ChimpChange lists on ASX

The US-based digital bank has flagged plans to grow a “real business,” not acquire customers to monetise down the track.

US-based digital bank start-up ChimpChange today listed on the ASX, offering what it says is a “recession-proof” banking app targeted squarely at millennials.

ChimpChange, based in Hollywood, is aiming to disrupt the banking sector with an app in which users — for now only Americans — can send each other money using mobile phone numbers with an attaching debit Mastercard.

The start-up landed on the ASX today after a completing a $15 million capital raise at 80c a share, valuing the company at $50.8 million.

Shares in ChimpChange closed the session down at 56 cents a share, after opening at 76.5c.

Founder and managing director Ash Shilkin told The Australian his company’s banking partners and processing partners wanted the extra transparency that comes with a public listing, and would provide the capital needed for a global push.

“We grew really rapidly last year,” he said. “We’ve now got 87,000 customers, and a large portion of those are millennials, who are attracted to a product with no monthly account fees, no overdraft fees. We can do everything a bank can do but more.”

In the company’s prospectus, Chairman Peter Clare said: “ChimpChange’s vision is to change the way people bank by offering an innovative, feature-rich, digital banking alternative that includes both the existing functionality expected of traditional banks with the addition of new features at for free or for a low cost.”

Mr Shilkin said despite launching as recently as June 2015 ChimpChange already had a number of additions to the board, nabbing ex-Westpac executive Peter Clare as Chairman and a Chief Marketing Officer in ex-Acorns CMO Nick Roberts, who Mr Shilkin described as “an absolute fintech rock star.”

He added that despite recent questions surrounding tech IPOs on user numbers and valuations, there was valid shareholder pressure to deliver a “real business.”

“There have been times in the past where it was sufficient to grow your customer base without having any real fundamentals underpinning it. I always took the view that we’ll build a business based on fundamentals, we’re not going to just acquire a whole lot of customers and work out how to monetise them later,” he said.

“We’re targeting 18 months to get to cashflow break even point and I think it’s very achievable given we understand our ability to market and the usage from our existing customer base.”

Mr Shilkin said an Australian launch is on the cards this year, probably through a partnership with a second-tier bank.

He said the biggest use of the raising proceeds would be marketing, with ChimpChange’s technology platform — a “secure, well oiled machine” — largely already built.

“Now it’s about deploying the capital effectively into marketing channels,” he said. “Working out which are working, not working, then scaling the channels that are working. We also need to obviously stay ahead of the innovation curve, so we’ll be doing that too.”

For Mr Shilkin the app’s biggest boon is its ‘recession-proof’ nature, particularly in light of Brexit and ongoing economic uncertainty. He said ChimpChange’s low price in relation to banks would make it particularly attractive for the underbanked and unemployed.

“In the US you’re paying 10 to 25 per month in account maintenance fees, and 35 dollars for an overdraft fee,” he said. “We have a huge regulatory advantage and we have 20 people in Los Angeles, we can keep that overhead very tight. Our cost base is very low and very tight, so I think the future economically, whatever it holds, we’ll be a good option in bad times or good.

“We’ll offer our free account every day of the week to those people who are getting ripped off by the banks.”

Mr Shilkin is one of the company’s biggest shareholders, with a 18.75 per cent stake after the IPO, while CO2 Group chairman Ian Trahar holds 17 per cent.