Chime, one of the hottest digital banks taking on Wall Street, faced outages that could see it lose customers. It highlights how competitive digital banking has become.

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Chime, one of the hottest digital banks taking on Wall Street, faced outages that could see it lose customers. It highlights how competitive digital banking has become.

Chime Banking Mobile App + Debit (1)

Chime

Chime offers a "no-fees" bank account.

  • Chime, a startup digital bank, experienced service outages beginning Wednesday afternoon that locked customers out of their accounts.  
  • ATM withdrawals and card transactions have been restored, according to Chime, but the app and website were still down as of Thursday afternoon. 
  • Angry Chime customers took to Twitter, threatening to pull money once the app and website were back online and move to traditional banks such as JPMorgan Chase, or Wells Fargo. 
  • "This is definitely going to make me reconsider using my Chime account," one Chime user told Business Insider.
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One of the fastest-growing digital banks is having growing pains. 

Challenger bank Chime experienced outages starting Wednesday afternoon that left customers unable to access their accounts. Additionally, customers couldn't withdraw cash from ATMs, use their Chime debit cards cards, and card transactions were being declined. The outage was initially identified by Chime at 7:16pm EDT.

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As of Thursday afternoon, ATM and debit card access were restored, according to Chime, although its app and website are still inaccessible. That means customers can't transfer funds or check their balances. 

The bank, which has over 5 million customers and is reportedly eyeing a $5 billion valuation for its next fundraise, spent much of Wednesday and into Thursday working through the outage. At one point on Thursday morning, the bank temporarily disabled debit card transactions and cash withdrawals for a brief period in an effort to get the system back online. 

"The outage stemmed from an issue with our gateway processing partner," Chime CEO and founder Chris Britt told Business Insider in emailed comments. "We're heads down today working to take care of our members," Britt said. "We feel like we let our members down and are focused on making things right."

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Read more: VC firms have poured $2.5 billion into fintechs like Chime and Varo this year. It's the latest threat to disrupt Main Street banks.

Chime customers took to Twitter complaining about the outages and seeking updates from the company. Some users said that they may ditch Chime and return to traditional banks such as Well Fargo or JPMorgan. 

 

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To be clear, the traditional banks aren't immune to these issues either. Wells Fargo experienced its own outage in February.

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Still, that hasn't stopped Chime customers from questioning the bank.

"This is the last thing that's ever supposed to happen at a bank. Customers can't access their money, that's ridiculous," Chime customer Jason Cousineau told Business Insider. "This is definitely going to make me reconsider using my Chime account."

Cousineau has banked with Chime for eight months. He first noticed issues when he was unable to log into the Chime app around 8:00pm on Wednesday. Though he has a checking account with a credit union, Cousineau prefers to use Chime because its technology is more user-friendly. 

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"It's like you have to pick and choose whether you want a reliable brick and mortar bank without as many new technologies, or if you want the online bank account, which is not obviously reliable," Cousineau said.

Read more: UK digital-only bank Monzo is launching in the US - but getting American customers to sign on may be a challenge

One Chime user started a Change.org petition calling for the company to compensate for damages incurred during the outage that already has over 1,800 signatures. On Twitter, there were complaints of customers being stranded at restaurants unable to pay or unable to buy gas for their morning commutes to work.

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It's not just traditional banks Chima has to compete with. VC funding for challenger banks has already reached $2.5 billion, breaking last year's record. The space is a crowded one as in addition to US-based Chime and Varo, European neobanks Monzo, N26, and Revolut have all begun expansion in the US. 

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