Chime is reportedly planning to use the funds to widen its product offerings, open a new office in Chicago, and double its team of employees. Recently, the company hired Mark Troughton as chief business officer. Troughton previously served as the president of home security start-up Ring, which Amazon ultimately acquired. The San Francisco-based challenger bank may also use some of the capital to acquire other fintechs. 

Chime's fundamentals look strong, but are they strong enough to warrant a US$5.8 billion price tag? Other challenger banks with a larger customer base and global footprint (not to mention greater profitability) are worth much less. Founded in 2013, Chime reached one million customers by May 2018. Then its growth skyrocketed and it added another 1 million users by October 2019, making it America's fastest growing challenger bank. Currently, Chime is gaining about 150,000 direct deposit users a month. The speedy growth helped Chime raise US$200 million in its Series D fundraising round in March, which is when it made the jump to hallowed unicorn status. Chime expects to post about US$300 million in revenue this year on the back of swipe fees from debit cards. That places its current valuation of US$5.8 billion at about 20 times annual revenue.

According to CNBC, Chime's revenue per customer typically exceeds the cost to acquire the customer, which means the company should have a feasible path to profitability. At present, Chime does not lose money on most customers, the report says.

Analysts say that Chime is tapping huge latent demand for low-fee digital banking services among cash-strapped millennials. One of the features the digital bank highlights is the ability of users to receive early delivery of their paychecks. For people not on a tight budget, such a feature would not be especially attractive, but those with cash-flow challenges would welcome it. To access that feature, users must sign up for direct deposit, thus making Chime a primary - if not the primary - bank its customers use.