Is Chime Changing Online Banking for Good?
Are neobanks like Chime the next big wave in banking?
Traditional banks have shifted many of their services online, lessening the burden of service from tellers. Since there is less need to visit a brick-and-mortar bank for most of our financial needs, the idea of an online-only bank is quite intriguing.
Chime is one of those revolutionary banking services that allow you to manage your finances from the comfort of your couch.
The company is changing the way we view what financial services can offer us. On the other hand, Chime is changing online banking for the better, but are there some things that online banking can’t do?
What is Chime?
Chime is a neobank offering online banking services such as checking and savings accounts and credit cards to consumers in the United States. Right now, they have millions of users. Their services are all digital, making it easy to do your basic daily banking from your smartphone.
What exactly is a neobank?
A neobank, often referred to as a fintech bank or fintech firm, offers digital-only banking solutions through phone apps, websites, and software. They are also sometimes referred to as “challenger banks,” as they are challenging our original ideas concerning what banks can and can’t do.
In some cases, these banks are not traditionally regulated or use service providers who are regulated in areas that they are not.
What products does Chime offer?
Chime offers traditional checking and savings accounts and a traditional credit card. Chime also has a credit card that people looking to build or improve their credit can use. They also allow consumers to withdraw cash from thousands of ATMs without paying withdrawal fees.
How can you deposit cash into a Chime account?
You can deposit cash into a Chime bank account through partnerships with some retailers, but sometimes, this comes at a consumer fee. Retailers where consumers can make deposits include Walgreens, 7-Eleven, and Walmart.
How user-friendly is Chime?
Chime has a smartphone app similar to those used by traditional banks for online banking. You can do everything from this app.
Additionally, you can also have the app set up to help you keep track of your daily spending. This is ideal for people who want to monitor their finances without opening the app all the time.
Who is using Chime?
Chime tends to be quite popular amongst a younger generation who doesn’t see the value in visiting a traditional bank. They do many of their day-to-day tasks online already, so using an online-only bank makes sense. Not only do younger folks tend to work, learn, and shop more online, but they tend not to prefer not carrying physical cash on them.
It appears younger people are opting for banks like Chime because they are more affordable than everyday banking services.
Furthermore, younger people have less disposable income due to a rough economy and a tough job market to penetrate. Therefore, they want to be wise with every dollar.
What services does Chime offer that traditional banks don’t?
One distinguishable feature of Chime is that they offer many of their services, including ATM withdrawals and bank accounts, for no fees.
At a traditional bank, you typically must pay a fee to have a bank account unless you want limited transaction capabilities, or the bank offers a quick way to earn free banking, such as if you are a student.
Considering that many bankers will visit a physical location, it’s worth considering if other companies will adopt a banking model like Chime’s.
What are some reasons people enjoy Chime?
Apart from no fees, which is a huge draw, there are some other great features that Chime has going for it. Chime also doesn’t require you to have a certain amount of money, or make a certain amount of money, to open one of their accounts.
They also have an exciting feature that allows you access to your paycheck a couple of days early. Chime can do this by giving you access to your funds when they arrive at the bank, which traditional banks cannot do.
They also provide some customers with overdrafts of up to $200 without charging any fees so that customers have a little wiggle room if they need a few extra dollars. You also don’t have to pay any foreign transaction fees.
How Is Chime changing online banking?
Online banking has been the norm for quite some time. More and more people have been able to do their everyday banking online. Over the past few years, traditional banks have increased the amount of banking a customer can do from home.
This includes depositing checks, opening different types of accounts, applying for credit cards, and even applying for some loans. But unfortunately, it hasn’t reduced many fees that can be quite costly for the average customer who may need every penny of their paycheck for basic needs.
Being that Chime isn’t charging the fees that banks often charge, this is one of the biggest draws for customers to consider when determining whether they want to move from a regular bank to a digital one.
As Chime only charges fees for cash deposits, the customer will only pay fees if they choose to deposit cash. They don’t get charged just for having an account, which traditional banks charge customers. Furthermore, Chime has partnered with many retailers for cash deposits that don’t charge fees, such as Walgreens.
Is there anything chime doesn’t have yet?
At this time, Chime does not allow you to open a savings account without already having a checking account open. While this might not be a significant issue, you can often do this at a traditional bank.
There is also no capacity to open a joint account on Chime. This could make it difficult for families who do their banking together to transition their finances over to Chime. Additionally, they do not offer checkbooks, though checks are becoming more obsolete as of late.
Chime also can’t offer customers loans, investment accounts, or mortgages. Although financial advisors typically manage these accounts, it makes sense that Chime cannot operate these accounts yet.
With Chime being a digital-based company, there’s no telling how long it will take them to fill in the gaps between their service and what people are still using traditional banks for.
How can traditional banks compete with Chime?
It’s hard to determine what steps traditional banks will take to try and compare to Chime, considering how much of their profits come from charging monthly fees to their customers for most of their accounts.
They also have systems that they have been using for many years that would be costly to replace to compete with Chime’s cutting-edge technology.
There are a couple of things that traditional banks have going for them that will take some time for neobanks like Chime to catch up.
For starters, there is still a generation of bankers that do not want to do any of their transactions online. These people will be harder to entice, even with no fees, especially with the technology they must learn.
Additionally, there is a sense of loyalty that some customers have to their bank, and they might be wary of transferring to a digital bank. Considering that there is no face that one can put on a neobank, it can be challenging to replicate that human aspect of a bank.
Is Chime the future of online banking?
Chime isn’t the first of its kind, and it won’t be the last. But, for those who don’t have complicated financial portfolios to maintain and want simple, self-directed transaction and account management capabilities, neobanks like Chime will win out. Chime is very easy to use, and it doesn’t cost you money to hold your money with them.
TLDR SUMMARY: Chime is neobank, or new age bank, that offers services without a fee but does not have the same range of services as large corporate banks.
About the Author
Bibhuranjan Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.
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