Hot Online Bank Startup Leaves Customers Without Access to Their Cash (bloomberg.com) 53
Chime, an online banking startup with more than 5 million customers, has been suffering an outage for much of past 24 hours that has left customers without access to their money. From a report: The startup blamed the disruption on an unspecified issue with a payments processor and said data was not at risk. The downtime comes as the digital bank has been growing quickly -- the number of customers has almost doubled since March, to about 5 million. Chime is also in the process of raising a new funding round that could value it at more than $5 billion. [...] San Francisco-based Chime is part of a growing digital banking sector that has seen rising interest from customers and global investors in recent years. Chime's target market, according to the company, is a younger demographic whose income ranges from $35,000 to $70,000 a year and who are frustrated by the fees charged by larger brick and mortar banks. It's a group that may be more likely to trust a startup with their money.
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It's funny, the absolute standard for savings used to be %5.25 and no fees. Nobody offered more and nobody offered less. Of course, that was before the deregulators tore down even the Chinese wall between investment banking and savings and loan and the fed allowed banks to poof money into existence.
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Consumer banking in the UK was restricted in 2009 after the crisis, and high street banks were no longer allowed to invest their clients money into anything other than Bank of England schemes.
Which meant that high street banks no longer made money on current or savings accounts.
Which in turn meant that banks have started to withdraw facilities and free accounts and lower interest rates on positive balances.
Which has led to outrage against the banks.
Which is hilarious - why should the banks provide a service
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The other side of the coin before was that those savings are where they got the money for loans. The Chinese walls made that the best place to get the money for loans from.
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And for higher balances (over $10k USD) I've found money market accounts (FDIC insured bank) that pay 2.00% or more. Right now
Why stay at your bank with the crappy 0.05% or whatever they are paying. You'd make more in interest by stuffing it in your mattress.
They offer access to money prior to direct deposit (Score:3)
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https://www.chimebank.com/get-paid-early/ [chimebank.com]
Wonder if they can be sued for false advertising? Or broken promises. Yea, I know. Terms of agreement obviously has an "oops" clause in it.
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My bank is the same way, even with mobile (phone camera-based) deposits and even when it's for a couple thousand dollars.
It's possible they don't do it for new customers, just for people they've "known" for years - but I don't know that.
On a side note - who trusts a startup with their banking business?
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People familiar with the FDIC?
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Chime's deposits are handled by The Bancorp Bank and are FDIC insured. Their market cap is 86 billion and they're the 5th largest bank in the US, hardly a startup. It seems to be a boutique brand. The weird thing about them is that many banks and debit processors see their visa as a prepaid card.
History... (Score:2)
A fool and his money are soon separated.
After playing with the AppleCard, I get the opportunity. It is huge. But history tells us that this is a bad idea, and not learning from history is a bad idea.
Just think of the players: “A Startup”, Venture Capital, stock-based competition... what could possibly go wrong.
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But in most of the world those banks are also under a LOT of regulations that mean if they refuse to give you your money when you ask them to (barring the bank is closed, the city is without power etc.) they are in deep, deep shit.
This is ... a startup. It's like Paypal version 2, just with much less name recognition.
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A fool and his money are soon separated.
After playing with the AppleCard, I get the opportunity. It is huge. But history tells us that this is a bad idea, and not learning from history is a bad idea.
Just think of the players: “A Startup”, Venture Capital, stock-based competition... what could possibly go wrong.
This phrase is at least 460 years old. It was used by a poet named Thomas Tusser in a poem he wrote called Five Hundred Points of Good Husbandry, in the year 1557.
While the wording is a bit different, the expression is still similar enough to the one that’s used today: “A foole and his money be soone at debate: which after with sorow repents him too late.”
FDIC insured? (Score:5, Interesting)
If so then the risk is you're out your money for some time, but covered if it fails. If Chime isn't FDIC insured then anyone giving them money is a fool.
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... anyone giving them money is a fool.
No shortage there, seems like a valid VC business model.
1. Make product that takes money from fools.
2. Sell said product to other fools.
3. Exit and buy yacht!
Indirectly. Chime resells Bancorp (Score:3)
Chime is a reseller for The Banc Corp Bank. That's an FDCI insured bank that is a bit shady.
https://research.fdic.gov/bank... [fdic.gov]
https://www.fdic.gov/news/news... [fdic.gov]
Obvious (Score:4, Funny)
The name of their company is 1 letter off from CRIME. It should have been obvious to anyone.
credit union bank some random startup (Score:4, Informative)
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I wish that was a good solution, but they aren’t exactly millenial-friendly. (They aren’t GenX friendly either in my case.) Simple things like poor app design, far too many things need to be done in person, ineffective security measures, and ultimately limited service offerings. The last one might not be on Millenials’ list of concerns yet, but give it time.
There is an opportunity out there for a great, modern, online-only bank. The challenge is that they need a way to make money in the
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Exactly, and N26 or Revolut are getting pretty big in Europe. They are app-only with literally no physical branches. (Revolut isn't quite a bank just a credit card though that's often enough, but N26 is a real one.) It turns out that banking can be quite simple, a breeze with a well-designed app, and completely remote.
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''N26 is a real one''
I agree. We will soon see a large amount of stateside users for them, they joined a stateside ATM network and are now offer feeless access and networked ATMs. And their app rocks, well designed, Stateside
Axos bank handles their deposits.
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Not my experience. Maybe the problem is choosing the right credit union. My experience is with a credit union that is based in Silicon Valley. [techcu.org]
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I'm a member of Gen X and I'm fine with my credit union. It provides the best service of any financial institution I've ever used, and it does it with zero fees. It has every modern access method that other institutions had. Every other commercial bank I used (both online and also brick+mortar/online) ultimately changed their terms somewhere along the way and started charging me fees to access my own money. I don't care what generation you are, but I know people are sick of getting charged some random month
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I might be talking about some more “next level” features than you expect. I will admit, dealing with humans is great at a credit union! The challenge (for me) is that when things are outside of their normal customer requirements it gets fuzzy. I had transferred a very large sum (to me) of money. From my brokerage account to my account to purchase a home; the teller had a few of his co-workers come over to look at the balance! (Five figures, nothing too crazy for buying a home.)
They specifica
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Yeah, that is just unprofessional behavior regarding the loan/check. It seems that at some point there are likely banking products and services that are legitimately served by a commercial bank with experience in them, or with international presence, or if you are running a large business you need to know that they have the capital to, say, process your payroll. By and large most people are looking for those really basic services -- a checking account, savings account, etc.
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Of course. And that is why I am happy to support my credit union for what I can use them for! Credit unions help make banking accessible... they just aren’t quite as effective when needs get more complicated.
the disruptor was disrupted (Score:2)
this will only continue to disrupt the dinosaurs like Bank of America that give out your cash on demand
Target Market (Score:2)
"Chime's target market, according to the company, is a younger demographic whose income ranges from $35,000 to $70,000 a year"
"Our target market is people with little financial experience who also have a lot of money"
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China/GDP per capita
$8,826.99 USD (2017)
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Moderate incomes, maybe. But there are all sorts of fees if you have less than a certain amount in there. The people who think 35K/year is a lot of money are the ones getting screwed by banking fees.
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It's more than half of full time workers in the US make.
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''are the ones getting screwed by banking fees.''
The screwing banks do is the 35 dollar return item charge, or the overdraft fees that are cumulative, fail to cover. there's another 35 bucks. This is how they make billions, along with the time they drag their feet to make funds ''available''. Funds are cleared by ACH no later than 24 hours and banks depend on the float to make billions. It's unacceptable in this day and age.
Example is TD charging over usery and hammering their customers with overly
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Median income per capita in the US has been ~30k for a couple years. It varies slightly by source. That means that over half of full time Americans make under $30k. That's not even taking into account younger people starting lower.
So yes, $5,000 to $40,000 above the median income is a lot for young people.
Problem identidied: (Score:2)
It's a group that may be more likely to trust a startup with their money.
Fees? (Score:3)
..are frustrated by the fees charged by larger brick and mortar banks.
I've been banking with Bank of America for 20 years, and I can count on one hand the fees I've been charged (pretty much 2 or 3 overdrafts back when I still wrote checks). And I can't recall how long it's been since my last fee.
Re:Fees? (Score:4, Insightful)
Last time I had BofA (long ago) they pulled that trick of holding deposits but immediately processing withdrawals, resulting in overage fees. Wells Fargo and Westamerica banks both did the same thing to me as well. Now I am a member of Redwood CU and they are great. Great service every time.
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BoA --Biggest of Assholes / Bank of Italy. Jerkoffs killed my Visa while overseas [they were notified before the trip].
After passing multiple identity verifications, they sent me a useless dead replacement visa. Again I request a replacement and verify identity multiple ways and they send me yet another dead card.
The only way I was able to get the issue resolved required me to threaten to get the US Embassy involved.
Then the original visa amazingly was functional.
Never ever trust them.
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Fees are waived for account holders with large combined balances. Fees are charged for those with low balances.