This is Bloomberg Business Week with Carol Messer and Tim Steneveek on Bloomberg Radio.
Some big news and financial services. We talked about Apple and Goldman Sachs credit card partnership might be coming to an end. Apple recently sending a term sheet to the financial giant. That would be a first step towards severing the contract. This is going to a person familiar with the matter. Apple, you know this right among those. But this is one of the big players looking to disrupt financial services by offering its own high yield savings account product,
financing a credit card, Apple Cash and more. Yep, they know fintech disruption. There's a lot out there.
Yeah.
Well, someone else who's looking at disrupt financial services is Chris Britt, founder and CEO of the privately held fintech Chime. Chime offers consumers checking accounts with no monthly fees. They've got savings accounts, products such as secured credit card that helps users build credit and more. Chime says it has quote millions of members and back in twenty twenty one, Carol, when Chime last raised money, it was valued at twenty five billion dollars.
Well, Chris us on Zoom from San Francisco. The company officially to launching the Chime scholars Foundation, which we will get to in a moment. Chris, great to have you here with Tim and myself. Hope you're well. Tell us a little bit about the environment for your business, because it sounds like you guys have a very front row seat, if you will, to what's going on with the consumer right now.
Yeah, sure, thanks for having me in the thrill to announce the foundation. But in terms of the consumer trends that we're seeing, yeah, we you know, we serve millions of consumers and I think the the you know, the relationship that we have with our members is that they use Chime as their primary bank account and primary way that they do their day to day spending. So we actually do, you know, see a lot of we do
have a front row seat to transaction activity balances. You know, I'd say we're starting to see a little bit of a weakening among the consumer that we see. You know, we've seen balances declined slightly, probably down about five percent year over year, but at the same time, we're still
seeing spending that's been really solid. It's up you know, six seven percent year over year, and again, you know, our members mostly use Chime for their everyday sort of non discretionary purchases, So in many ways we're insulated from you know, you know ups and downs of the economy because people use our cards for their every day you know, grocery transactions and daily habits that you know, really help you know, fuel our business.
Chris, are you seeing their spending patterns change, like what they're actually spending money on this year versus what they were spending money on in twenty twenty, twenty twenty one in twenty twenty two. Has that mix changed?
Oh for sure. I mean we're seeing more and more just a normalization of the economy and where spend is happening. So you're seeing things like ride share at Uber and Lyft is up pretty, you know, pretty significantly year over year. You're seeing more spending for you know, concerts and restaurants and those sorts of activities, and I you know, it's it's a well needed, you know sort of normalization of you know, just getting back to post post COVID transaction
activity and that's been really healthy, you know. At the same time, you know, we still see unemployment rates that are really really low. So and you know, we serve consumers that make up to about one hundred thousand dollars is just generally the sweet spot that we serve. And those consumers can generally get jobs and they sign up for Chime accounts, they get direct deposit, and they use
us for everyday transaction. So you know, I wouldn't say our business is countercyclical, but it's very resilient to you know, be able to withstand you know, ups and downs in the economy.
Chris, are you because people use this for director posit for their salaries, for their paychecks, are you seeing are you seeing people lose jobs? Are you seeing them jump around more? Jump around less? What can what can your data tell us about job hopping and the strength of of the economy for for those Chime users.
Well, look as you as you moved down the income spectrum, there certainly is more turnover and more change in in how and where people work and receive direct deposits. So we naturally we always see a little bit more turnover. Uh. You know, then you might if if the consumers that you served made hundreds of thousands of dollars a year a year, But like I said, it's still very healthy people can you know, there's jobs out there for people, they're readily available and and a lot of people have
you know, multiple sources of income. That trend hasn't. That's been pretty consistent. I would say, you know where people might have a little bit of gig gig work for a side hustle, but still you know, the primary wages you know, come from a corporation or you know, h
office job that they have. You know, people are particularly in our in our portfolio of of members that we serve, they're just amazing, amazing people that are resilient and you know, uh can can go out and hustle and you know, get the work and get the job that they that they need to help their families and move their financial lives forward.
Hey, Chris, for those who might not be familiar though with Chime, just remind us how it all kind of works and how what is the business of Chime and how you guys make money.
So Chime exists to unite everyday people to help unlock their financial progress, and we do that by starting with offering a core checking account, a deposit account that you know, chimea is not a bank. We partner with primarily two
fd I C insured banks that hold the deposits. What we're really good at is creating you know, really easy to use, intuitive, low fee services and a tech you know end end tech technology stack and and sort of operate all aspects of the consumer interaction primarily through an app. So we don't you know, have the cost burden of a heavy, you know, sort of branch infrastructure. We're able
to operate at a very low cost structure. And then what we do is we deliver to these to these members that we serve fee free checking accounts, so there's no there's no fee associated with you know, having the core underlying depositive account. We give them access to their paycheck a few days early. We give them free overdraft services and other services to help them with liquidity, and
we also help them with credit building. So that combination of services has really resonated with millions of people.
That rely on But you make money by getting a fee on what every transaction that they do off that account. Is that correct?
You know, we have a few sources of income, but that is a very large part of our of our revenue is the interchange that is earned when consumers use their Chime cards for their everyday purchases. And what we like about that model is that it's very aligned with the consumer. Right, we only monetize when they're engaged with us and using the card for everyday transactions. We've been very careful, careful to design the business to not from their misfortune, which is often times the way. You know,
larger institutions make money off of this segment. So yes, we earn money off interchange, and it's really allowed us to unlock free banking for millions of people who otherwise we'll be paying huge amounts of monthly freeze, search, draft fees, you name it.
Let's talk about interchange fees. The FED is proposing lower caps on those interchange fees. This is your business. How concerned are you about this? Does that mean that you'll make less money if the Fed does indeed go through with that proposal.
Well, we're of course well aware of the conversations happening in Washington around interchange. You know, none of the proposals being contemplated would have any direct impact on Chime or the banks that we that we partner with, so you know, we're monitoring it. It's sort of an age old discussion and debate, But at the end of the day, you know, interchange has been a huge positive for millions of people that suffer from, you know, paying outrageous levels of overdraft
fees and monthly fees. And you know, like I said that, this interchange based business model has really been tremendously helpful for us to be able to disrupt this category. Look at the changes that have happened in overdraft.
That's exactly where That's exactly where I wanted to go, Chris, because you guys were early to do to do this. You know, so many banks now though offer free online banking, no ATM fees, early direct deposits, no overdraft fees, something that you guys have been doing for years. How do you differentiate from those traditional banks that are now offering those services that you offer.
Well, I think it's great that all those changes have happened. It's awesome for our country. It's awesome for people, you know, people in every state across across the country. What do we do. We have to keep innovating and push the envelope on the next service that's actually consumer friendly and actually help our members, you know, move their financial lives ahead. For themselves and for their families. So we certainly have more copy chat you know companies, you know, startup types.
But also it's in many ways it's flattering that these big institutions now do advertising on getting paid early and free overdraft all on note, like I would say, the overdrafts are the structure are friendlier, but you know there's still you know, some gotcha's. You know, they may give you a little bit of extra grace period, but a lot of these institutions still aren't shy about being pretty aggressive on the fee schedule.
We are talking with the founder and CEO of chime on Zoom from San Francisco, Chris Britt is still with us. Hey Chris, just a few rapid business questions to wrap up the business part of our interview in three and sixty seconds. I want to ask you because we want to get to your foundation. We want to talk a little bit about your backstory. First of all, are you guys profitable?
We have very attractive, highly profitable unit economics. We are not yet profitable, but that's a decision we've made a as a private company.
Okay, will you be soon or that's not a goal? That's a part of it.
We're not optimizing for profitabily right now. We may actually be profitable in Q one, but it's not it's not a stated goal. You know, we raise a large round of financing in twenty one, so you know, we don't need to raise money again. But you know, we're feeling like there's an opportunity right now to continue to pursue our vision, which is to you know, be the number one market share company in terms of primary account relationships among consumers that make up to one hundred thousand dollars
a year. And I think that's within reach for us over the next few years.
Which tells you a lot about the folks that you are reaching out to and helping growth in users and how sticky if somebody's on the platform, do they stay with you?
Oh yeah, I think that's if you were to, you know, in a nutshell describe what different differentiates Chime relative to other consumer fintech companies. Is just that it's the engagement. It's the primary account relationship that we enjoy with with millions of consumers. So the majority of people that that bank through the Chime app are using us as their primary every day, you know, transaction relationship and sort of
way to manage their money. So yeah, it results in very high engagement, lots of transaction volume and you know for the business, extremely high our poo relationships with with our members, but in a way that's very aligned.
With that all right, and growth end users. Can you give us any kind of like year to year overgrowth?
Oh yeah, I mean, you know, we're growing at a rate of you know, next year will grow well above thirty percent. So I think in an environment where a lot of companies are you know, mus or declining, are flatlining a bit, you know, we are a real bright spot in that we're you know, growing at a at a nice clip right now.
And just quickly, since you just did another funding round, any plans to go public anytime soon? I know this has been as certainly in the past.
Well we did a funding around in twenty twenty one. That's been it's been a few years. But yeah, yeah, but look, we intend to be an independent, large public company. We've certainly you know, we've raised a lot of money and so we uh, you know, we want to make sure that we can do that for for our amazing investors and also for all of all the chimers that
work here to support our members every day. So it's not something that we have planned on in the short term, but we're certainly about as I P R I P already as as you know a company could be, and were certainly of the scale to be able to to be a you know, a nice public company. I think, you know, we're gonna wait and see how the the economy plays out and the stock market plays out over the course of you know, the first half of next year, and figure out planes from there.
Hey, Chris, I want to talk about the big news this week coming from Chime, the company announcing the Chime Scholars Foundation. I actually, you know, we've talked many times in the past. I didn't know your backstory. Give us just, you know, quick thirty seconds on your backstory and how that got you to launch a company like Chime, and then we'll get into the foundation.
Yeah, you asked about public offerings. Well, this today is the public offering of Chimes Scholars Foundation. I'm so thrilled to announce it, and I appreciate you asking about my backstory. I actually wrote a little blog post about it too on the Chime website. But man, I was so lucky. Growing up, I grew up in Mount Vernon, New York, which is a sort of working class you know town, lived in an apartment building, and when my parents got divorced, my mom had to go to work and my dad
wasn't around all the time. And by the grace of God, I had a neighbor downstairs. His name was Joe, and Joe used to look out for me. He made sure that I got to practice, did my homework, had some dinner, and we had so much fun. It became like a father figure, a grandfather, and really my best friend. And and why that's relevant to today's news is that, you know, my mom, when the schools got pretty tough in my town, my mom decided to try to apply to a private school.
When I got in, but it was really difficult to pay for it, and Joe agreed to I mean, I had a scholarship, but still it was tough, and Joe agreed to pay for it. And then later in life, when I got into college, you know, neither of my parents had graduated from college, and I got into a
great college, Tulane University. I got a scholarship there too, but again it was tough to make it all work, and Joe agreed to pay for you know, the remaining balance for me and I just you know that story, which probably sounds incredibly weird or lucky, it really was. And I think when I think about very yeah, I mean, look, I think when in ways that Chime could give back in some way. You know, I talked about our mission around unlocking financial progress. Higher education is the most powerful
engine to allow for economic mobility. So it's very much brand aligned for us, is what can we do to help people gain more access to education. Obviously there's you know, lots of colleges and community colleges and different ways to
get you know, post secondary education. But too often people are you know, saddled with tremendous amounts of debt and they start out life like really difficult starting place because you know, they may be sort of feel forced to go to a four year college, they've got a ton of debt, and the first you know, part of their professional lives are very difficult. So that's what we've tried to solve for with this nonprofit that we've started, a
Chime scholars Foundation. I think, you know, we're thrilled to announce it today, you know, we've already been in pilot for at a year. We've offered scholarships to over three hundred students. And one of the things that's really unique is that it's not just for four year university. It's
also for community colleges, it's for vocational training. And you know, we're really optimizing for people that have the grit and the grind and people that we feel a high degree of confidence are going to see it through and get their degrees and move their financial lives for themselves and
their family forward. And I think maybe you know, in addition to announcing the three hundred students, you know, the other announcement that I just wanted to highlight is Chime and our board of directors and investors have committed to allocate one percent of the equity of our company into this foundation to ensure that we can fund it for many years to come.
Well, and I love it as you write, as we look at this release, you know, it's like everyday kids like you who have responsibilities at home, work hard, hustle, yearn for something more. It's not necessarily everybody who at a four point zero in terms of who you are providing this for, are possibly offering up Thank you so much. Chris Britt, Happy holidays, have a good holiday season, Founder and chief executive officer of Chime, right here on Bloomberg