IBS Journal September 2016
47
$20 in monthly account keeping fees plus overdraft fees by their bank. A customer who deposits just $5 every two months qualifies for a free account with us, and we do not have any overdraft fees.”
The second is more compelling and should appeal to the mass market, Shilkin believes. “Now that we have built out the basics of the bank account, we are building out a number of value-add tools to help our customers understand how they spend their money, and manage their money more effectively. The overall value proposition in the next 6-12 months comes to life with being more helpful than a regular bank account, which haven’t really innovated in the last 20 years.”
Rising up
ChimpChange isn’t alone in this world, of course. It seems that not a day goes by without yet another cool mobile-only challenger bank bursting onto the scene, making lots of noise about disrupting an establishment that has taken its customers for granted for far too long. But in recent months, the company has been standing out from the crowd.
In June, it listed on the ASX after completing a $15 million capital raise at 80c a share, valuing the company at $50.8 million. It has also nabbed ex-Westpac executive Peter Clare as Chairman, a Chief Marketing Officer in ex-Acorns CMO Nick Roberts, whilst former Kresta Holdings interim CEO Ian Leijer has joined as CFO and executive director. Shilken, previously CO2 Group CFO, has also secured the backing of his former Chairman Ian Trahar, who has a 47% stake in the business. And it’s all thanks to an 80s movie; somewhat apt given the new entrant’s Hollywood base.
“My first inspiration came from Back to the Future. When I was 14 after watching the movie I told my dad that one day our wallets will be in our watches and we will zap money to eachother from our watches,” comments Shilkin. “As I vacationed to the US, I particularly saw a multitude of problems which I thought didn’t need to exist. I asked myself why banks charge high monthly account keeping fees to such a huge portion of the population, why overdraft fees are so high, why it costs $25 to wire transfer someone money domestically and it still takes overnight. Finally, I asked myself why bank accounts have failed to incorporate technology to add more value to the customer user experience. My gut told me there must be a
better way, so I quit my job and dedicated my life to finding it.”
As for challenges, there have been two major ones. “One is specific to our industry, and that was finding a bank to partner with. Finding a sponsor bank is difficult in the best of times, let alone when you are a startup without a proven track record. We are thrilled to have landed a partnership with the Central Bank of Kansas City (CBKC) who provide the FDIC insured home for our members’ money. CBKC’s status as a leading CDFI and the experience amassed within its Central Payments Division is a combination not found with other issuers. CBKC are highly supportive of innovation which is key for a partnership with us.”
The second challenge has been raising capital. Like many startups, ChimpChange needs to invest a lot of money in technology development and marketing before it hits a critical mass that will generate sufficient revenue for it to be profitable. FinTech funding hit an all time high in 2015, but don’t believe the hype, warns Shilkin.
“In my experience it is a misconception that it is easy to raise capital as a startup, even one with a great idea and huge market potential. This year we have raised approximately $15 million, which gives us a three-plus year runway if things are going bad. If we deliver on our targets this capital will get us through to break-even. My experience is that I received over 100 “No’s” before raising my first $1 million. That’s a lot of reasons to quit or question the business model. But perseverance has got us to a point where we have created over 90,000 new bank accounts for people, and increased our market capitalisation for $1 million to over $35 million.”
So, if all goes according to plan, if the venture hits all its targets and starts turning a profit, what’s the dream scenario? “I would like to see ChimpChange as a nationally known mobile bank alternative to traditional banks. There will always be hundreds of banks, but we aim to be the one that people tell their friends about; because we are helping people to have a better relationship with their money and get ahead in life.”
Hollywood is the ultimate home of dreamers. Some dreams come true, some don’t. Just like the movie business, the FinTech sector is littered with the corpses of good ideas that didn’t take off. Will it be a happy ending for ChimpChange? It’s too early to say, but, with some serious backing and growing momentum, the startup certainly can’t be accused of monkeying around.
www.ibsintelligence.com
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