Digital-only banking startup Chime has raised $200 million from investors in a new round of funding which values the company at $1.5 billion, it said on Tuesday.
The investment was led by venture capital firm DST Global with participation from new investors General Atlantic, Coatue, ICONIQ Capital and Dragoneer Investment Group, the company said. Existing investors Forerunner Ventures, Cathay Innovation, Menlo Ventures and others also participated, Chime said.
San Francisco-based Chime will use the cash injection to launch new products in credit building and short-term lending, Chief Executive and Founder Chris Britt said in an interview. Chime curently offers checking and savings accounts and a debit card.
“Everybody knows their credit score because of all the services out there that are free, but what people struggle with is how to improve their credit score,” Britt said.
Chime is among a number of digital-only banking providers that have sprung up in the United States and globally in recent years with the aim of taking advantage of new technologies to offer easier-to-use and cheaper services built for the smartphone era.
Online banks in the United States include Varo Money Inc and Ally Bank, while established financial institutions such as JPMorgan Chase & Co have also recently launched digital-only accounts.
Globally, some of the most well funded digital banks include Germany’s N26, UK-based Monzo and Brazil’s Nubank.
In the United States, Chime also competes for deposits with financial technology startups which have recently started to expand beyond their initial area of focus and are trying to lure consumers by offering high rates.
Online wealth management firm Wealthfront last month launched a cash account with an interest rate on deposits of 2.24 percent, while student lender SocialFinance offers a checking account with a 2.25 percent rate.
Chime – which has no minimum deposit and charges no monthly service fees, or fees for transfers and foreign transactions – has more than 3 million bank accounts, it said.
It does not have a bank license but accounts are protected by the Federal Deposit Insurance Corporation (FDIC) through a partnership with The Bancorp Bank.
Britt said applying for a bank charter might be something the company will consider “down the line” but that it is curently more focused on building new products.
It plans to grow its headcount to 200 people, from 120, by the end of the year, Britt said.