If you reside in the U.S., chances are high you employ apps like Venmo and Cash App to pay again your pals or cut up the payments with your roommates. Lydia is a French startup that additionally turned payments right into a mobile shopper app and repair.
Now, after reaching 8 million customers, the firm finds itself in an fascinating place. Does it wish to add extra monetary companies to develop its common income per person? Or does it wish to simplify its app to ensure that as many individuals as potential use Lydia to ship and obtain cash from their telephones?
The firm has basically determined that it doesn’t wish to decide one choice over the different. That’s why Lydia is launching a challenger financial institution, Sumeria, and splitting itself into two apps — Lydia for peer-to-peer payments and Sumeria for people who find themselves in search of a mobile-first checking account.
“We’re proud to announce the launch of our European banking challenge, Sumeria. It’s the identical firm, Lydia Solutions, that’s launching a banking challenge,” Lydia’s co-founder and normal supervisor, Antoine Porte, advised TechCrunch.
The choice is smart when you’ve been utilizing Lydia for greater than a few years. After elevating €235 million ($255 million at in the present day’s trade price) and specializing in development, the firm determined to refocus on monetization in late 2022 and 2023.
The outcome has been a blended bag as Lydia grew bigger and its app grew to become extra difficult. While most customers had been utilizing Lydia for fast mobile payments, the firm saved telling its customers that they may additionally use it as a checking account with a devoted account quantity and a Visa debit card. The firm additionally gives inventory and crypto buying and selling, small loans, financial savings accounts, cashback and extra.
Two million customers at the moment are utilizing these superior options, and a few of them even began paying for a month-to-month subscription — the firm says that this a part of the firm is worthwhile. But throughout that course of, Lydia inadvertently alienated a part of its person base — it was not as easy to make use of because it was.
That’s why Lydia is making an attempt to carry readability to its choices. A couple of weeks in the past, the firm launched a second app, merely (and confusingly) referred to as Lydia, devoted to peer-to-peer payments. Existing Lydia customers who simply wish to ship cash with their cellphone and create cash pots ought to swap to this new app. Hopefully, this will likely be the final complicated transfer.
As for Lydia’s unique app, the firm is totally altering its method to mobile banking and launching Sumeria, a European challenger financial institution. It’s a brand new title and a brand new begin.
This transfer comes just a few months after communications professional and influencer Anne Boistard gathered complaints from former Lydia workers for her Instagram account, Balance Ton Agency.
Porte and Lydia’s co-founder and president, Cyril Chiche, admitted that they made errors in the previous. “Nothing new was launched. These are issues that we’d already processed internally,” Chiche mentioned. Now, the firm needs to maneuver on and the new model is a part of this course of.
“We already had this concept [of rebranding] in thoughts. It was already in the works. But all that in fact helped us transfer on to one thing extra severe. We have been criticized for the method we acted as a scrappy startup,” Porte mentioned.
All of Lydia’s banking options have been carried over to Sumeria. Users get a checking account with a devoted IBAN to obtain cash and make SEPA payments, in addition to a debit card that they will management from their cellphone. The firm believes it might make a greater checking account than conventional banking establishments. This pitch is harking back to the earlier wave of European and British challenger banks, akin to N26, Monzo and Starling Bank.
“Banks work for their very own pursuits earlier than these of their prospects. It doesn’t use expertise in an environment friendly method,” Chiche advised TechCrunch. “Online banking is a software program front-end for processes and organizations which can be clearly outdated and due to this fact very costly to run.”
Sumeria brings a brand new emblem, some new card designs and an entire mobile app redesign with an easier predominant display screen. You’ll see your card in a customizable digital pockets on the app house display screen, your predominant account and its stability at the high, and your most up-to-date transactions at the backside.
You can 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 at the backside of the display screen to modify from one tab to a different. Sumeria can also be launching an internet interface so you’ll be able to see your stability 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 method you handle cash. People will earn 2% on their money stability (4% for the first three months) so long as they use their Sumeria card no less than 15 instances per 30 days — your cash doesn’t must be segregated to a separate financial savings account.
“We generate curiosity for all of your accounts. You don’t must put cash on this or that account,” Porte mentioned. “There are at the moment €500 billion of deposits that don’t generate any curiosity in private present accounts in France,” Chiche mentioned.
Unlike Revolut, Sumeria will focus completely 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 imaginative and prescient was worldwide, not European. The valuation required to lift a lot cash made them promise an excessive amount of,” Porte mentioned.
With this new title, the firm hopes folks will take Sumeria extra critically and think about using it as their predominant checking account — that’s the different cause for the rebranding. That’s additionally why the firm will open a retailer in Paris this summer season the place folks will be capable of speak to Sumeria consultants.
It will likely be a form of financial institution department, however with out the traditional places of work that yow will discover in financial institution branches. It will work extra like the genius bar in Apple shops.
Lydia has set formidable objectives with Sumeria. The firm plans to speculate €100 million in its new enterprise and rent 400 folks over the subsequent three years. Sumeria needs to succeed in 5 million prospects by 2027.
