automatic savings feature can sweep 10% of each paycheck into savings.

“That helps people automatically get into a rhythm of saving money,” Britt said.

Chime also gives people their paychecks a few days early.

“If you normally get paid on Friday, we release the money into the consumer’s account when we get the pre-notification of the deposit that comes from the Federal Reserve,” Britt said. “That has the effect of giving people a fee-free advance on their paycheck.”

Chime’s most recent business move was the acquisition of Pinch, a company whose app lets people have their rent payments reported to the credit bureaus, even if they don’t rent from a large landlord that normally reports such data (the data is provided through a data aggregator). Eighty percent of people for whom Pinch reported rent payments saw positive improvement in their score, Britt said.

The company had raised some venture financing, but it was still relatively small.

“We were aware of them through Silicon Valley and some shared early investors who knew them,” Britt said. “We knew the founding team for a couple of years, and thought what they were working on was aligned with the things we want to do for members, like help them improve their financial life.”

The Pinch app has been discontinued (it had about 30,000 users) and Chime does not have immediate plans for a rent payment reporting service. Britt does plan to have the Pinch team help design its next financial products.

“The team that led Pinch has taken on senior positions on our product team, so they will be very involved with the credit building product we’re going to roll out in early 2019,” Britt said. “We have plans to use data points on your transaction history, making bill payments on time, paying your rent, to make better informed decisions on short-term credit and lending beyond the traditional FICO-type approach. As we all know, particularly for younger people that’s not always the best approach because you just haven’t had enough time to build your credit score yet.”

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Fintech Mobile banking Credit scores Subprime lending Savings accounts Disruptors CHIME
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