Chime’s IPO is more than a milestone — it’s a model for fintech with purpose

Tilman Ehrbeck is a co-founder and managing partner of Flourish Ventures, an $850 million global early-stage venture firm. Flourish’s portfolio spans 100+ companies across the U.S. and emerging markets, including Alloy, Brico, Chime, Clerkie, Flutterwave, Kin, Mantl, M2P, Neon, SILQ, Skipify, Spade and Unit.

As an early equity investor in Chime in 2017, we were convinced smartphones could help build a better financial system for customers. Chime's success and recent IPO reinforce our resolve to invest in purposeful fintech innovation capable of delivering outsized, positive societal and financial returns. 

Before Chime and other contemporary challengers, incumbent U.S. retail banks would require significant minimum account balances or charge high monthly maintenance fees; they would not credit account holders with their incoming paychecks until three days later, making some money on the float for themselves in the meantime; and most controversially, they would charge customers with overdraft fees to the tune of $35 each time account balances dipped below zero. Banks argued they needed these fees because they had to maintain a costly branch infrastructure and legacy IT systems to serve low-income, retail customers. 

Challenging the status quo in retail banking

With the widespread adoption of smartphones and instant connectivity, we felt the incumbent business practices were outdated and unjustified. So did Chime. In partnership with backend providers, it offered customers a free checking account, no minimum balances, same-day paycheck deposit, and it prevented their customers from overdrafting — after all, it knew at any point whether balances were sufficient for another debit card swipe. 

Chime made this model work profitably by building a digital-first product on a modern, cloud-based business infrastructure. Its cost-to-serve customers was estimated to be just one-fifth to one-third that of legacy players. The average U.S. debit card interchange fee of around 1.2% of transaction value was high enough to pay for it all. While some investors doubted that users would entrust a startup with their primary bank account relationship, customers loved Chime’s fee-free accounts and same-day paycheck features—and flocked to the platform. This was especially true for the younger generation in their first jobs, still wary from the financial crisis and eager to avoid credit card debt.

Purposeful innovation

That early trust has translated into habitual use. Today, two-thirds of Chime’s 8.6 million active members use the platform as their primary financial account, benefiting from direct deposit features and same-day access to their paychecks. On average, they make nearly two transactions per day — and 70% of those are for essential categories like groceries, gas, and utility bills. Users open the Chime app 141 times per month, reflecting its role as a daily financial tool. 

Features added over time have helped users better manage their financial lives with no or limited additional costs. An overdraft feature, free up to $200, has been used by more than 8 million members covering over $43 billion in transactions since it was introduced in 2019. An early-wage access option has delivered $8.8 billion since 2024. Automatic savings features have helped users squirrel away over $500 million — supporting long-term financial resilience with no additional fees.

Chime’s growing suite of products has also helped create an opportunity to start reducing its dependence on interchange fees.

Everyday use, real-world impact 

Chime’s early success pushed incumbent banks to adapt — spurring real, systematic change. In 2019, U.S. regulators estimated that American households were paying more than $12 billion annually in overdraft and other avoidable bank fees — costs that disproportionately hit the lowest-income families. But as the pandemic accelerated digital payments, the dam broke. By late 2021, banks such as Ally, Capital One, Fifth Third, and PNC began adopting Chime-like features, including same-day paycheck access and eliminating overdraft fees. When regulators revisited the data in 2024, they found those annual fees had been cut in half—to less than $6 billion.

For us at Flourish Ventures—and for our financial backer, eBay founder and philanthropist Pierre Omidyar—Chime’s success affirms our belief that when technological innovation is paired with business models focused on benefiting customers, it can spark powerful demonstration effects at scale. This kind of success pressures incumbents to evolve, ultimately improving the financial system’s ability to serve more people with better products and services at lower costs.

The next frontier: AI, blockchain, and the future of finance

Today, we hold a similar conviction that advancements in AI, namely generative and agentic AI, and the blockchain infrastructure create new opportunities to reimagine the financial system. A wave of fintech innovations will provide meaningful investment and customer returns, while responsibly addressing the legitimate policy and regulatory concerns regarding system’s stability and integrity.

Just as the smartphone era enabled real-time access to financial services, the recent leaps in AI and platform technology innovations enable dynamic, personalized financial experiences and promise to again meaningfully reduce systemwide operating costs. AI agents can replace service layers. Workflows can self-execute. Service offerings and pricing can adjust dynamically. 

Currently, early-stage startup activity offers a glimpse of what’s to come. For example, agentic AI holds the potential to turn well-meant financial advice into action. An always-on financial agent can continuously scan for better cash sweep options, such as higher-yielding savings accounts, and move money autonomously to maximize returns for customers. On the cost side, GenAI-powered innovation in compliance, risk management, fraud detection, and customer service operations is cutting thousands of staff hours and reducing cycle times by an order of magnitude. Chime itself has reported that 70% of customer support interactions are driven by generative AI-powered chatbots. 

In this rapidly evolving landscape, regulators are likely to focus on issues such as the explainability and transparency of AI decisions, the verifiability of delegated decision-making to AI agents, and who bears ultimate liability when things go wrong. 

Chime’s success reminds us that financial services are a means to an end: helping people seize economic opportunity and weather life’s volatility. When designed well, fintech can do just that — reshaping the system to serve more people, more fairly.

A call to action for fintech builders

Creating the change we want to see is a long-horizon endeavor. There's arguably a greater need today than ever for fintech entrepreneurs and their early-stage risk-capital backers to embark on the startup journey to create viable, better ways of doing business. 

At Flourish Ventures, we intend to do our part by reinvesting our proceeds from Chime's IPO to support innovators who, like us, see the most significant gaps in our financial system as the most valuable opportunities. Chime created a powerful example — it's up to us to follow and build new businesses that do societal good and financially well.