Digital bank Chime cuts 12% of its workforce as stormy markets hurt fintechs

Nov 2 (Reuters) – Online banking firm Chime has laid off 12% of its employees, a spokesman said on Wednesday, blaming “current market dynamics” as this year’s tech rout slams once-high valuations growing startups.

The San Francisco-based company has cut about 160 jobs, joining a series of fintechs such as Swedish payments firm Klarna that are looking for ways to cut costs as runaway inflation and the Ukraine crisis worsen the business climate.

Klarna, once Europe’s most valuable startup, saw its valuation plummet to $6.7 billion in July from $46 billion earlier. Buy-it-now and pay-later company Affirm Holdings has also lost more than 80% of its value so far this year.

The slowdown comes after payment companies saw robust growth during the pandemic as consumers embraced digital banking.

The Information was first to report on Chime’s job cuts on Wednesday.

Chime makes money by collecting fees from payment processors such as Visa Inc each time a customer uses a Chime debit or credit card. It was valued at $25 billion in a funding round led by Sequoia Capital Global Equities in August last year.

Launched in 2012 by former Visa Inc executive Chris Britt and former Comcast Corp Ryan King, Chime’s competitors include digital banks Revolut, Current and Varo.

Earlier this year, Reuters reported that Chime could target a valuation of nearly $40 billion for an initial public offering in New York. (Reporting by Mehnaz Yasmin in Bengaluru; Editing by Devika Syamnath)

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