The company is already in Dizraptor’s portfolio since Nov 10. New offerings are possible in the future
About the Company
Chime is the US largest digital bank. Chime Bank is also a branch-less mobile bank that allows users to access its services through an app. Customer’s Chime spending account and savings account come with a free Visa debit card. Chime mobile application lets you control your savings, account balances and transactions, instantly transfer money to your friends, deposit paper checks by photo and much more.
Unlike traditional bank accounts, there are no monthly account fees and minimum balance requirements, overdraft is fee-free. Chime doesn’t profit off of customers. Every time a customer uses his Chime debit card, Chime earns a small amount from Visa paid by the merchant.
Nearly 2 billion people in the world don’t have access to banking services. Digital banks represent a powerful tool for advancing financial inclusion, helping more and more people to manage their money effectively. Pitchbook estimates that digital banks will serve 145 million people in North America and Europe by 2024.
In 2018, the global digital banking market was valued at $804B and is expected to reach $1.7T by 2027, growing at a CAGR of 10%. In 2019, the digital banking market in North America was valued at $376B and is predicted to reach $721B by 2027, growing at a CAGR of 8.3%.
Financials and Valuation
In 2019, Chime reached nearly $200M in revenue, a fourfold increase over 2018, according to Forbes ($300M according to CNBC). Chime CEO Chris Britt said that the company has more than tripled its transaction volume and revenue during the pandemic and has become profitable on an EBITDA basis. Chime is expected to reach $1.5B in revenue in 2021. Cornerstone Advisors and StrategyCorps estimate that 12 million U. S. consumers are now customers of online bank Chime as of February 2021.
Chime has raised $2.3B from investors, including Yuri Milner's DST Global, Tiger, ICONIQ, General Atlantic, Dragoneer, and hedge funds investing in public and private firms. Its Series G investment round in August 2021 raised $700M valuing the company at $5B ($69 price per share).
Long-term activity risk. Chime is a leading digital bank, but it faces intense competition in the market. Chime's top competitors include SoFi, Moven, Varo Money, Cash App. Also, companies from other segments may foray into the digital banking market. Apple has launched its new iPhone-integrated credit card, registering 3 million credit cards within the first year.
Overestimated market valuation. Digital banking is relatively young, there is a risk that analysts and venture investors are overestimating the industry’s growth potential. Chime hasn’t disclosed its financial statements. It is unclear if it shows any tendency toward profitability.
Challenger Bank Chime Reaches The 12 Million Customer Mark, Forbes, February 2021
Fintech firm Chime valued at $25 bln after $750 mln funding, Reuters, August 2021
Global Digital Banking Market to Reach up to $1,702.4 Billion by 2026, GlobeNewswire, November 2021
Emerging Technology Research, PitchBook Data, August 2020 (pdf)
Chime is now worth $14.5 billion, surging past Robinhood as the most valuable US consumer fintech, CNBC, September 2020