In the event you stay within the U.S., chances are high you utilize apps like Venmo and Money App to pay again your folks or break up the payments along with your roommates. Lydia is a French startup that additionally turned funds right into a cellular client app and repair.
Now, after reaching 8 million customers, the corporate finds itself in an attention-grabbing place. Does it need to add extra monetary providers to develop its common income per person? Or does it need to simplify its app to ensure that as many individuals as potential use Lydia to ship and obtain cash from their telephones?
The corporate has primarily determined that it doesn’t need to decide one choice over the opposite. That’s why Lydia is launching a challenger financial institution, Sumeria, and splitting itself into two apps — Lydia for peer-to-peer funds and Sumeria for people who find themselves on the lookout for a mobile-first checking account.
“We’re proud to announce the launch of our European banking project, Sumeria. It’s the same company, Lydia Solutions, that is launching a banking project,” Lydia’s co-founder and normal supervisor, Antoine Porte, advised TechCrunch.
The choice is smart if you happen to’ve been utilizing Lydia for greater than a few years. After elevating €235 million ($255 million at at the moment’s alternate fee) and specializing in development, the corporate determined to refocus on monetization in late 2022 and 2023.
The consequence has been a blended bag as Lydia grew bigger and its app grew to become extra difficult. Whereas most customers had been utilizing Lydia for fast cellular funds, the corporate stored telling its customers that they might additionally use it as a checking account with a devoted account quantity and a Visa debit card. The corporate additionally gives inventory and crypto buying and selling, small loans, financial savings accounts, cashback and extra.
Two million customers are actually utilizing these superior options, and a few of them even began paying for a month-to-month subscription — the corporate says that this a part of the corporate is worthwhile. However throughout that course of, Lydia inadvertently alienated a part of its person base — it was now not as easy to make use of because it was once.
That’s why Lydia is making an attempt to deliver readability to its choices. A number of weeks in the past, the corporate launched a second app, merely (and confusingly) known as Lydia, devoted to peer-to-peer funds. Present Lydia customers who simply need to ship cash with their telephone and create cash pots ought to change to this new app. Hopefully, this would be the final complicated transfer.
As for Lydia’s authentic app, the corporate is totally altering its method to cellular banking and launching Sumeria, a European challenger financial institution. It’s a brand new identify and a brand new begin.
This transfer comes a number of months after communications knowledgeable and influencer Anne Boistard gathered complaints from former Lydia staff for her Instagram account, Stability Ton Company.
Porte and Lydia’s co-founder and president, Cyril Chiche, admitted that they made errors up to now. “Nothing new was released. These are things that we’d already processed internally,” Chiche stated. Now, the corporate desires to maneuver on and the brand new model is a part of this course of.
“We already had this idea [of rebranding] in mind. It was already in the works. But all that of course helped us move on to something more serious. We were criticized for the way we acted as a scrappy startup,” Porte stated.
All of Lydia’s banking options have been carried over to Sumeria. Customers get a checking account with a devoted IBAN to obtain cash and make SEPA funds, in addition to a debit card that they’ll management from their telephone. The corporate believes it might probably make a greater checking account than conventional banking establishments. This pitch is paying homage to the earlier wave of European and British challenger banks, equivalent to N26, Monzo and Starling Financial institution.
“Banks work for their own interests before those of their customers. It doesn’t use technology in an efficient manner,” Chiche advised TechCrunch. “Online banking is a software front-end for processes and organizations that are clearly outdated and therefore very expensive to run.”
Sumeria brings a brand new brand, some new card designs and an entire cellular app redesign with an easier fundamental display. You’ll see your card in a customizable digital pockets on the app house display, your fundamental account and its steadiness on the high, and your most up-to-date transactions on the backside.
You may scroll right down to see all of your accounts or scroll as much as dig a bit extra in your transaction historical past. There’s no menu on the backside of the display to change from one tab to a different. Sumeria can be launching an online interface so you’ll be able to see your steadiness and transactions with out having to put in the app, or if you wish to use a pc.
What’s totally different from different challenger banks is that Sumeria desires to simplify the way in which you handle cash. Individuals will earn 2% on their money steadiness (4% for the primary three months) so long as they use their Sumeria card at the very least 15 occasions per thirty days — your cash doesn’t should be segregated to a separate financial savings account.
“We generate interest for all your accounts. You don’t have to put money in this or that account,” Porte stated. “There are currently €500 billion of deposits that don’t generate any interest in personal current accounts in France,” Chiche stated.
In contrast to Revolut, Sumeria will focus solely on the European market in order that individuals who stay in France, Germany or Spain really feel like they’re utilizing a French, German or Spanish checking account. “Their vision was international, not European. The valuation required to raise so much money made them promise too much,” Porte stated.
With this new identify, the corporate hopes folks will take Sumeria extra significantly and think about using it as their fundamental checking account — that’s the opposite purpose for the rebranding. That’s additionally why the corporate will open a retailer in Paris this summer season the place folks will be capable to discuss to Sumeria specialists.
Will probably be a kind of financial institution department, however with out the same old workplaces that you will discover in financial institution branches. It can work extra just like the genius bar in Apple shops.
Lydia has set bold targets with Sumeria. The corporate plans to take a position €100 million in its new enterprise and rent 400 folks over the following three years. Sumeria desires to succeed in 5 million prospects by 2027.
