One of the largest neobanks has announced plans to purchase its partner bank.
About Chime’s Acquisition of Stride Bank:
This week, Chime announced that it had entered into a definitive agreement to acquire Stride Bank. Chime will pay $590 million in cash for the bank. Stride is a nationally chartered bank that was founded in 1913 and has served as FinTech Chime’s banking partner for more than seven years.
The transaction is currently expected to be completed during the first half of 2027. Before that, it will need to get approval from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System. Once it does close, Stride will be known as Chime Bank, N.A. and will operate as a wholly owned subsidiary of Chime. Brud Baker, who is currently Stride Bank’s Chairman and CEO, will stay on to lead Chime Bank.
In a press release, Chime hailed the deal as a milestone for the company and for the industry. It also noted that the service currently has more than 10 million active customers. Also, despite the cost of the acquisition, Chime says that the purchase will allow it to cut costs in the future, as it won’t need to pay partner-bank fees.
What They’re Saying:
Discussing this proposed acquisition, Chime CEO and co-founder Chris Britt said in a statement, “We founded Chime because mainstream America deserved better banking. Our member-aligned, technology-driven strategy will remain the same. This acquisition will make our proven model even stronger.”
Britt added, “By combining Chime’s leading brand and deep member relationships with Stride’s national charter and team, we will accelerate toward our vision to be the largest provider of primary bank accounts in America.”
Meanwhile, Baker said, “Stride has spent more than a century serving customers and strengthening communities. For seven years, we have seen firsthand how Chime puts members first and how seriously it takes its mission. That gives us real confidence in this combination and the future we can build together.”
My Thoughts:
Chime is now the second FinTech this week to share an update suggesting that they’ll become a fully-fledged bank in the new year. The other is Revolut, which gained conditional approval from the Office of the Comptroller of the Currency for its national bank charter.
What’s funny to me is that these two updates again highlight the two paths neobanks take to become “real” banks. For example, while Varo went the application route, others like LendingClub and SoFi have purchased existing banks and rebranded them afterward.
Considering that Chime is a massive neobank, becoming an official bank is a big deal that will surely make an impact on the current landscape. Personally, I also think it’s a good thing for customers, who will have greater protections dealing directly with a licensed bank. Of course, we’ll need to wait and see if this transaction goes through.
