Consumers Say It’s Not You, It’s Chime

Executive Summary

• “Soft switching” may be costing your institution its role as consumers’ primary financial institution, according to J.D. Power. So who’s winning? Top of the list is the fintech Chime.
• Chime not only beats banks and other fintechs for share of new checking account openings, but has a much higher conversion rate than any bank.
• How can traditional players fight back? Avoid alienating consumers when Chime and others offer easy enrollment. And make it easy for people to open multiple checking accounts at your bank.

Bankers and credit union executives have their viewpoints about what makes their institutions different — maybe even “special” — versus fintechs and other competitors. But a growing problem for them is that’s just not how consumers are thinking about them these days.

In a study about “soft switching” — when consumers open new accounts and make them their primary relationship without closing old accounts — J.D. Power has found that Chime is the leading alternative provider when people open new accounts.

The company’s first edition of its Financial Services Churn Data and Analytics study determined that 52% of checking accounts opened in the third quarter were additional accounts, while only 25% of those opened were considered replacement accounts for pre-existing relationships. The remaining 23% represented new accounts opened by people who hadn’t had that type of account before.

Of the first two categories — additional and replacement accounts — 72% of consumers opened them with a different provider than their existing primary financial institution. The research also determined that over half — 54% — of those opened with new providers become the consumer’s new primary account. All the while, their former primary still has a relationship, though it grows moribund as deposits and usage shift to the new account.

Much of J.D. Power’s retail financial services research focuses on categories of provider — how satisfaction ranks among retail banks or credit unions or direct banks, for example, each study in a silo. The new study was designed to evaluate across provider categories, says Miles Tullo, J.D. Power’s managing director, financial services.

Clearly, Tullo says, the findings shows that fintechs and neobanks are competing well for consumers’ accounts. Further, consumer mindsets have changed and banks and credit unions must reboot their own thinking.

“When you’re in the industry and have the traditional view of things, you think about the world being organized into buckets like that — banks, credit unions, fintechs,” says Tullo. “But consumers aren’t thinking that way. This jumps out in our results and the magnitude of it was a surprise.”

Want more insights like these? Check out Pinwheel’s content hub: Primacy in the Digital Age

Chime Pulls Ahead of the Field

The study was based on responses from over 80,000 U.S. consumers. As shown in the top-ten chart below, Chime had the leading share of new checking account openings at 13%, followed by 9% for JPMorgan Chase. SoFi, which serves a broader swath of financial needs than does Chime, had a 5% share. (Chime’s banking functionality comes from a combination of two banking as a service relationships, with The Bancorp Bank and Stride Bank.)

The study also found that Chime ranked fourth for attracting checking customers depositing more than $1,000 in the first year, a sign that the relationships are being opened as more than a sampling of another provider’s services because the price is right.

Tullo provided a breakdown of results at the state level, and found that the leading states for Chime are Oklahoma, 23%; Arizona, 19%; Oregon, 19%; South Carolina, 19%; and Indiana, 18%.

He says these findings sync with Chime’s business plan.

“Chime’s stated strategy is to target individuals who make up to $100,000 in household income and live in areas that are traditionally not heavily banked,” says Tullo. “So they’re not going after the New York City high-income consumer. They’re going after the consumer who is not in an urban center — everyday average Americans.”

In early November, during its quarterly earnings briefing, Chime reported that it currently has 9.1 million active members and that it had added 1.6 million active accounts in the last 12 months, up from 1.2 million in the previous 12-month period. Officials also indicated that the fastest-growing income group was members making $75,000 or more annually. Median household income in the U.S. rose to $81,604 in 2024, according to a September report by the Census Bureau.

To a degree this jibes with the perception that Chime and other fintechs prove especially attractive to younger people who are less financially healthy.

While some traditional players might take some comfort in that, things change. Years ago, when Millennials began opening financial accounts, some bankers were heard to say things like, “Who cares about reaching Millennials? They don’t have any money.” Now they and Gen Z are most mass retail financial providers’ prime targets.

In additional key data points Tullo pulled for The Financial Brand, the following reported having the highest percentage of primary bank accounts with Chime:

• Young mass affluent
• Mass market
• Under age 40
• Credit score below 620
• Not currently employed
• No college degree
• Less than $50,000 in investments

Among the features of Chime’s checking account are SpotMe, up to $200 of debit card free overdraft protection; early wage access; and cash back on rotating product and service categories with the company’s debit card.

Read more: A Wave of New Charters is Coming. Meet Your New Competitors