If you live in the US, chances are you use apps like Venmo and Cash App to pay off your friends or split the bills with your roommates. Lydia is a French startup that also turned payments into a mobile consumer app and service.
Now, after reaching 8 million users, the company is in an interesting position. Does it want to add more financial services to increase average revenue per user? Or does it want to simplify its app to make sure as many people as possible use Lydia to send and receive money from their phones?
The company has essentially decided it doesn’t want to choose one option over the other. So Lydia launches a controversial bank, Sumeriaand is split into two apps — Lydia for peer-to-peer payments and Sumeria for mobile-first bankers.
“We are proud to announce the launch of our European banking project, Sumeria. It is the same company, Lydia Solutions, that is starting a banking project,” Lydia co-founder and CEO Antoine Porte told TechCrunch.
The decision makes sense if you use Lydia for more than a few years. After raising 235 million euros ($255 million at today’s exchange rate) and focusing on growth, the company decided to refocus on monetization in late 2022 and 2023.
The result was a mixed bag as Lydia got older and her fit became more complicated. While most users used Lydia for quick mobile payments, the company kept telling its users that they could also use it as a bank account with a dedicated account number and a Visa debit card. The company also offers stock and crypto trading, small loans, savings accounts, cash back and more.
Two million users are now using these advanced features, and some of them have even started paying for a monthly subscription — the company says this part of the company is profitable. But in the process, Lydia accidentally alienated some of its user base – it was no longer as simple to use as it used to be.
That’s why Lydia strives to bring clarity to its offerings. A few weeks ago, the company released a second app, simply (and confusingly) called Lydia, dedicated to peer-to-peer payments. Existing Lydia users who just want to send money with their phone and create money pots should switch to this new app. Hopefully this will be the last confusing move.
As for Lydia’s initial app, the company is completely changing its approach to mobile banking and launching Sumeria, a European challenge bank. It’s a new name and a new beginning.
The move comes just months after communications and influencer expert Anne Boistard fielded complaints from former Lydia employees about her Instagram account. Balance Ton Agency.
Porte and Lydia co-founder and president Cyril Chiche admitted they made mistakes in the past. “Nothing new has been released. These are things we had already worked out internally,” Chiche said. Now, the company wants to move forward and the new brand is part of that process.
“We already had this idea [of rebranding] in mind. It was already in the works. But all this of course helped us move on to something more serious. We were criticized for the way we operated as a scrappy startup,” Porte said.
All the banking features of Lydia have been transferred to Sumeria. Users get a bank account with a dedicated IBAN to receive money and make SEPA payments, as well as a debit card they can check from their phone. The company believes it can make a better bank account than traditional banking institutions. This step is reminiscent of the previous wave of European and British challenger banks, such as N26, Monzo and Starling Bank.
“Banks work for their own interests before those of their customers. It’s not using technology in an effective way,” Chiche told TechCrunch. “Online banking is a software interface to processes and organizations that are clearly outdated and therefore very expensive to operate.”
Sumeria brings a new logo, some new card designs, and a complete redesign of the mobile app with a simpler main screen. You’ll see your card in a customizable digital wallet on the app’s home screen, your main account and its balance at the top, and your most recent transactions at the bottom.
You can scroll down to see all your accounts, or scroll up to see a little more of your transaction history. There is no menu at the bottom of the screen to switch between tabs. Sumeria is also launching a web interface so you can view your balance and transactions without having to install the app or if you want to use a computer.
What sets it apart from other challenger banks is that Sumeria wants to simplify the way money is handled. People will earn 2% on their cash balance (4% for the first three months) as long as they use their Sumeria card at least 15 times a month — your money doesn’t need to be segregated into a separate savings account.
“We create interest in all your accounts. You don’t have to put money in this or that account,” Porte said. “There are currently 500 billion euros of non-interest-bearing deposits in personal current accounts in France,” Chiche said.
Unlike Revolut, Sumeria will focus exclusively on the European market so that people living in France, Germany or Spain will feel like they are using a French, German or Spanish bank account. “Their vision was international, not European. The valuation required to raise that much money made them promise too much,” Porte said.
With this new name, the company hopes that people will take Sumeria more seriously and consider using it as their main bank account — that’s the other reason for the rebranding. That’s also why the company will open a store in Paris this summer, where people can chat with Sumeria experts.
It will be a kind of bank branch, but without the usual offices you can find in bank branches. It will function more like the genius bar in Apple stores.
Lydia has set ambitious goals with Sumeria. The company plans to invest 100 million euros in its new venture and hire 400 people over the next three years. Sumeria wants to reach 5 million customers by 2027.
