Chime Business Model – Business Model Analyst

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The Chime business model offers free mobile banking services to its customers.
Chime is an American financial technology company, commonly known as a Neobank, that operates in the United States of America. Chime is one of the most notable Neobanks in Europe, and its headquarters is in San Francisco, California. As a Neobank, all of Chime’s services are provided to its customers through online means. Therefore, it does not have physical bank locations.
Chime’s banking services are free and can be accessed by its customers through its website or mobile apps. To enhance its services and ensure that its customers have a seamless experience with its financial products, Chime partners with real banks such as Bancorp Bank. 
Despite being a financial technology company that offers most of its banking services online, Chime has over 12 million users. About 7 million of Chime’s users use the financial company as their primary bank. Chime has been offering banking services to its customers in the United States for over six years and has proved successful. In this article, we will examine all you need to know about Chime’s business model, its history, value propositions, strengths, weaknesses, and every measure put in place by the company to ensure its success.
Chime was founded in 2013 by Chris Britt and Ryan King, in San Francisco, California. Ryan King, at the time, was a software developer who was obsessed with building products that would have a positive impact on many people. Rather than lead a team, Ryan wanted to lay the groundwork and build a product from scratch. Ryan’s dream soon came true when he met Chris Britt, his neighbor, and friend, who lived on the other side of a park in their San Francisco neighborhood. Chris Britt, at the time, was an executive in the financial space, helping big companies such as Visa and the Green Dot corporation with product development.
Chris told Ryan about banking and payments and the opportunities that can be seized by providing easy banking services to people. This is how the idea of Chime came to life. 
Chime was created to provide financial security and peace of mind while serving as an alternative to traditional banks. It aims to simplify banking procedures for everyday people.
Chime did not launch officially until April 14, 2014, on the Dr. Phil Show, an American talk created by Oprah Winfrey and the host, Phil McGraw. Before founding Chime, Chris Britt worked at Green Dot and Visa as a senior executive, while Ryan King was a former engineering VP at Plaxo. Therefore, they had enough experience to create an alternative to traditional banks that does not rely on bank fees and profit from customers.
At the time of launch, Chime was just an app that was integrated into the user’s bank account. Chime raised $8 million in November 2014 and another $9 million in May 2016 for its Series A round funding. In September 2017, Chime raised $18 million for its Series B funding. For its Series C funding, Chime raised $70 million in May 2018. Chime’s major investors include Menlo Ventures, Cathay Innovation, Aspect Ventures, Crosslink Capital, etc.
By 2018, Chime acquired Pinch, a startup that helps people build their credit scores without getting into debt. To achieve this, Pinch reports to credit bureaus when their users pay their rent on time. Although Pinch was acquired by Chime on September 18, 2018, its cofounders, Mattia Bittner and Michael Ducker, became part of Chime’s team through the acquisition. 
Chime experienced rapid growth as one of the first market movers in the United States, and, by March 2019, the company was valued at $1.5 billion. It also had its series D funding, in which it raised $200 million. In September 2019, Chime launched SpotMe, a free service for eligible Chime users who overdraft their checking accounts. At the time, most American banks charged 35 dollars for overdrafts.
However, Chime’s SpotMe feature became an option for its users because they could overdraw their records up to $200 without any charges. On October 16, 2019, Chime experienced a temporary setback. Its customers were denied access to their deposits due to a service outage. However, this problem was fixed the next day, and by the end of the year 2019, Chime’s valuation had quadrupled.
In January 2020, Chime partnered with the Dallas Maverick, an American professional basketball team based in Dallas, as their jersey sponsor team as part of a multi-year deal. When the COVID-19 pandemic broke out in 2020, touchless payment solutions were on the rise. This was because everyone was trying to avoid contact with objects and other people that may cause them to contract the deadly coronavirus. The use of online banking institutions increased, and this proved beneficial for Chime as one of the first companies to offer digital banking services.
To ease the financial strain of the pandemic, Chime introduced a program that allows its users who have electronically filed tax returns with the IRS to get a $1200 advance on the Economic Stimulus Payment. This program was implemented through Chime’s fee-free overdraft product, SpotMe. This pilot program resulted in Chime processing over $375,000,000 in stimulus payments a week ahead of the government’s scheduled disbursement rate.
In June 2020, Chime launched Credit Builder, a credit card that helps Chime users build their credit history freely and safely. As Chime grew through the years, it continued to add new features, improve its services, and expand its user base. By September 2020, Chime had another round of funding, making the company the most valuable Fintech company in the United States, surpassing several competitors.
In March 2021, Chime launched a P2P (peer-to-peer) payment service to serve as competition to Zelle and some other Fintechs. Although Chime witnessed rapid growth, it was not without its problems. In 2021, Chime was probed by the California Department of Financial protection and Innovation and the Illinois Department of Financial and Professional Regulation. After the conclusion of the investigation, it was agreed that Chime was going to stop referring to itself as a bank. Since Chime truly does not have a banking license, it had to change its URL from “” to “”, and had to remove the word “bank” from all of its marketing and product materials. 
In July 2021, Chime was accused of closing customer accounts without prior notice or explanations and even refused to return customer deposits. Chime blamed this accidental closure of customer accounts on their fraud prevention measures. Regardless of these setbacks, Chime continued to increase its user base and attract more investors. In August 2021, Chime had its Series G funding round, led by investor Sequoia Capital Global Equities. In this funding round, Chime raised $750 million, capping the company’s value at about $25 billion.
Although Chime was planning to go public, in February 2022, the company announced that it was delaying its IPO until later in the year, as a result of a troubling market environment. Chime continues to innovate and expand its offerings, with a focus on making banking more convenient and accessible for all. The company has also committed to using its platform to promote financial wellness and inclusion and has partnered with organizations such as the Financial Health Network to further this goal.
Chime is still a private company. Therefore, it is still owned by its co-founders. Chris Britt is the founder and CEO (Chief Executive Officer) of the company, while co-founder, Ryan King, is the CTO (Chief Technology Officer) of the company.
Principal executive officers at Chime include the Chief People Officer (CPO), Beth Steinberg, the Chief Operating Officer (COO), Mark Troughton, the Chief Financial Officer (CFO), Matt Newcomb, the Chief Marketing Officer (CMO), Vineet Mehra, the Chief Experience Officer (CXO), Janelle Sallenave, the General Counsel, Kate Karas, the Senior Vice President (SVP) Corporate Affairs, Jennifer Kuperman, the Chief Risk Officer (CRO), Xiongwen Rui, the Senior Vice President (SVP) Corporate Development & Chief Strategy Officer (CSO), Jared Grusd, the Senior Vice President (SVP) Technology, Architecture & Strategy, Brian Mullins, and the Chief of Staff (COS), Jackie Chang. 
Investors in Chime include Crosslink capital, Menlo Ventures, General Atlantic, Dragoneer Investment Group, Tiger Global Management, etc.
The Chime mission statement is to make financial peace of mind a reality for everyone
Since Chime does not charge any fees from its customers, how is its business model so successful?
Chime is a Neobank that operates only in the United States of America. It is a mobile-first company, and its mobile app is an integral part of the banking experience. The app is user-friendly and offers a range of features, including the ability to check account balances, track spending, and access account statements. Unlike other Neobanks that operate a subscription-based business model in which they charge a monthly subscription fee to allow their users to access their services, Chime allows its users to open a checking/savings account in a few minutes, verify their identities through video authentication, and start using its services free of charge.
To become a Chime user, individuals must be citizens of the United States and must be 18 years or older. They must also possess a valid Social security number (SSN) and must have a registered address in the United States or the District of Columbia. After opening and verifying a Chime checking account, users are assigned a dedicated bank account with a linked Chime-issued VISA debit card that can be used in over 60,000 Automated Teller Machines (ATM) across the United States. 
Since Chime does not have any physical location, its customers access its services through its mobile apps and websites. Chime users can track their account balances, savings, and daily transactions, audit their financial balances, control their credit cards, and send money and deposit paper checks through Chime’s mobile banking application. The Chime mobile banking application is integrated to work with other mobile payment applications, such as Google Pay, Samsung Pay, Apple Pay, etc. No minimum is needed to open a checking bank account with Chime, and customers receive a VISA-issued debit card upon successfully opening an account with Chime.
The debit cards given to Chime customers can be used to make purchases online and in person. For every successful purchase, a merchant processing transaction fee is deducted from the total of the final authorized purchase. However, this comes at no extra cost to a Chime user as the provider of the goods purchased or services employed is responsible for the payment of a percentage of the sale to the payment parties involved, i.e., Visa and Chime. Chime users can also use their Visa-issued debit cards to withdraw their money at any of Chime’s extensive network of Automated Teller Machines. 
Another key aspect of Chime is its partnerships with other financial technology companies. This allows Chime customers to easily access and manage their money through a single platform, making banking more convenient. One of the major benefits of using Chime is the low fees associated with its services. Unlike traditional banks, Chime does not charge overdraft fees, monthly maintenance fees, or minimum balance fees.
This can save customers a significant amount of money over time. In addition, Chime offers competitive interest rates on its savings accounts, allowing customers to earn more on their money. The company also offers a referral program that rewards customers for referring their friends and family to Chime.
Overall, Chime offers a range of services that are designed to make banking more accessible and affordable for everyone. Its focus on automation, convenience, and partnerships with other financial technology companies sets it apart from traditional banks and makes it an attractive option for many people. With its low fees, competitive interest rates, and user-friendly app, Chime is revolutionizing the world of banking and making it easier for people to manage their money.
All of Chime’s services can be accessed for free by all of its customers. It neither charges monthly fees like most financial institutions nor does it provide premium services that can be accessed through a subscription fee. Therefore, the Chime business model does not directly make money from its users. The following are ways through which Chime makes money from its users:
The major way through which Chime makes its money is through interchange fees. Interchange fees are the processing fees paid by merchants to financial institutions every time a consumer uses their debit cards to pay for goods purchased or services employed. Since Chime’s card is issued by Visa, Chime and Visa are the financial institutions whose networks are involved in the processing of transactions carried out by Chime users with the use of their debit cards.
Therefore, merchants who provide goods and services to Chime users are expected to pay a percentage of the transaction amount used to cover the cost of processing the transaction to Visa. Every time a Chime user uses their Visa-issued debit card to purchase goods or services, Chime receives 1.5% of the processing fees paid to Visa. While this may not look like a big source of revenue for Chime, it is important to note that the average Chime customer makes about 40 transactions in a month. When Chime’s 12 million members are put into consideration, interchange fees make up a significant part of Chime’s revenue. It relieves Chime users of the burden of paying account fees, ATM charges, and other banking fees charged by traditional banks, t to provide its services at no cost to its users.
Chime has partnered with various ATM operators, such as MoneyPass and VisaPlus Alliance, to provide its users with access to over 38,000 fee-free ATMs across the United States. This means that Chime users have access to one of the largest ATM networks in the country, providing them with the convenience of being able to withdraw cash from ATMs wherever they are. Chime’s ATM network is completely fee-free for its users. This means that Chime account holders can withdraw cash from any ATM in the network without incurring any additional fees.
However, if a customer decides to use their Visa-issued Chime debit card to withdraw money in any other ATM outside of Chime’s extensive network, Chime charges a fee of about $2.50 to $3.50 per transaction. Apart from Chime’s fees, the ATM provider may charge additional fees as they like. Despite Chime’s large network of ATMs across the country, as of 2021, ATM fees reportedly account for 21% of Chime’s total revenue. 
When customers open a Chime account, they are given a spending account and a savings account. The spending account functions like a traditional checking account, allowing customers to make purchases and withdraw cash. The savings account, on the other hand, helps customers save money by automatically transferring a portion of their spending account funds into their savings account every time they make a purchase. Also, Chime offers a deposit account that allows customers to store their money in a secure, FDIC-insured account and earn interest on their deposits.
Chime makes money by earning interest on the deposits it holds. When customers deposit money into their Chime account, Chime uses that money to make loans to other customers or to invest in financial instruments such as bonds or other securities. Chime earns interest on these loans and investments, and a portion of this interest is used to pay interest to its depositors. Typically, the amount of interest paid to depositors is lower than the amount of interest earned on loans and investments. This difference is known as the “spread” and is how Chime makes a profit from the deposits and savings of its users.
Chime offers investing services to its users through its partnership with financial services companies such as Robinhood. The company offers customers the ability to invest their money in a range of investment products, including stocks, mutual funds, exchange-traded funds (ETFs), etc. Robinhood is an online brokerage firm that allows users to buy and sell securities such as stocks, ETFs, and options through its platform.
Through Chime’s partnership with Robinhood, its users can open a Robinhood account through the Chime app and trade stocks, ETFs, and options without paying any commission fees. Chime users can access the Robinhood platform through the Chime app and use it to buy and sell securities. Chime earns revenue from this partnership by earning interest on the cash that its users hold in their Robinhood accounts.
The Chime Business Model can be explained with the business model canvas below:
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Since only people living in the U.S. can open accounts with Chime, Chime’s customer segment is restricted to the United States of America. The following are the people who make up Chime’s customer segment:
Chime’s value propositions are centered around providing accessible and convenient banking services to underserved communities, including those who may have been denied traditional banking services due to a lack of credit history or low income. The value Chime provides cuts across every member of its customer segment, as it ensures that Chime is able to retain its users and generate revenue. The following are Chime’s value propositions to its customers:
Chime’s channels consist of:
Chime’s customer relationships are the methods through which it acquires customers and retains them. Chime’s customer relationships include:
Chime’s revenue streams consist of:
Chime’s key resources include:
Chime’s key activities include:
Chime’s key partners include:
Chime’s cost structure consists of:
Although Chime is the most valued Neobank in the United States of America, it is not without its competitors who ensure that it continues to develop a unique selling proposition (USP) to stay on top. Some of the biggest Chime competitors include:
The following is a detailed SWOT analysis of the Chime Business Model:
Chime is the most valued and one of the leading Neobanks in the United States of America. The financial technology company has built a solid business model and carved out a successful niche in the competitive world of banking and financial services. The company’s business model is built on offering a range of high-quality products and services, including checking accounts, debit cards, and investment options, to a large and growing customer base. 
By leveraging technology and focusing on customer convenience and satisfaction, Chime has been able to attract and retain a loyal customer base that keeps growing exponentially. In the future, Chime will likely continue to focus on expanding its product offerings and improving its technology, as it looks to maintain its strong market position and continue growing its business.


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