Online bank Chime plans to layoff about 150 people, or 12% of its 1,300-person workforce, a spokesperson has confirmed.
The move would allow Chime to flourish “regardless of market conditions,” co-founder and CEO Chris Britt said, according to an internal memo seen by TechCrunch. The Information earlier reported the news.
Britt and Chief Technology Officer Ryan King are adjusting marketing spend and cutting the number of contractors they use, the memo indicated. Britt and King will also adjust workspace needs to renegotiate contacts with vendors, according to the memo.
“The changes will help, but we also need to adjust the size of our organization as we increase our focus and forge our path to profitability,” Britt wrote. While the startup is “well-capitalized,” the financial market is uncertain, he explained.
A Chime spokesperson told Banking Dive the layoffs were “an incredibly tough decision,” and one they take “very seriously.”
“To ensure the long-term success of the business and as we look at current market dynamics, we are focusing our organization to be fully aligned with our company priorities,” the spokesperson said. “As a result, we are eliminating some positions, while still hiring for select others.”
Chime launched in 2012, and has been a sweetheart in the fintech space, becoming one of the first neobanks to hit EBITDA profitability in 2020. That year, Chime surpassed Robinhood as the U.S.’s top-valued fintech, with a $14.5 billion valuation.
It ranked No. 1 on an Apptopia list of the most downloaded digital-first banking apps in the first half of 2021. In the first half of 2022, it was the second-most downloaded banking app.
However, many fintechs have winnowed staff this year due to the market downturn. Varo laid off 75 people, or 10% of employees, in June. Amount, a Chicago-based fintech that helps banks facilitate buy-now-pay-later financing, cut 18% of its workforce, or 108 employees, that same month.
“Almost every late-stage company that I know of is either doing layoffs or going to,” Stephanie Choo, a general partner at fintech-focused venture capital firm Portage, told Forbes in June. Chime, at the time, told Forbes it hadn’t made any staff cuts and weren’t planning on it.
Rising interest rates, recession concerns and a decrease in venture investment no doubt contribute to industry cuts. KMPG’s Pulse of Fintech H1’22 report, published in September, showed that global fintech investments were down in the first half of the year, though not by much: They fell just 3% from $111.2 billion to $107.8 billion.
The number of deals dropped from 3,372 to 2,980, a 12% year-over-year decline.
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