Banking

Challenger bank Current doubles customers in six months

Current, a U.S. challenger bank that aims to serve Americans overlooked by traditional banks, this week raised $131 million in Series C funding.

Tiger Global Management led the round and was joined by Sapphire Ventures and Avenir — all three are new investors in Current. Three other firms that have put money in the company before — Foundation Capital, Wellington Management Co. and QED Investors — also participated in the latest round.

Current has raised $180 million in total venture funds and is valued at $750 million.

The new injection of capital follows a period of rapid growth at the company. It said its number of members doubled in the past six months to more than 2 million. Current said revenue has risen more than 500% year over year, though it declined to disclose any dollar amounts.

“From a macro perspective, I think the [financial] system is building wealth inequality, maybe not intentionally,” says Stuart Sopp, CEO of Current. “I don’t think there’s some puppet master saying hey, we’re going to make these people rich and these people poor. But it’s definitely happening, and the existing structure is driving a wedge between two classes of people in America.”

Current offers basic banking, early access to paycheck funds and financial education for a $36 annual subscription fee. It provides a fee-free overdraft facility of up to $100 for those who have their paycheck deposited in a Current account.

With the additional funding, Current plans to roll out more products.

The company, which was launched by founder and CEO Stuart Sopp in 2015, was originally designed as a banking app for teens. It quickly pivoted to serve the needs of people who live paycheck to paycheck. The user base today is about 50% Black, and the average customer is 27 years old.

“We aim to onboard people onto financial services,” Sopp said in a recent American Banker podcast.

Sopp started his career as a trader and manager of traders on Wall Street, at Morgan Stanley, Citigroup, Deutsche Bank and Bank of New York Mellon.

“Sixteen years is enough for anyone to trade every day and every night,” he joked.

He got an understanding of how financial products are created and moved, and he said he saw systemic unfairness.

“From a macro perspective, I think the [financial] system is building wealth inequality, maybe not intentionally,”Sopp said. “I don’t think there’s some puppet master saying hey, we’re going to make these people rich and these people poor. But it’s definitely happening, and the existing structure is driving a wedge between two classes of people in America.”

The goal of Current, Sopp said, was to build a bank “that was accessible to everyone and would fix with capitalism, not with socialism, some of these things.”

The main way Current helps is through low fees and not charging overdraft fees.

“The demographic that can afford the least is potentially paying the most,” Sopp said of some banks’ large overdraft fees.

Many fintechs and challenger banks have sought or obtained bank charters in the past year — Varo, SoFi, and Oportun among them. Sopp said he has no plans to pursue this path.

“The economic cost-benefit analysis is, we should just partner,” Sopp said. “We see very little reason for us to go and get a bank charter other than having a more direct relationship with regulators. That may happen in time; the regulators will demand it if we get to tens of millions of customers.”

Sopp also noted that companies that have a bank charter have to acquire deposits. The problem is, he said, that Current’s core audience — consumers living paycheck to paycheck — does not have a lot of money to deposit.

“I have this paralyzing fear of trying to be a lender,” Sopp said. “I don’t want to be a lender, because we won’t solve this problem. We will then have to go after more affluent people, like everyone else.”


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