Chime secures new distribution channel with Workday partnership

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Neobank Chime is expanding the reach of Chime Workplace, its suite of enterprise financial wellness solutions, with a new partnership with human resources and financial management platform Workday. 

Chime Workplace is a set of financial tools and banking products, including earned wage access, checking and savings accounts, and financial planning tools, that employers can offer their employees at no cost. Employers can also set up loyalty and reward programs and see trends about their employees' financial health, such as an active savings rate or the number of employees with direct deposit into a Chime account. 

Chime will embed Chime Workplace directly into Workday's Workday Wellness platform. Workday Wellness is an artificial intelligence-powered HR management tool for businesses that allows them to gain insights into which benefits their employees use.  

"Employees today are increasingly looking to their employers for competitive financial wellness benefits," said Cristina Goldt, general manager, HCM, workforce management and payroll at Workday in a statement. "Our partnership with Chime makes it easy for Workday customers to provide their workforce with financial wellness tools directly through Workday Wellness. This ultimately helps them manage money, build credit, and save – fostering a more financially confident and resilient workforce."

For small businesses, Chime Workplace is billed as an employee retention tool because it allows employers to provide a larger offering of benefits to their employees. 

"By integrating Chime's capabilities with Workday Wellness, organizations can deliver measurable improvements in financial health while strengthening engagement across their entire workforce," said Jason Lee, chief of Chime Enterprise, in a statement. 

For Chime, Workplace represents an important customer acquisition tool for the neobank's broader financial service products as it looks to capture a greater share of everyday banking services. Through the distribution play, Chime will gain access to Workday's 11,000 global customers and 75 million users under contract. 

Chime as of June 30 had 8.7 million active members, according to the company. About 67% of those customers had made at least one direct deposit or at least 15 purchases using the Chime card. 

Chime has been growing since it announced its initial public offering in May amid a wider office expansion thanks to new product offerings such as Instant Loans, its free premium membership Chime+ and early-pay access MyPay, William Blair analyst Andrew Jeffrey said in a research note.

"Chime's focus on primary banking relationships affords it a differentiated monetization opportunity," Jeffrey said. "Despite competition, and our enthusiasm with competitors like Block, we see Chime as the top destination for individuals making up to $100,000 seeking to switch direct deposit relationships. Compared to other digital finance models that have ground out of P2P, our view is that Chime's bank-first offering, radical cost-to-serve advantage, and proprietary vertically integrated technology stack comprise durable competitive advantages." 

Earlier this month Chime closed out its first quarter as a public company, posting year-over-year revenue increases north of 37% to $528 million. That led to expanded revenue guidance through the second half of the year, Chief Financial Officer Matthew Newcomb said on the company's earnings call with investors in May. 

"We think our model is analogous to SMB payment and usage-based SaaS businesses, which monetize a core payments relationship and then deepen this engagement by cross-selling value-added services," Newcomb said.