There’s a good chance that you use apps like Cash App and Venmo to split bills with your roommates or pay your friends back. Lydia is a French company that also made a payment app and service for mobile users.
The company is now in an interesting spot after getting 8 million users. Does it want to raise the average amount of money each user makes by adding more banking services? Or does it want to make its app easier to use so that as many people as possible can give and receive money from their phones with Lydia?
The business has pretty much decided it doesn’t want to choose between the two. That’s why Lydia is starting a challenger bank called Sumeria and splitting into two apps: Lydia for peer-to-peer payments and Sumeria for people who want a bank account that works best on their phone.
“We’re excited to say that our European banking project, Sumeria, has begun.” Lydia Solutions, the company that is starting a banking project, that Antoine Porte, who is also co-founder and general manager of Lydia, meant the same thing.
If you’ve been using Lydia for more than two years, this choice makes sense. The company raised €235 million ($255 million at today’s exchange rate) and focused on growth. In late 2022 and early 2023, they chose to shift their attention back to making money.
There have been some good and some bad results as Lydia grew and its app got harder to use. People mostly used Lydia to make quick payments with their phones, but the company kept telling people they could also use it as a bank account because it came with a Visa debit card and a separate account number. The business also gives out small loans, savings accounts, cashback, trades stocks and cryptocurrencies, and more.
The advanced features are now being used by two million people, and some of them have even started paying a monthly fee. The business says that this part of the business is now profitable. Lydia lost some users because it wasn’t as easy to use as it used to be while it was becoming more complex.
That’s why Lydia is trying to make its products more clear. A few weeks ago, the company released a second app for peer-to-peer payments. It was simply named Lydia, which can be hard to understand. People who already use Lydia and only want to send money and make money pots should switch to this new app. This should be the last move that is hard to understand.
The company is changing how it does mobile banking and starting Sumeria, a European challenger bank. This will affect Lydia’s original app. A new name and a fresh start.
This move comes a few months after Anne Boistard, a communications expert and social media influencer, used her Instagram account, Balance Ton Agency, to collect complaints from former Lydia workers.
Cyril Chiche, co-founder and president of Porte and Lydia, said that they had done wrong things in the past. “Nothing new came out.” “We had already thought about these things internally,” Chiche said. The business wants to move on, and the new name is a part of that.
“Changes to our brand name were already in mind.” It was already being planned. Of course, that all helped us get to something more important. As a scrappy company, we got in trouble for how we behaved, Porte said.
In Sumeria, all of Lydia’s banking traits have been brought over. Users are given a bank account with a unique IBAN number that lets them receive money and make SEPA payments. They are also given a debit card that they can manage from their phone. People at the company think their bank account will be better than those offered by regular banks. This pitch makes me think of the last wave of startup banks in Europe and Britain, like N26, Monzo, and Starling Bank.
“Banks put their own needs ahead of those of their customers.” Chiche told TechCrunch, “It doesn’t make good use of technology.” “Online banking is just software that stands in for processes and organizations that are very old and cost a lot to run.”
It has a new logo, some new card styles, and a completely redesigned mobile app with a main screen that is easier to use. The home screen of the app shows your card in a digital wallet that you can customize. Your main account and its balance are at the top, and your most recent activities are at the bottom.
If you scroll down, you can see all of your accounts. If you scroll up, you can see more of your transaction records. You can’t move from one tab to another using the menu at the bottom of the screen. It will also have a web interface soon, so you can check your balance and see your activities from a computer or without installing the app.
Sumeria is different from other startup banks because it wants to make it easier for you to handle your money. As long as someone uses their Sumeria card at least 15 times a month, they will make 2% on their cash balance (4% for the first three months). Your money doesn’t need to be in a separate savings account.
“We earn interest on all of your accounts.” Porte told them, “You don’t have to put money in this or that account.” “Right now, €500 billion is deposited into personal current accounts in France that don’t earn any interest,” Chiche said.
Sumeria, on the other hand, will only serve customers in Europe. This way, people who live in France, Germany, or Spain will feel like they are using a bank account in those countries. They had a global, not a European, view. Due to the need to raise a lot of money, they made too many promises, Porte said.
The other reason for the name change is that the company wants people to take Sumeria more seriously and think about making it their main bank account. That’s also why the business is opening a store in Paris this summer where people can talk to Sumeria experts.
It will be kind of like a bank branch, but it won’t have any rooms like a bank branch does. It will work more like Apple shops’ Genius Bars.
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Lydia’s plans for Sumeria are very big. In the next three years, the business wants to hire 400 people and put €100 million into its new business. Its goal is to have 5 million users by 2027.
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