Digital-only challenger bank Chime‘s recent outage may have riled many customers on social media, but the company’s real-time response to the crisis ensured damage to the brand was nipped in the bud.
On October 16, Chime’s app went dark on its 5 million customers. Customers complained of not being able to receive their paychecks or pay their bills. It was a crisis for a company that prides itself on its customer-centric approach. But the company’s always-on response was the reason it was able to repair its reputation, according to Celent senior analyst Stephen Greer. It also represents a departure from the guarded approach to communication taken by large incumbent banks.
So we getting some compensation or what? Not being able to use my debit card is an inconvenience. People got bills to pay and need to eat.
— Lexis.k ♕ (@lexanelle) October 16, 2019
“[Fintech startups] take a fundamentally different approach to customer communication– which is to be a very customer oriented,” Greer said. “Banks, for decades, have been very product focused. There’s just a fundamental difference in the way [startups] market themselves.”
How Chime handled the service interruption
On October 16, Chime’s app and website stopped working, and customers could not access funds or make purchases online or in-store. The day the interruption began, the company reported that its processor was experiencing “issues” resulting in the temporary cessation of service.
The next day, Chime posted another update, and by October 18, the app and website were back up and running. Chime did not respond to requests for comment by press time, but CEO Chris Britt this week told an audience at Money2020 that the incident was a “learning experience”.
Greer explained that upfront communication on social media is becoming a litmus test for customer trust, particularly as startups learn to work with third-party partners.
Chime isn’t the only fintech startup to take an open approach to dealing with customers during service interruptions. For example, at the end of October, following an outage at digital-only banking brand Revolut, the company added a detailed blog post explaining the source of the problem, how the company addressed the issues and lessons learned.
“Due to a human error, changes were made without backward compatibility, meaning that there was a change in the database behind the authentication service that authenticates every mobile app request. When the authentication service isn’t working properly, it leads to problems accessing the app,” Revolut wrote.
According to an analysis of Twitter mentions by Brandwatch, social media was critical to maintaining a sense of transparency for Chime. On October 17, the day after the outage began, 79% of Chime mentions were negative. However, by October 23, sentiment had turned over 70% positive. Chime’s number of mentions also slowed down since the crisis, according to Brandwatch data.
According to Greer, service interruptions are inevitable growing pains for fast-growing startups. The winners will be those who take on these challenges quickly and openly. “[Service interruptions] are a double edged sword — the reality is that brand image is helped by the transparency that goes into the response.”
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