Should you dwell within the U.S., likelihood is you utilize apps like Venmo and Money App to pay again your mates or cut up the payments along with your roommates. Lydia is a French startup that additionally turned funds right into a cell client app and repair.
Now, after reaching 8 million customers, the corporate finds itself in an attention-grabbing place. Does it wish to add extra monetary companies to develop its common income per consumer? Or does it wish to simplify its app to make it possible for as many individuals as doable use Lydia to ship and obtain cash from their telephones?
The corporate has basically determined that it doesn’t wish to choose 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 basic supervisor, Antoine Porte, instructed 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 this time’s change price) and specializing in development, the corporate determined to refocus on monetization in late 2022 and 2023.
The consequence has been a combined bag as Lydia grew bigger and its app grew to become extra difficult. Whereas most customers had been utilizing Lydia for fast cell funds, the corporate saved 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 consumer base — it was not as easy to make use of because it was once.
That’s why Lydia is attempting to deliver readability to its choices. Just a few weeks in the past, the corporate launched a second app, merely (and confusingly) referred to as Lydia, devoted to peer-to-peer funds. Current Lydia customers who simply wish to ship cash with their cellphone and create cash pots ought to swap to this new app. Hopefully, this would be the final complicated transfer.
As for Lydia’s unique app, the corporate is totally altering its strategy to cell banking and launching Sumeria, a European challenger financial institution. It’s a brand new identify and a brand new begin.
This transfer comes a couple 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 prior to now. “Nothing new was released. These are things that we’d already processed internally,” Chiche mentioned. Now, the corporate needs 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 mentioned.
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 cellphone. The corporate believes it may make a greater checking account than conventional banking establishments. This pitch is paying homage to the earlier wave of European and British challenger banks, reminiscent of 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 instructed 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 emblem, some new card designs and an entire cell app redesign with an easier principal display screen. You’ll see your card in a customizable digital pockets on the app house display screen, your principal account and its steadiness on the high, and your most up-to-date transactions on the backside.
You’ll be able to scroll all the way 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 screen to change from one tab to a different. Sumeria can be launching an online interface so you possibly can 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 needs to simplify the best way 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 instances monthly — 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 mentioned. “There are currently €500 billion of deposits that don’t generate any interest in personal current accounts in France,” Chiche mentioned.
In contrast to Revolut, Sumeria will focus completely on the European market in order that individuals who dwell 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 mentioned.
With this new identify, the corporate hopes individuals will take Sumeria extra significantly and think about using it as their principal checking account — that’s the opposite cause for the rebranding. That’s additionally why the corporate will open a retailer in Paris this summer time the place individuals will be capable of discuss to Sumeria consultants.
It will likely be a type of financial institution department, however with out the standard workplaces that yow will discover in financial institution branches. It would work extra just like the genius bar in Apple shops.
Lydia has set formidable targets with Sumeria. The corporate plans to speculate €100 million in its new enterprise and rent 400 individuals over the subsequent three years. Sumeria needs to succeed in 5 million clients by 2027.
