Chime brings investing directly to its digital banking users

• Key insight: Chime is expanding its financial services offerings through adding a new direct investment feature to its app.
• What’s at stake: Investment products accessible through modernized fintech apps could compete with traditional banks and investment firms for new first-time investors.
• Expert quote: Investing is a natural progression for fintechs seeking to deepen relationships and add new revenue streams, according to Javelin Strategy & Research analyst Dylan Lerner.

Chime is launching investing services in its digital banking app.

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The neobank fintech announced on Monday that it has begun offering investment products to users of its mobile app shortly after promoting the recently-launched “Trump Accounts,” which are IRA-like savings accounts for children. The move fills a gap in Chime’s digital finance services, which already include checking accounts, debit cards and high-yield savings accounts.

The launch adds an additional element to the competitive field between Chime, a digital-only challenger bank fintech, and traditional financial institutions such as banks and now investment firms. Chime, in particular, targets consumers it says are not well-served by traditional firms or methods.

“The hardest part of investing is often getting started and sticking with it,” said Chime co-founder and CEO Chris Britt. “Millions of people already trust Chime with their money every day. By bringing investing into the app they already know and love, we’re making it easier to turn saving into investing and investing into long-term wealth.”

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The challenger bank, which hit GAAP profitability earlier this year, told American Banker previously of its plans to launch an investing product this summer. “Investing is one of the last legs of the stool in terms of financial progress,” Britt told American Banker at the time.

Chime’s investment product allows users to either buy stocks and ETFs directly without commission fees or to buy portions of a managed portfolio. Portfolios will be managed by Atomic Invest, according to a company statement, and will have no management fees for Chime Prime members, a 0.10% annual management fee for Chime Plus members and 0.25% for all other Chime users.

KeyBanc analysts following the company expect the offering to succeed with higher-income users, according to a research note, and see plenty of room for Chime’s investment offerings to coexist alongside other retail investment platforms such as Robinhood and Wealthfront.

“Chime’s primary bank account positioning offers a unique attach point for Chime Invest,” the analysts wrote. “Our read on Chime Invest is that the product is built around ‘wealth’ vs. ‘trading’ where there is a materially different expectation of product breadth, depth, etc. Roadmaps/customer segments could, of course, converge over time, but we see limited overlap today.”

To Dylan Lerner, senior digital banking analyst at Javelin Strategy & Research, the launch of an investing service at Chime was not surprising.

“Digital banking has increasingly become commoditized, prompting nearly every fintech to eventually broaden its product suite,” he told American Banker. “Chime has evolved into a broader financial services company, [and] investing was notably missing from Chime’s lineup. It’s a rather natural progression for fintechs seeking to deepen relationships and add new revenue streams. Robinhood’s expansion into banking is one recent example, although from the opposite direction.”

Robinhood was selected by the U.S. Treasury to build the digital interface for the initial Trump Accounts rollout on July 4, and BNY was the bank selected to manage the initial accounts directly. Official guidance on potential for rollovers for Trump Accounts has not yet been provided by the Treasury, but many banks and investment firms, like Chime, are expecting to be able to roll over Trump Account assets into other investment accounts in the near future.

“The exact timing for that isn’t clear yet, but when they do announce it, we stand at the ready,” Britt previously said.

The main opportunity for Chime, according to Lerner, isn’t to win investors away from competitors like Robinhood but to convert its existing bank customer base to first-time investors.

“Trump Accounts created an opening for exactly this kind of private sector participation,” he said. “[They] can also be an entry point into a broader family banking dynamic capturing both children and parents. For Chime, that could be a long-term strategy to establish a relationship with parents while providing banking products and services to the children as their financial needs develop. If executed well, Chime has an opportunity to build relationships from cradle to adulthood.”

Securities held in Chime investment accounts are SIPC-protected up to $500,000, according to the company, and general access to the investment service will be released on a rolling basis to users over the coming weeks.