Chime outgrew bank partner model, CEO says

Chime, one of the largest fintech players in the U.S., is shifting away from the traditional partner-bank model by acquiring Stride Bank. For retailers and operators who rely on fintech partners for consumer lending, this is a major signal that the industry is moving toward direct ownership of the banking stack. Chime’s CEO admitted that the constraints of working through a third-party bank slowed down their ability to launch new products and iterate on features. By becoming their own bank, they gain 'complete control' over their product roadmap. This move is a direct response to increasing regulatory pressure on 'Banking-as-a-Service' (BaaS) relationships. Recently, regulators have cracked down on the risks associated with fintechs using partner banks, leading to slower approvals and more red tape. For merchants, this means that the lenders you partner with may soon face a choice: slow down their innovation to meet compliance demands or follow Chime’s lead and acquire their own charters. A lender that owns its own bank can generally offer more stable service, faster updates to credit products, and less risk of sudden service disruptions caused by regulatory intervention.

Source: Banking Dive

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