Chime buys the bank it was renting

For most of the last decade the standard fintech answer to banking regulation was to find somebody who already had a charter and pay them to hold the deposits. The arrangement had an obvious appeal: the partner bank carried the examinations, the capital and the liability, and the fintech carried the app.

Chime has decided to stop renting. It agreed on 8 September to acquire Stride Bank, N.A. for $590m in cash, about one and a half times Stride's tangible book value, and to bring the charter in-house. Stride becomes wholly owned and is to be renamed Chime Bank, N.A.

The two have worked together for seven years, which is the detail that gives the price its meaning. This is not an acquisition of capability. Chime already had access to everything Stride does; what it did not have was the right to keep that access without asking.

That is the shift worth naming. A partnership is a contract, and a contract can be renegotiated, repriced, or ended by a regulator talking to the other party. Supervisors have spent three years pressing banks on how carefully they oversee the fintechs they sponsor, and the predictable effect has been to make sponsorship more expensive and more conditional for everyone renting one.

At some point on that curve, buying becomes cheaper than renting, and 1.5 times book is what that point looks like on a term sheet. Chime is paying a premium for the removal of a counterparty, not for a balance sheet.

The exchange is not free. A bank holding company answers to the Federal Reserve as well as the Office of the Comptroller of the Currency, holds capital against its assets, and files what banks file. The examinations Stride used to absorb arrive at Chime's own door instead, and they arrive whether or not the quarter was good.

Chris Britt, Chime's chief executive and co-founder, framed it as scale rather than structure: combining the company's brand and member relationships with "Stride's national charter and team" to "accelerate toward our vision to be the largest provider of primary bank accounts in America". Brud Baker, Stride's chairman and chief executive, said the charter and the team "will be central to what comes next".

Neither statement mentions the part that decides whether this works. The OCC and the Federal Reserve both have to approve it, and the deal is not expected to close until the first half of 2027, which is a long time to hold a price agreed in a different rate environment.

TabaPay reached the same conclusion a week ago at a smaller scale. Two firms buying their sponsors inside a fortnight is a pattern rather than a coincidence, and it suggests the banking-as-a-service era is ending the way most intermediated models end: the biggest customer decides to own the intermediary.