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Chime says that the layoffs that the company just carried out are in line with its priorities at the time.
Online banking platform Chime has laid off 12% of its staff, according to a recent report by The Information. Considering that the bank has a workforce of 1,300 employees, this means that about 156 individuals are affected by the axing decision.
Chime Cites Reason for Staff Lay-offs, Reveals More Action Plans
For Chime, there is an overwhelmingly obvious reason to cut down on its staff. And that’s because of the unfavorable market conditions that have persisted in fintech for a while now.
However, according to a memo obtained from Chime co-founder Chris Britt, the lay-off is just one of many steps that the company would be taking, to ensure it thrives. He assures that that is the only route to profitability. Part of the memo reads:
“The changes will help, but we also need to adjust the size of our organization as we increase our focus and forge our path to profitability.”
Britt further added that he and co-founder Ryan King are already working on other workable plans. He says those may include cutting down on marketing expenses, reducing the number of contractors, and a general downward revision of all costs the company incurs.
Is There a Growing Trend of Staff Lay-Offs in Fintech Startups?
Chime’s recent decision reflects the fate that fintech startups are currently dealing with, albeit globally. It is also worth mentioning that the present situation is in sharp contrast to the boom that was experienced in the sector last year. Thereby, causing fintech startups to have to cut down on all costs by all means necessary.
Just like Chime, the most recent staff lay-off was done by corporate spending startup Brex. Brex cut its staff by 11% after being valued at $12.3 billion earlier in 2022. And its reason for the decision is not far from the usual. That is the difficult macroeconomic environment. Opendoor also opened the door to let 18% of its staff go some moments ago.
But yet, looking from a broader angle, tech layoffs might be gradually reducing. Especially when compared to how rampant it was some months back. According to layoffs.fyi, the worst period of layoffs has come and gone since August and there might be hope.
For Chime though, the layoffs that the company just carried out, are in line with its priorities at the time. Interestingly, while some positions are being eliminated, others are being created and eligible candidates are being hired, according to a spokesperson.