Digital bank Chime has tripled its valuation, officially passing the $1 billion-mark this week.
The San Francisco-based company announced a $200 million Series D financing round that brings its new valuation to $1.5 billion. Investors were led by DST Global, which also participated in earlier fundraising rounds, and new investors Coatue, General Atlantic, Iconiq Capital and Dragoneer Investment Group, Chime said Tuesday.
“There’s pent-up demand for more consumer-friendly banking services,” Chime CEO Chris Britt told CNBC. “We think there’s a better way to do this that’s actually aligned with the best interests of our members.”
The online-only bank lets customers deposit and save money on its platform and spend using a no-fee debit card. Chime earns revenue from debit card transaction fees paid by merchants. Accounts are FDIC-insured through a partnership with Bancorp Bank. The partnership model is an increasingly popular setup for financial technology start-ups that don’t have their own bank charters.
The digital-first approach and promise of zero fees has helped Chime attract roughly 200,000 users per month, the company said. Chime said it now has more than 3 million bank accounts, up from 1 million last summer.
So-called challenger banks are an increasingly popular option for consumers who don’t want traditional branch-based banking options. These upstart banks often cite the competitive advantage of building their companies on modern technology with a lower cost structure than traditional banks. Since they’re only online, they also avoid costs associated with maintaining branches.