CEOs at Stash and Chime say they're seeing record signups as fintechs race to set up ways for customers to get stimulus checks quickly

• Fintechs aimed at helping customers get through the market downturns have enjoyed significant account growth as a result of their efforts.
• Digital bank Chime, which was last valued at $5.8 billion, had record signups on Monday.
• Meanwhile, investing and banking app Stash saw customer deposits jump by 50% and account openings surge 35% compared to February.
• M1 Finance, which offers lending, banking and investing services, had a record 119,000 brokerage accounts opening in Q1.
• Fintechs also enjoyed lower customer acquisition costs, long a pain point for the space, as customers found apps organically.
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Fintechs that have long pitched themselves as a more cost-effective alternative to big banks and wealth managers are stepping up to the plate to service clients during the coronavirus pandemic, and enjoying a big boost in business as a result.

As many Americans reassess their personal finances amid the market downturn occurring as a result of novel coronavirus, startups that have marketed themselves towards those who are underbanked have found themselves front and center.

And while fintech CEOs are adamant their motivation isn't the bottom line, their businesses have enjoyed huge growth during these hectic times.

"This crisis is an opportunity for companies to really show their true colors," Chris Britt, cofounder and CEO of digital bank Chime, told Business Insider. "The actions that companies take at this time will really define their position and define their brands."

Chime, which was last valued at $5.8 billion after a $500 million Series E in December 2019, has been proactive in helping its customers get stimulus payments, which are part of the CARES Act.

The startup, which has roughly 8 million accounts, first piloted a program in early April to front the $1,200 stimulus check to 1,ooo customers via its SpotMe feature, which allows users to overdraw on their account for free.

Analysis of the program showed customers wanted some, but not all, of their stimulus money early, Britt said. As a result, Chime doubled the typical SpotMe limit to $200 for 100,000 customers.

It wasn't just about getting money to customers ahead of time. Chime also pushed to do it faster as well. While customers of most banks had to wait until Wednesday for their stimulus checks to begin hitting their accounts, Chime had already distributed more than $1 billion in stimulus payments to over 600,000 customers by Monday.

"We think this is a huge opportunity for us to make sure that we are walking the talk," Britt said. "Coming out of the other side of this crisis you are going to see a number of companies that have really stood out by doing the right thing and really trying to be helpful. Not just trying to figure out angles for your commercial interests, but actually trying to be a force of good in the world."

Chime had a record number of new signups on Monday

And while Britt said growing the business isn't a factor in any of the decisions the digital bank has made in recent weeks, there is no denying the actions the startup has taken have led to some impressive growth. A Chime spokesperson declined to offer specifics around increases in user numbers, but did say Monday the bank saw the highest number of account openings in its seven-year history.

Chime isn't the only one to see an uptick in business thanks to its work around helping customers deal with the current market. Stash, which initially launched as a micro-investing app and has expanded into banking, retirement and custodial services, has seen its fair share of growth as well.

The New York-based startup created a tool to help users calculate how much their stimulus check will be, posted directions around setting up direct deposits (which will expedite how quickly customers would receive stimulus checks) and has provided constant updates and a FAQ around how the CARES Act works.

As a result, Brandon Krieg, CEO and cofounder of Stash, told Business Inside the fintech has seen big increases in both deposits and new customer accounts. The New York-based startup, which landed $65 million in Series E in March 2019, saw customer deposits grow by 50% compared to February. Account openings also jumped 35% for the same time period.

"I'd say that this is one of the most significant growth periods we've ever seen right now," Krieg said.

Even those whose target market is less likely to be recipients of stimulus checks have seen an increase in business.

M1 Finance, which offers lending, banking, and investing services, signed up more than 50,000 new brokerage accounts in March, Brian Barnes, its founder and CEO, told Business Insider. By comparison, the fintech opened roughly 30,000 new accounts in each of the previous two months.

Barnes said the same way customers in need of financial assistance are looking at their options, so too are those who have money with financial advisors. He cited Vanguard, the $5.3 trillion asset manager behemoth, as getting huge inflows after every big market event thanks to its role as a low-cost provider. Fintechs, too, could position themselves in a similar way, he added.

To be sure, traditional players business hasn't necessarily stagnated. Charles Schwab announced Wednesday as part of its Q1 earnings the opening of 609,000 new brokerage accounts, a company record. That being said, it's $3.5 trillion in total client assets were down 2% from the previous year.

Meanwhile, M1, which just surpassed $1 billion in client assets early this year, opened a total of 119,000 new brokerage accounts for the quarter.

"I do think this is where people start reevaluating, 'What am I paying for?'" Barnes said. "I give you 1% of my net worth year-in-year-out, and you're supposed to be the expert. It's not like you saw this coming. I lost 30% of my portfolio like everybody else did. I might as well just buy the market portfolio and just forgo the 1% fee structure."

Fintechs are also enjoying lower customer acquisition costs

One additional knock-on effect of the market downturn has been fintechs ability to cut down on customer acquisition costs. Expensive marketing budgets to lure new customers onto their platform have long been a pain point for personal finance startups.

However, a combination of a decrease in advertising from others and consumers searching for new places to put their money has helped lower those costs.

Chime's spokesperson said a majority of Monday's record-high sign ups came organically as a result of social media and general buzz about the new tools offered regarding the stimulus payments.

Krieg said the company is seeing an increase in impressions on advertising and a decrease in its cost per mille, or the advertising rate for every thousand viewers of its ad.

Still, he added, pouring money into marketing isn't necessarily sustainable.

"The game of raising a continuous venture money and spending it on marketing doesn't scale," he said. "It doesn't work forever. Businesses have to get to a point where they can be self-sustaining."