If you live in the US, you may be using apps like Venmo or Cash App to pay back friends or split bills with your roommate. Lydia is a French startup that has turned payments into mobile apps and services for consumers.
Now, with 8 million users, the company finds itself in an interesting position. Do you want to add more financial services to increase your average revenue per user? Or simplify your app so that as many people as possible can use Lydia to send and receive money from their mobile phones? Do you want to?
The company essentially decided it didn't want to choose one option or the other. That's why Lydia launched challenger bank Sumeria and split it into her two apps: Lydia for peer-to-peer payments and her Sumeria for people looking for a mobile-first bank account.
“We are proud to announce the launch of the European banking project Sumeria. It is the same company that is launching the banking project, Lydia Solutions,” said Antoine, co-founder and general manager of Lydia. Port told TechCrunch.
If you've been using Lydia for more than a few years, this decision makes sense. After raising €235 million ($255 million at current exchange rates) and focusing on growth, the company has decided to refocus on monetization from the end of 2022 to 2023.
The results were mixed as Lydia grew larger and the app became more complex. While most users were using Lydia for quick mobile payments, the company continued to tell users that it could also be used as a bank account with a dedicated account number and Visa debit card. The company also offers stock and cryptocurrency trading, microloans, savings accounts, cashback, and more.
Today, 2 million users are using these advanced features, and some of them have started paying for monthly subscriptions. The company says this segment is profitable. However, during the process, Lydia accidentally alienated part of her base of users. She is no longer as easy to use as she used to be.
That's why Lydia is trying to be clear about what it offers. A few weeks ago, the company launched a second app dedicated to peer-to-peer payments, simply (and confusingly) called Lydia. Existing Lydia users who just want to send money and create a money pot with their mobile phones should switch to this new app. I hope this is the last confusing move.
As for Lydia's original app, the company is completely changing its approach to mobile banking and launching Sumeria, a European challenger bank. It's a new name and a new start.
The move comes months after communications expert and influencer Anne Bostard's Instagram account, Balance Tong Agency, attracted complaints from former Lydia employees.
Cyril Chichet, co-founder and president of Port and Lydia, admitted he has made mistakes in the past. “Nothing new was released. These are things that have already been processed internally,” he said. Now, the company wants to move forward, and new brands are part of that process.
“We already had this idea [of rebranding] With that in mind. Construction had already begun. But, of course, all this helped us move on to more serious problems. We were criticized for our rough-and-tumble startup approach,” Port said.
Image credit: Romain Dilet / TechCrunch
All banking functions of Lydia were taken over by Sumeria. The user gets a bank account with a dedicated IBAN to receive money and make her SEPA payments, and a debit card that can be controlled from a mobile phone. The company believes it can create better bank accounts than traditional banking institutions. The proposal is reminiscent of previous waves of challenger banks in Europe and the UK, including N26, Monzo and Starling Bank.
“Banks are working in their own interests rather than their customers' interests. They are not using technology efficiently,” Chiche told TechCrunch. “Online banking is a front-end process and organizational software that is clearly outdated and therefore very expensive to operate.”
Sumeria brings a complete mobile app redesign with a new logo, some new card designs, and a simpler main screen. Your card appears in a customizable digital wallet on the app's home screen, with 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 dig deeper into your transaction history. There is no menu at the bottom of the screen to switch from one tab to another. Sumeria has also launched his web interface, which will allow you to check your balances and transactions without installing an app or using a computer.
What sets Sumeria apart from other challenger banks is that it wants to simplify the way you manage your money. As long as you use your Sumeria card at least 15 times a month, you'll earn 2% of your cash balance (4% for the first 3 months). There's no need to segregate your money into separate savings accounts.
“We generate interest on all your accounts. You don't have to put money in this or that account,” Port said. “France currently has 500 billion euros in non-interest bearing deposits in personal current accounts,” Ciché said.
Image credit: Lydia Solutions
Unlike Revolut, Sumeria focuses solely on the European market, allowing people living in France, Germany, or Spain to feel like they are using a French, German, or Spanish bank account. “Their vision was international, not European. The valuations required to raise this much money made them promise too much. '' Port said.
With this new name, the company hopes people will take Sumeria more seriously and consider using it as their main bank account. That's another reason for the rebrand. That's why the company is opening a store in Paris this summer where you can talk to Sumeria experts.
This will be a bank branch of sorts, but without the usual offices found in bank branches. It would function like the Genius Bar in the Apple Store.
Lydia set ambitious goals with Sumer. The company plans to invest 100 million euros in the new business and hire 400 people over the next three years. Sumeria says that by 2027 he wants to have 5 million customers.