I thought BankSimple was a great brand, because it tells you what it is and fits well with the current zeitgeist.
What is "BankSimple?" A way to bank that's simple. Sounds interesting! Everyone hates how complicated banking is, right? Let's go to the website to find out more.
What is "Simple?" Who knows. A website that has something to do with banking--or so I'm told--with yet another web 2.0 one-word "brand", a really uninspiring one too. Hey, I wonder what's on Reddit.
Eh, Ally isn't just "Ally Inc," it's "Ally Financial," and it uses the term "Ally Bank" in advertising its banking services. And Mint doesn't do banking at all — they're purely an analytics service.
'Ally' is not a successful startup. Ally is the rebranded GMAC, whose founding dates back to 1919. GMAC was renamed (and officially transformed into a registered bank) as part of a series of changes which included receiving over $16 billion in federal bailout assistance.
While I think this may be true at first, if they gain any critical mass, the "Bank" in BankSimple would become redundant and wasteful.
I think it is good and forward looking to rebrand it Simple before launch so that becomes synonymous with banking. Imagine if Google was instead called GoogleSearch? Google became synonymous for Search and therefore the Search portion of their name is superfluous.
I for one applaud this move and think the branding is nice, clean, and, of course, simple ;)
Like how the "bank" in "Bank of America" is redundant and wasteful?
To clarify, I don't really care either way- I'm sure they had other reasons for dropping the "Bank" from their name, especially since they're not really a bank.
But I was replying to tdoggette not vaporstun, who was making (I think) the opposite point.
So my response was to point out that actually the banks we think of as not having "bank" in the name do, and it hasn't stopped us from referring to them without it. So if they stuck with Bank Simple, it would help people initially understand what they do, then once (if) they become a household name, people could refer to them as "Simple".
Of course, this is all ignoring the whole legislation stuff.
Many banks in the UK are referred to, and understood, in everyday language without the "bank": Barclays, Halifax, Natwest, Santander, Lloyds to name a few.
I think an important difference is that those are relatively unique words, unlike Simple, which is common and ambiguous.
Telling someone that you have your money in a simple account doesn't convey as much meaning as telling someone you have your money in a Barclay's account.
That's true in the Bay Area at least, but not necessarily everywhere. Back when I was their customer I recall visiting NYC, and asking several random strangers if they knew where I could find a "B of A", and none of them knew what I was talking about, until I clarified, "Bank of America".
I'm a New Yorker and I know what you mean by "B of A," as do many of the people I know. I think we're both dealing with small anecdotal data sets here, though.
I disagree. Even Citibank doesn't use the "bank" part on their main website, instead going by just Citi: http://citi.com
There are also many other large banks that omit "Bank" from their name such as Wells Fargo.
Keep in mind this is not a traditional bank, so following the rules of traditional banks would be inappropriate. They are better off following the rules of progressive startups which have been using simplicity in their names quite successfully as of late (e.g. Square).
As for Bank of America, you couldn't remove the Bank from Bank of America or it'd just be America which doesn't make a whole lot of sense. I don't think Bank of America, aside from controlling most of the banks in this country, is an objectively great brand. Rather, I thought it always tried to piggyback and sound like a federal entity which it's not and always found its name disingenuous.
The "Bank" in "BankSimple" was problematic for us. We're technically not a bank. We also don't want to be associated with the way people have approached banking, particularly in the US.
Sorry you're not crazy about the new name, but we're happy with it. It gives us a lot of room to grow.
There are actually laws prohibiting non-banks from using the word "bank" in their name. A lot of bank holding companies (which are not, technically, banks) got around this by replacing the "k" in "bank" with a "c" -- such as "BancAmerica Corp". I'm sure we all breathed a sigh of regulatory relief seeing that "c" there.
I'm a fan of the name Simple instead of BankSimple. I bank with ING and USAA at the moment, and I've never had any trouble with the fact that neither one has the name "Bank" in their brand.
I agree, calling it "BankSimple" feels limiting, and carries baggage from bad experiences I've had with banks in the past.
Now if only I could get an invitation to open an account!
Nitpicking: simpel.nl is actually a word joke, because they sell SIM-only cell phone subscriptions. So in effect their name does convey more meaning than "Simple" does, so it doesn't really belong in your list :)
This may be one of the few times I like the original name better than the one a company re-brands itself as.
I wish companies could so something like a pretend re-brand and make a fake post on their blog, submit it to HN and then see what the feedback is before just jumping in. HN provides some of the best and most brutal feedback I've seen in a community that simply can't be replicated by a focus group or board meeting.
In some regions of Germany, the noun "Simpel" means idiot (it still means "simple" as an adjective). Also note that the spelling is slightly different, but the pronunciation is pretty much the same. Just in case these guys ever want to reach around the globe...
You have a cheesy nickname, so it doesn't count. An organization that handles money doesn't need to be experimental on the name. I think it needs to be more on the safe side. It's money after all.
Does someone know exactly what they are? If we deposit money with them, how do we know we will get our money back? What does it mean when they say: "we're not a bank, but we deposit your money in FDIC-insured funds"?
I'm all for introducing new types of banking entities, and I'm willing to even try this company out, but in the age of post-Madoff and personally having my identity stolen, how do I know who these guys are, and that they will protect my money and my information?
> What does it mean when they say: "we're not a bank, but we deposit your money in FDIC-insured funds"?
it means that "simple"/"banksimple" is not a bank itself. you deposit your funds through their interface into actual banks while simple provides an interface to track and visualize your money. thats my understanding, at least. they definitely can't bill themselves as a bank when they aren't one.
Doesn't that mean that you don't actually get any of the legal protections (insurance and assurances) that comes with keeping your money in a bank or credit union?
I still don't get it. When I deposit $1000 into Simple, will I get a statement from Simple or the "banking partner". Can I go directly to the "banking partner" and withdraw my money or must I always go through Simple?
i don't work for them. read their FAQ and their site. if it doesn't answer their questions, ask them. if you're not convinced, don't use it. i suspect this isn't for everyone. it might not be for you. not everyone "gets" mint either.
Guys - the FAQ https://www.simple.com/faq/has all the answers you need.
- FDIC insurance is pass through from the underlying banks.
- you open your account through us, and manage it through us.
From all the questions here on HN I think you need to much more explicit with people about who actually holds their money, and that they can withdraw it from that Bank directly if they desire.
You FAQ absolutely does not answer my question. It sounds like this comment answers the question, but it still isn't explicit enough.
If I trust Joe Schmo with my money, he can put that money in a FDIC insured bank. In a way, you could say that I am protected by the FDIC insurance because if there is a run against the bank or something, my money would still be safe.
However, the mere fact that Joe is storing my money in an FDIC insured location doesn't mean that I get the same legal protections. What if Simple goes out of business? If it goes bankrupt?
I infer from this comment that my money would go nowhere if Simple went out of business, that I actually have a relationship with some bank that I could access and completely bypass Simple if I so chose, and that would continue to exist even if Simple went out of business. I would absolutely not trust you without this explicitly stated in the FAQ though.
Coincidentally I noticed that both Simple and Square do not mention anything (anymore) about who they are. No about page, no team page, no nothing. Especially with companies that are all about your money, I'd at least like to know who's running the shop.
Since it's pretty much the standard for startups to tell about themselves on their web site, this must have been a deliberate choice. What advantage does it have – especially in the case of Square and Simple – not to show who you are?
It's probably to do with image, particularly how that looks to ordinary consumers. If consumers look at a bank/payments company and see it is run by a small team of 20/30 something geeks, rather than wall street types they might be anxious about letting them take care of their money.
We had a "team" page on our previous site (under the BankSimple name). We plan on revising and reviving that page, it just didn't make the cut for our updated site for the Simple rebranding.
I like knowing who's behind the products and services I use too.
I noticed this as well, but I was able to see the team over on their Jobs page (and get a little bit of information about them too). I don't mean for this to be a solution to what you have brought up, but if you want to see something about them now it's a start.
From a regulatory perspective, we're a lot like a prepaid card. It's a well-known model that banking authorities, legal experts, and the government is comfortable with. You probably already use financial products that work similarly to the way we do.
That said, we hold ourselves to the same security standards that "real" banks do. I'd like to think we're going above and beyond when it comes to security.
"a lot like a prepaid card" doesn't answer the question. In what ways is it like a prepaid card? In what ways is it not? As the OP asked, where does the money actually go? It's a concern that you couldn't really answer the question.
I think that you are wrong that this is a concern. HN is not a financial forum, and you are asking for technical details that are irrelevant to the discussion. Simple's statement is that your money is in a third party bank, and Simple promises to be a prudent intermediary.
Maybe you could provide more detail? Simple appears to be very transparent in what service they provide and where they make their money. I said that HN is not a financial forum not because we aren't curious, but because we aren't informed. It's rather like customers fervently demanding to know which web framework you built your photo sharing website on, because "there was that thing that went bad that time before and like lots of people lost some data". Would it comfort this customer to know that you are using django? Or rails? It's foolish to provide any answer, because at such a high level there are no wrong answers. It's important to be concerned about your money, but let's be reasonable in the technical questions that we demand answers to. As Simple handles money, they are already heavily regulated and bonded, and if anyone doesn't get their money back, it won't be depositors.
Like others have echoed, I just want to know how this really works. Part of the problem of "disruption" is that it creates confusion and breaks the usual pattern of doing things. Noone will sign up for your service if it's just 1 huge black box that is completely foreign and new to them. You will need to educate how it all works... I mean, I still don't know what you guys do, or are.. You're not really a bank, Ok.. that's a start.
Firstly, I have no affiliation with Simple. But here's my problem with this line of reasoning: even if Simple wrote a detailed description of what they are and how they work, it wouldn't actually help anyone here. Maybe a couple of us have dabbled in something financial, but that doesn't make us qualified to judge whether banking with Simple is a sound financial decision. I don't fix my own medical problems, I don't practice my own law, and I certainly am not going to be my own banker. The best bankers in the world thought that CDO's would be a good (if risky) investment. It's arrogant to think that you can evaluate the financial stability of a financial company by asking a couple of shallow questions on an Internet forum. A couple of people have asked whether their money would be FDIC insured in their name - that's an implementation independent question that actually deserves an answer. Even so, how are any of us understand whether FDIC protection has exploitable loopholes? Let's drop the technical posturing and ask deeper questions that have meaningful answers. Yes, you might have to think before you type.
How can people evaluate if they're comfortable using this service without asking these questions? I don't see any technical posturing. And I do see, deep, pointed questions from people interested in the service, but still skeptical about it.
HN is not a financial forum, thus he should be precluded from asking about the details of this startup, who, is trying to brand themselves as a simple banking system based on their technical prowess. Further, you state he is asking technical questions which are irrelevant... how can TECHNICAL questions be irrelevant on HN - especially after you claim he shouldn't be asking financial-forum-esque questions here.
What then should he be asking.
Personally, you appear to me to be attempting to stifle perfectly relevant questions on HN and trying way to hard to filter commentary rather than add to the discussion.
Frankly, I am quite wary of Simple - especially when they state things such as "we are a lot like a prepaid card" -- you know why? Prepaid cards are largely targeted at low income/bad credit users and they pay a premium fee for such use and are bilked as a result.
I don't want to think that just because al3x and Simple are posting to HN they should automatically receive my trust.
ESPECIALLY given the inherent and complete corruption we know to exist at all levels of banking (if you have not been paying attention this last few years) Simple better make damn sure they set themselves apart.
It looks like their business model is "oooh shiny! and we are not a BANK!"
That doesn't cut it.
If they are simply an abstraction to the known egregious practices of other institutions, then simple needs to be very clear what advantage its customers gain from this model.
Relevant, always. But demanded? We don't always demand to know important details regarding open source NoSQL databases, and that's our area of expertise. Just suggesting that outrage isn't appropriate in this situation.
It's not outrage, people just don't understand how this business works. I think people want to know how it works both because they like understanding the inner workings of things, and they won't use it until they're convinced it will work.
If I am to be giving my money to anyone for safekeeping, I better be damned sure I understand the financial and legal details. Are the FDIC-insured accounts in (Bank)Simple's name? What happens if they go under? Can the creditors of Simple use those deposits to recoup their investment?
Honestly, I don't understand this rebranding. Are they making things other than banking simple? I love the idea of making banking more simple and easier, and that's why I thought their previous name, BankSimple, was better. Can someone help me understand this?
I think this is just a PR (over-)reaction to the current negative image of "banks" and provides some space between Simple and the "banking" practices it skewers in its marketing. (It is somewhat problematic to say "banks are bad for you" and "we're not a bank" when your name screams "we're a bank")
I guess it's also somewhat logically defensible, since FDIC-insured credit unions are just as qualified to be Simple's back-end partners. Though it still feels like a dodge, given how foggy the relationship is between Simple and their partner institutions. It feels like they want people to not think about Simple accounts supporting places like BofA, while still being free to partner with BofA in the background.
That said, I wonder if they've considered a "community-focused" account option, where people can specify that they only want their funds to be deposited with credit unions, accepting whatever slightly worse terms come with less competition.
It's extremely unlikely that we'd ever partner with an institution like BofA. We chose bank partners who are comfortable with our vision, and that includes not charging outrageous fees and engaging in other customer-hostile practices. The big banks have shown time and again that they're not in business to act in the best interest of their customers, and that makes them poor partners for us.
We don't currently have plans to allow customers to select the institution with which their funds reside, but it's something we'll take under consideration. Thanks for your thoughts.
> "We chose bank partners who are comfortable with our vision, and that includes not charging outrageous fees and engaging in other customer-hostile practices."
I don't mean to snipe, but you did partner with Visa, right? I understand that real life doesn't always present ideal choices, but that was rather part of my point. That people might switch to Simple with the idea that they won't be supporting those kinds of institutions, when via a partner deal, they may still be.
Or, in other words, if BofA woke up tomorrow and offered Simple a great customer-friendly back-end deal, while remaining customer-hostile to individuals who deal with them directly, would Simple's philosophy prevent a deal? And how happy would a customer be, if they switched from BofA to Simple only to find out that their money is technically in a BofA account?
And please don't take the criticism as something that it's not; I'm only posting because Simple sounds interesting and I'd like to see it do well.
We're focused on banking right now, but one of the things we like about the Simple name is that it gives us room to grow.
Another thing the new name gets us is freedom from both legal issues around the term "bank" and negative associations with the retail banking industry.
Plus, people kept mixing up "BankSimple" and "SimpleBank". That was driving me nuts :)
I wonder if there were issues with calling themselves BankX when they are not regulated as a bank. Edit to add, there are definite laws against this in some states, for instance CT (I'm not sure if this would apply in this case, but it's indicative of what is out there):
"No partnership, common law trust or association, or individual using a trade name, shall use, either as a part of its name or as a prefix or suffix thereto or as a designation of the business carried on by it, the word "bank", "banking", "banker", "bankers", "trust" or "savings", "
I read it as them hiding that from you for simplicity... you get this one interface and customer service which is wonderful, but to achieve this they are the proxy to your bank?
So... do they set up the bank accounts, or do you? Do you have the ability to go straight to your bank, or does Simple preclude that ability?
In this text:
> Simple is not a bank. Simple replaces your bank. We build the services and support you need to manage, understand, and automate your everyday spending and saving. Meanwhile, we integrate with chartered banks who manage your deposits in FDIC-insured products. We take care of you, our partner banks take care of your money, and jointly, we’ve designed a better financial experience.
I come out confused. Who has the money, can I go straight to them to get it?
That's the missing bit of clarity that would make me feel the love (trust).
What if you took mint.com, and instead of interfacing with hundreds of banks, you interface with a single bank. You can integrate much more closely and provide a better experience, and the customer shouldn't really care what the underlying bank is.
I wonder if the Mint team ever thought of going that route; they were/are very well placed to lead users into this model. Once you get used to the idea of being able to see all your accounts and varies metrics in one place it's obvious to appreciate being able to push data the other way and instigate transfers and bill payments from that nice central hub. Maybe the complications of getting the banks on board was the barrier.
The problem is that most customers do care what the underlying bank is, especially given the events over the past few years. The world may have been ready for this five years ago, but not anymore.
We work with partner banks who hold on to deposits. For all intents and purposes, you never have to think about who that partner bank is, but if you ever need to contact them directly, you'll know where your funds are.
Assumption alert: the account at the partner bank is in your name.
Your money must be in your name for it to get the FDIC's "$250,000 limit per depositor" insurance coverage. Having one big mattress with Simple's name on it would preclude your money being insured. Ergo, the account must be in your name.
I dont' think that's exactly true. There is such a thing as the CDARS program, which allows you to spread your money between accounts at multiple banks. Not sure what the limitations are on that, but I would be weary of assumptions on this.
If the money were not in my name, that would be deal killer.
It's per depositor per bank. Not per depositor period. Spreading your money across accounts at a single bank would not get you additional protection. Spreading your money across banks is how you protect more of your money.
I have no affiliation with Simple, but the relationship seems pretty straight forward. "Where" your money is becomes an abstraction. You hold an account with Simple, and are issued a Visa card with which you can access the funds in your account. Everything beyond that is transparent to you.
The accounts would technically be "in your name", since the funds are yours, but you never have to interface with the other bank, so it becomes a question of: do you want to know the technical specifics, or stick to what's pragmatic? Pragmatically, your account would be with Simple. Your money is in an FDIC insured depository bank, so you don't face any additional risk because of the "partner" distribution.
But pragmatically if they switch banks behind the scenes, that would usually require a hard credit pull every time it occurs. This would seem to hurt a person's credit score if that was what actually occurred (that's why the semantics are important).
Maybe the definition of a hard credit pull should be changed? It discourages people from shopping for loans since you often cant get a real interest rate quote until that provider gets your credit rating themselves anyways.
Well...I think FICO scores should be revamped anyways, but if you're shopping for loans, from what I recall, you only get hit once per 30 days (as obviously if you're in the market for a loan, you shouldn't be negatively affected for every vendor you approach).
Banking is an industry that is not nearly as simple as it seems. There is a difference between "you" walking in to a bank wishing to establish an account and a "partner" like Simple seeking to move depository funds between banks.
The bank pulls a credit check on you, the individual, to mitigate risk. A company like Simple would secure a bond or insurance to mitigate this risk for the partner bank, reducing the friction for a business critical action (moving partner banks).
Pragmatically, Simple wouldn't survive very long if every customer were hit with a hard credit pull every time Simple moved their funds. I'm not even sure that would be legal.
Sure. I would assume it would be very similar to the pre-screening credit card companies do (which does not negatively affect a person's credit); however, if you look at the common components of a person's FICO score, a number of factors _could_ be adversely affected depending on how these things are done (closing of revolving accounts, length of credit history, credit searches, etc.). People are asking questions because it's a complex subject...and while people want to believe they won't be adversely affected, that doesn't mean it won't happen. Simply due dilligence I think.
Fine, but if we're being pragmatic, then it's better to stay with BoA because they're the biggest and they're too big to be allowed to fail. Your money is safer with them than anywhere else.
I would be interested in knowing who the partners are so that I can assure myself that they are doing business in a way that differentiates them from the megabanks.
On a side note: I was onboard with the BankSimple idea when I thought they were building a bank, now, I'm not so sure. I think it's a good idea, but not a great idea.
hey al3x. thanks for the explanation. i had a read over the faq and i think it's still not too clear who would have the deposit. am i right in assuming that on opening an account my initial deposit would go to a specific bank partner, and i would be informed of who that partner was in case i ever wanted to approach them directly to access my deposit without your service?
I don't understand who I call when a problem arises. Do I call you, the anonymous partner bank, or is it simply impossible to call somebody if I have an issue?
You call us if you have a problem or question. We'll let you know what bank your funds reside at, but you should never need to contact them. We have our own in-house customer relations staff.
Okay, so let's take a real situation that happened to me: an ATM debited my account $600, but only dispensed $300. In that situation, I call you, and what happens from there?
Thank you for taking the time to answer some of our questions on what is surely a busy day.
Does this mean you only find out where your funds are if you call and ask, or is there some page (probably hidden under an 'advanced options' panel I suppose) showing the underlying accounts and their balances, internal transfer transaction logs, etc?
Can you tell us which banks in particular will be holding the deposits? I ask because I am interested in your product, but I do not want to do business with any bank that repeatedly forecloses on houses for which it holds no mortgage, hires mercenaries to commit the crime of breaking and entering, has a chief underwriter who has testified "Defective mortgages increased during 2007 to over 80 percent of production," or has admitted to over 100,000 instances of perjury. As such I'd like to be certain that you aren't doing business with Bank of America, Wells Fargo, or Citigroup before I open an account.
Love where you're going with this; however, the trust level is just not high enough for me to move my funds from a credit union (becu.org for me) to your partner bank. Now if you could partner with them, or a similar credit union, that would be amazing.
So you're a metabank, and you provide mint like tools for analyzing expenses, paying bills, etc.. Then you provide better customer service or a better experience or something like that?
Do you plan to use customers leverage to get better terms with the actual banks? Like could you move all the accounts to another bank if it paid better interest or something like that? Do you take a cut of the action?
Banking is a commodity product. Other than access to ATMs, customer service, and online banking there's not much difference between banks (other than rates & fees, of course).
Same goes for the customers, honestly. If the bank doesn't extend you credit anyway, its a "your money is green" situation.
Yet the marketplace is still inefficient, and they think they can make money by making it efficient.
To do so, Simple has defined a standard checking account, if you will. It has x% interest, y fees, etc. Since banks and customers are a commodity, Simple can then say "we have 10000 customers at this price. Any FDIC insured bank - do you want them?" and perform a reverse auction of sorts. Its very much like LendingTree or FeeFighters.
The obvious obstacle is the same with internet banking - what if I need to talk to someone or get money out of an ATM? You're not going to convince me a random bank in New Mexico is interchangeable with Wells Fargo when I need cash.
They are handling this objection by providing a front-end which standardizes the customer service, ATM access (they pay the fee so use whatever ATM), and online banking pieces, and hopefully that standard is high quality.
So you still have an account with XYZ bank in Nowhereville, USA, but you've got a nice front-end instead of a questionable online banking product/customer support. All XYZ bank does is hold your cash for you, and its insured anyway so they can't screw that piece up.
There are strict rules that govern how banks operate. As bad as that relationship may have gotten recently, there are some basic legally enforced assurances that I can take for granted in how banks will respond to requests about my money. If Simple is a middleman to this transaction, I no longer have those legal protections.
What happens to the deposits if Simple (the company) goes under?
EDIT: Yes, I know they are FDIC-insured. But inside accounts setup by Simple. Are those accounts also in Simple's name, or jointly setup? What could potentially happen then during the lawful unwinding of the company?
That's a good question. When you make a deposit how long does it (if ever) sit in Simples possession before being put int your FDIC insured account? This may not sound like a big deal, but if Simple were to go under this float would go under with them.
This is a good example of why "we're not a bank" is more confusing than comforting. IMO Simple should just gloss over that part.
Edit: I would liken it to startups that are built on top of some cloud; I don't need to know that because ultimately I hold the startup responsible for their reliability/security, not their underlying provider.
If you bank with us, you're money resides in an FDIC-insured bank account. You have the account and routing numbers and can transfer funds in or out at any time. We try to make banking anything but "scary" :)
Sweeping the technical details under a rug is what is making this scary. Many people may not care, but it would be very comforting to those that do if you had a document somewhere that explained exactly, in gory detail, where and how BankSimple fits in between the customer and the bank.
Most banks do use "glorified IT systems". Very few of them develop their technology in-house.
Think about it this way: you can have a bank that buys their technology from another company, or you can have a technology, design, and customer service company that partners with banks. Both are viable options, but I think our approach is going to better for retail banking customers in the long run.
As a customer, I'd feel a lot more comfortable if you worked solely as a technology vendor to my bank.
This isn't a knock on the team you're putting together, or your ability to build a great company. It's caused by the realities associated with venture capital.
Now that you took VC money, there's countdown to an exit, and I have to think about likely buyers. If you're successful, one of the top possibilities is a strategic acquisition from a major bank. This basically means that if I buy into the vision and support it, I'm likely to end up right where I started.
I want to like this idea, because I want to see more great, customer-service oriented banks. But I just can't quite bring myself to like it, because of the guaranteed change in ownership that is pending and the lineup of probable buyers.
There's a ton about when and how and if we exit that's out of our control, and I wouldn't presume to predict exactly what's going to happen. But, please know that our goal is not to sell out to a big bank. We're building this because we want to use it, and part of what we want to use is a banking service that's provided by people who are acting in the best interests of their customers.
Unfortunately, I'm not sure that going with a smaller or local bank provides a more solid guarantee that you won't be banking with a giant down the road. The economic crisis of the past few years has seen a ton of consolidation in retail banking, and I think there's even more to come.
I was the first investor in Simple. I can't speak for all the investors, but for me this was an investment in making the world a better place.
When Josh proposed the idea to me I asked a few people about their experiences with their banks. One of my friends told me how she had accidentally double-booked an airline ticket. This overdrew her account and--since she uses her debit card for everything--she started incurring overdraft fees on everything she purchased. She ran up several hundred dollars of overdraft fees before she even realized she was overdrafted. When she called Bank of America to explain, she was given the runaround. They eventually refunded half the fees (their standard offer) but refused to refund the rest without her jumping through hoops.
My friend is a single mom with two kids and a full-time job. She did not have time to constantly monitor her bank, nor the time to jump through the bank's hoops. Paying the fees caused her significant hardship.
The big banks in this country make their living by preying on those least able to protect themselves. They are evil. Again, I can't speak for the other investors, but I am not interested in selling out to a big bank. Success for me is either beating the other banks or forcing them to compete on Simple's terms: by treating their customers like people.
I agree that many retail banks wouldn't be missed by anybody if they disappeared tomorrow; and I applaud and support efforts to improve competition in the sector. I think that we share a vision of what should be in the retail banking sector.
That said, I can't help but think about the capital required to scale the business due to the high customer acquisition costs in the sector. This large capital requirement seems likely to reduce the ability of Simple to have meaningful control over their exit, as it won't all come from impact investors.
I hope the Simple team makes a mark on the market, but I still fear that success means that a large bank purchases them, increases the cross-sells, adds incremental fees, and "streamlines" customer service. I hope my concern is misplaced.
Either way, I'm excited to see what develops, and I think you made a great investment.
USAA is an outlier in terms of banking interfaces. I've had accounts with several banks, and so far none has beat USAA in terms of web interface, customer support, and consumer friendly features like free ATM withdrawals from wherever. In fact, when I transfer from my brick and mortar bank to USAA, they grant me use of the funds immediately. I know they haven't collected the funds yet, but they let me use them so there is no "limbo" where nobody really has my money.
Simple would do well to match USAA's service, but in reality they are competing with the BofA's, Chase's, and WF's of the world, and beating them on service shouldn't be too difficult. I think Simple is a step between your bank's actual web interface and a service like Mint.com. It's certainly a gap in the market. The question remains "is there a market in the gap?"
As a follow-on to this, it certainly appears (from quick searches of your site as well as reading through this thread) as though you are not disclosing which banks you are specifically partnering with... this is certainly your choice, of course, but given the events of the past few years, I think that there's a significant number of people that make an active choice not to use certain banks due to their past behaviors - if I were to sign up for something like this, I would be concerned that there would be a chance that I could be implicitly supporting a company that I'm actively not supporting today. Is there any notion of being able to "choose" the partner bank your account is held with, or at least being able to screen a list prior to opening an account?
It wasn't a cheap domain, but our investors felt it was worth the expense. It's memorable, flexible, and to-the-point. We're generally not a profligate company, but we felt strongly about this.
I for one, love the branding. I think this is a leap forward in banking. I don't get why so many people are confused about the concept or don't like the name. Seriously...who cares about a statement or where it comes from? Those are old paradigms that need to be destroyed. Good job, Simple! I'm just sad that I can't get in the UK.
Anyone notice the name "Joeseph Schumpeter" on the sample card? Its a reference to Schumpeter's Creative Destruction - further implying them to be in the process of destroying the old ways of doing things (in this case banking) with a radically different approach. Love it!
Where? I cant find it. But I think its a fantastic idea. I really love the idea of "Creative Destruction". The people who always go "but that will cost jobs blabla" always pisses me off because they only see the bad and not the good. Until we hit "real" AI there will be alot more work to be done.
This move strikes me as being a little too quaint for a financial service. I can't tell what I'd be signing up for. While their language is very friendly, it's also obtuse, and that doesn't foster trust.
What questions would you like us to answer, or where do you think we can be more specific? We're always trying to improve the way we explain what we do, so we're open to suggestions :)
On the naming of the account, it is a little more complicated. Everyone gets, at least, two accounts with us. One is a joint account, that is named 'Simple', but titled for the benefit of (FBO) our customers. But titling it such, all FDIC insurance flows through to the individual customers.
In addition to the co-mingled account, everyone gets an individual interest baring account, which is directly titled in the name of the customer.
Either way, you can access your funds at any time.
In the case of the co-mingled account, we generate pseudo-account numbers that correspond to your portion of that account.
It is a complicated answer, but unfortunately, banking is complex. We do a lot of heavy lifting on the back end to make it as simple as possible for you.
psuedo-account numbers do not inspire confidence that my money is safe. please put a HOW IT WORKS section on your website and go into details, because this just seems insecure and shady
I wish Simple the best of success, but it seems clear that a more technically correct name for the company would be Complicated.
I understand that your goal is to create the appearance of simplicity via complicated obfuscations. Those of us who are concerned about where our accounts live, and how they're structured, are not your prospective customers. So while I have no need for an invite, I wish you the best of success. Certainly some people will enjoy your service.
The financial system is inherently complicated. Having an account with a traditional bank is no guarantee that your financial life will be free of intermediaries. Banks outsource everything from IT to customer support to marketing and fraud analytics. Unless you either run a bank or work with a very basic credit union, you probably don't have the full picture of what's going on with your bank accounts.
Banking with us does not obfuscate where your funds reside. It does, however, mean that you don't have to deal with a bank for support and technology issues. Instead, you get to deal with a company that's focused on those things rather than on managing a treasury, making loans, etc.
I put my money into a bank and take it out when I want to spend it. I look at my statement to see where I spent it. It's simple. There is absolutely nothing else I want a bank to do for me. I do want a clean and useful mobile-optimized interface, a friendly and helpful customer service staff, and to not be charged a penalty (sorry, 'fee') every time I make a mistake. That's the Simple proposition. Why would you want it to be complicated?
I don't get what the confusion is. "Simple" (generic name, weak branding..) is a middle-man between banks and you.
Why?
-They have multiple backend banks, so I suppose that keeps you the customer from getting locked into one bank's crappy fee policy.
-They can focus on customer satisfaction and UI rather than be bogged down by becoming a "real" bank.
Any doubts about their trustworthiness because they're not a bank is nothing but FUD, since they explicitly stated multiple times that your money is in a bank.
Sorry that you think the name is "weak" and "generic", but I'm glad that you get what we're doing.
"Simple" is definitely a generic term, but brands are built over time. Personally, I love our new logo (by our own @3n), and I think it'll resonate when you start seeing it on actual debit cards and such :)
Obviously, I support your business idea, and I look forward to it shaking banks up a bit. If the product is strong enough, a generic brand won't kill the business. I still believe
BankSimple was a better name (in my opinion), as it actually positioned you as a new player in a game to change the status quo. I can understand if there were potential legal issues with a non-bank calling itself a bank. If this is the reason a change was made, then I'm wasting my keystrokes.
My thinking is that an innovative, abstract replacement for banking will either float or sink on the strength of its offering and subsequent word-of-mouth. My mother wouldn't ever sign up for this on her own regardless of what it's called, but in time, I might be able to get her to use it if it's good. A descriptive brand name is almost irrelevant for a company like this.
Now, the other angle here is that banking might simply be their entree into the abstraction business at large. So maybe today I bank through Simple, but in a few years I buy insurance through them. And maybe my cell phone plan.
There's a lot of confusion and noise interfering with the efficiency of consumer markets as mediums of value exchange. Abstraction, quantification, and objective selection could be a neat way to cut down on some of the inefficiency, misinformation, and confusion.
The logo though. Good type, horrible website icon. It has the Star of David on it. The only ethnicity to Google auto-complete to banking conspiratorial pages is represented by this symbol. There are lots of idiots in the world, I know, but I wouldn't go with this logo. The one on the actual card is much, much better.
The banking market in europe is not as unified. Simple would have to approach europe country by country. For example, retail banking in italy is nearly ten times as expensive as in the netherlands.
A pan-European, unified solution would indeed be rather hard to do, but even going country by country you could earn quite some money. Start with the UK (fewer i18n and support problems), then probably the countries who are paying for the rest of the EuroZone right now.
My checking account is fundamentally a revolving cash account between a portion of my paycheck and my monthly bills (cc, mortgage, utilities, etc.). Other than autopay bills, all my purchases go through my credit card (which is then another autopay against my checking acct.). I manage all this at a macro level through Mint.
I never visit my bank website, partly because it sorta sucks, but partly because I have no reason to—I really just care about the balance. Additional views would be nice, but I need it at the macro level to incorporate all my accounts (which Mint, admittedly, falls short on). I don't use my debit card for anything other than ATM cash.
My checklist for a checking account is pretty short:
1. No fees. (Including ATM fees. I'm reimbursed if a third-party charges one, too.)
2. Smartphone check deposit.
3. Features / Customer Service / Interest Rate, etc.
Simple's down in that third bucket (and they don't meet criteria #1).
Although you may be referring to third-party ATM fees. I'm curious which banks still reimburse for third-party ATM fees. Can you share the name of your bank?
This is correct for their high-yield investor checking account (don't let the name fool you, the interest is a fraction of a percent). This account requires a credit check and a linked brokerage account; although, I don't think that brokerage requires a minimum balance. While I hold options, my cash balance is ~$3.
Anecdote: I have been with Schwab for years and love their offering. One weekend in Vegas I accumulated something like $150 in ATM fees and they refunded every penny of it. Like Alex said, this was only possible through previous trade commissions/fees they've generated from me.
It's only possible from trade commissions/fees they've generated in general, but not specifically from you. Some people definitely come out ahead.
And yeah, you have to open a brokerage account but you can leave it with $0 and no positions forever. That said, Schwab has some pretty killer deals on ETFs on the brokerage side..
USAA reimburses third party fees, has a nice iphone app for deposits, and a generally sound web interface. If you can get in, I highly recommended them.
We're planning on doing smartphone check deposit. We have a huge fee-free ATM network, but you're right, we don't reimburse all ATM fees. Thing is, most banks that do reimburse all ATM fees are either making that money back by charging account maintenance fees or subsidizing it through brokerage account fees. There's no free lunch.
So, we may not be a perfect fit for you, but I hope you'll give us a second look with that in mind.
I already have a checking account. The website interface works. Its not trendy glossy HTML5, but that's ok because my money isn't handed over to a third party who gets to profit off its interest on my behalf. What problem are you solving? The user interface for bank's sites are not good? So you are a different user interface and all I have to do is put my money in a black box? Who is funding these startups, wow. I have no confusion over the terms of my checking account, its already simple.
There's a whole bunch of problems we're solving. More, really, than fits in an HN comment.
You're right that user experience is a primary concern for us. The interface that most people have their financial data is extremely poor. This makes answering questions about your financial life slow and clumsy, if it's even possible given the tools your bank provides. That keeps a lot of people from making the right financial decisions to stay debt-free and grow their savings.
To your point about your checking account: many checking accounts don't actually have simple terms. Increasingly, they're full of hidden fees and complex conditions.
More broadly, we're doing what we're doing because many banks aren't investing in design, technology, and customer service. Instead, they're investing in new ways to squeeze as much money as they can out of their customers without innovating. We're here to continuously experiment and improve. That may mean that we're not the right banking solution for everyone, but we think a lot of people are going to like what we've built.
Ok fair. With Simple I can have a nifty way to view my expenses and have no hidden fees. The cost to me is nothing out of pocket, but I have to let Simple manage my money. I can see being more useful than a prepaid visa card for (college)kids, but it seems rather limiting to compete with standard checking accounts.
>I can see being more useful than a prepaid visa card for (college)kids, but it seems rather limiting to compete with standard checking accounts.
I'm not sure if your ability "to see" anything is relevant, but your characterization seems extremely shortsighted. Do you honestly believe that innovative startups of this kind launch with one set of features and never make improvements or add features later? I can think of lots of ways a company could innovate in the banking world, so I guess they are only limited by imagination.
I retract my comment about who would invest in this company. Yes I agree innovation is needed in the banking world, and I don't know anything beyond the website. So right now there is too much missing information about their first product to speculate.
People aren't compelled to try a financial service to spend more wisely. They're compelled to try it because it "earns" them more (more interest, cash back, etc). Might be the same thing, fundamentally, but psychologically, it's not. Greed is good.
Some people are driven to change banks because of interest rates, but those people are not the majority. Most people change banks around major life events: moving, getting married, getting your first job, etc. Or, they change banks when they have an extremely negative experience with their current bank.
Either way, changing banks is a hassle, and we really have to make it easy and compelling. But interest/rewards aren't the only motivation, or even the primary motivation, for switching one's bank according to bank industry research.
I suspect the (Bank)Simple guys went down the list like this when deciding on their new domain...
SimpleFinanceTechnologyCorp.com (too long)
SimpleFinanceTechnology.com (long, but register anyway)
SimpleFinanceTech.com (meh)
SimpleFinance.com (already taken)
Simple.com (perfect!)
- Be a resident of the United States and over the age of 18;
- Have a Social Security number; and
- Own a smartphone (iPhone or Android).
Do I really need to have a smartphone?
Well, you need to have an iOS (version 4.2 or higher) or Android device. Android phones and iPhones are preferable so that you can deposit checks using your smartphone’s camera and receive push notifications when you buy things.
I can't believe you need a smartphone to sign up. That seems absolutely crazy to me. Why can't you just accept scanned checks from a scanner? I would hazard more people have access to a scanner (even the one at work) than own a smartphone.
We require a smartphone for more than just mobile check deposit. We want people to have our app installed so we can use it for multifactor authentication, for example. We also want to do rich push notifications of account activity, and SMS (the only viable non-smartphone option for that) isn't a great experience.
Today, there's still a bunch of people who don't have smartphones. But the previous generation of iPhone is now basically "free" at some carriers, as are many Android phones. By the time we're off our invite list and open to anyone who wants to sign up, it's going to seem crazy to support anything that isn't a smartphone.
Aha! Multifactor authentication is an integral part of the service. That's a USP. You should put it right in that FAQ.
A number of Internet banks used to say "hey, you could mail us checks, or you know, just keep a brick-and-mortar account open and transfer them over." The way the FAQ reads to me is that Simple are a bit bloody-minded about it, what if I never get checks? (I must have had about 2 or 3 this year, total). Then I wouldn't need a smartphone, but Simple would still not let me sign up. Saying things like multifactor authentication would help push the idea that the smartphone is really required, rather than just something helpful.
Are you going to put limits on check amounts? The only checks I tend to get are payroll checks and often those are too big for most deposit by smartphone check deposit programs.
I would suggest that they are no more interested in doing business with customers without a smartphone than ING Direct is interested in doing business with people who don't use the web. I think the general consensus is that the majority of banking is going to mobile over the next few years, and Simple is betting on it. Why waste a metric ton of money to service people without smartphones when 90+% of the customers you want will have them within the next few years.
They're upfront and honest about the requirements. I don't see the big deal.
Simple (from what I can see on their site) is about creating a wonderful banking experience for its customers. There is nothing wonderful about scanning and uploading checks. If the service requires a smartphone, so be it.
From a strategy standpoint, it can be assumed that most of their launch market is going to have an iOS or Android device.
Also, Nielsen points out that 43% of all cell phones in the US are smartphones; it's just a matter of time before every cell phone sold is going to be a smartphone. Apple's iPhone 3GS is free with a two-year contract.
You will receive interest. In fact, we automatically move your money around behind the scenes so you earn as much interest as possible.
I don't know when we'll start publishing our interest rates, but we have some additional info about interest rates on our FAQ: https://www.simple.com/faq/
> When you get your Simple card, it'll say "issued by {Bank Name}" on the back.
How does that fit around moving money around behind the scenes? Will each customer's money be limited to a single bank, and moved around between account types? Will all Simple's customers be using one bank that you have partnered with?
If not, could one Simple account actually have its funds stored between multiple different banks (or multiple accounts within a single bank)?
And when you say "we automatically move your money..." are we talking about the automated equivilent of when a bank phones / writes to you saying "looking at your behaviour over the last 5 years this account might fit you better...", or is it more like "every day your money might move somewhere else", or (I assume this) where between those two?
If I weren't English then I'd be signing up for sure, good luck :)
The way it works is the card gets linked to an account on signup. This account is a non-interest bearing card account. When you deposit funds, we place those funds in other accounts. The other accounts are determined by what products we have available from our partner banks, and your historic usage patterns.
For example, if you start spending less, we'll move more of your money into an interest bearing account so that you can benefit from your financial restraint.
As you spend money, we (in real time) move funds to the card account from your other accounts to cover the cost of anything you buy using the card.
As our portfolio of financial products grow, we'll continually rebalance your money across these products to maximize your return.
This system automates what most people try to achieve, but banks make difficult to do: namely, earn as much interest on money you have and pay as little interest on money you borrow.
We do this because it is the right thing to do for our customers & quite easy for a computer to manage. Other banks don't do this because they earn significant revenue when people make mistakes in managing their money. We have none of those punitive fees, so our interests are aligned with our users.
(PS: I'm in London right now. What's up with English Bacon??)
Let's say I'm a customer and I don't have a huge pile of savings - maybe I'm earning $2500/month and the total cash I own at any one time is between $7500 and $10,000.
My usage patterns might suggest that every month I spend around $2200, so you could leave that on the card and play around with say $7k. What happens if I then want to go out and, in a single transaction, spend more than $3k. Do you let me go technically "overdrawn" without charging me a fee and instantly move money in from elsewhere to replace it? Or do I have to inform Simple in advance of spending that much? Or do people without enough money to give plenty of buffer just not get their money moved around as much?
Thanks for your answers - and what's wrong with our bacon, it's amazing! How long are you over here for?
If you spend more money than what we have placed on the card account, but you have available funds at other accounts we manage, we'll automatically move over the money to cover the cost of your transaction. No fee. Real time.
We don't have the notion of 'overdraft'. Instead, we set up a special savings goal for each customer called an Emergency Fund. We automatically start saving a small amount each day towards the Emergency Fund. So, you might have $1,000 in your account and $500 in your Emergency Fund. If you then went to a store and spent $1,200, we would draw $1,000 from your Safe-to-Spend and an additional $200 from your Emergency Fund. Again, no overdraft fee. In fact, instead of paying a fee and then paying interest on the overdraft, you will be earning interest on any money in your Emergency Fund. A small tweak on how overdrafts typically work, but a huge bonus for customers.
I'm just here for the day. I came to town to speak at The Economist's banking conference. Flying back tomorrow to celebrate the launch with our team.
Next time you're over here give "streaky bacon" a try, it looks to be closer to the norm in America. And I've made a mental note to eat some bacon next time I'm in LA to see what you're complaining about!
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[ 3.0 ms ] story [ 233 ms ] threadWhat is "BankSimple?" A way to bank that's simple. Sounds interesting! Everyone hates how complicated banking is, right? Let's go to the website to find out more.
What is "Simple?" Who knows. A website that has something to do with banking--or so I'm told--with yet another web 2.0 one-word "brand", a really uninspiring one too. Hey, I wonder what's on Reddit.
http://en.wikipedia.org/wiki/Ally_Financial
Though I suppose 'Ally' was a spectacular renaming, and their advertising is working, if it gives people the impression Ally is a can-do startup!
Rife with fraud internally (My mother used to work there and told some horrible stories of how they screwed over customers).
I think it is good and forward looking to rebrand it Simple before launch so that becomes synonymous with banking. Imagine if Google was instead called GoogleSearch? Google became synonymous for Search and therefore the Search portion of their name is superfluous.
I for one applaud this move and think the branding is nice, clean, and, of course, simple ;)
To clarify, I don't really care either way- I'm sure they had other reasons for dropping the "Bank" from their name, especially since they're not really a bank.
Official name "Wells Fargo Bank, N.A." owned by "Wells Fargo & Company".
So my response was to point out that actually the banks we think of as not having "bank" in the name do, and it hasn't stopped us from referring to them without it. So if they stuck with Bank Simple, it would help people initially understand what they do, then once (if) they become a household name, people could refer to them as "Simple".
Of course, this is all ignoring the whole legislation stuff.
Telling someone that you have your money in a simple account doesn't convey as much meaning as telling someone you have your money in a Barclay's account.
There are also many other large banks that omit "Bank" from their name such as Wells Fargo.
Keep in mind this is not a traditional bank, so following the rules of traditional banks would be inappropriate. They are better off following the rules of progressive startups which have been using simplicity in their names quite successfully as of late (e.g. Square).
As for Bank of America, you couldn't remove the Bank from Bank of America or it'd just be America which doesn't make a whole lot of sense. I don't think Bank of America, aside from controlling most of the banks in this country, is an objectively great brand. Rather, I thought it always tried to piggyback and sound like a federal entity which it's not and always found its name disingenuous.
Of course they are top for 'banksimple' or 'simple bank'.
Shoes.
Sorry you're not crazy about the new name, but we're happy with it. It gives us a lot of room to grow.
The changed spelling is to indicate that it is not a bank and its accounts are not insured by the FDIC.
e.g. Banc of America Securities, U.S. Bancorp
It seems that a technologically driven bank could offer even more interesting services to individuals and businesses.
Edit: Or would love to chat in person over coffee (on twitter @scottmarkwell)
I agree, calling it "BankSimple" feels limiting, and carries baggage from bad experiences I've had with banks in the past.
Now if only I could get an invitation to open an account!
If you do qualify, USAA is about the best company you'll ever deal with for insurance or banking.
By the way, the on-page anchors in your footer aren't working atm (#features, #vision, #sign-up, etc.).
I wish companies could so something like a pretend re-brand and make a fake post on their blog, submit it to HN and then see what the feedback is before just jumping in. HN provides some of the best and most brutal feedback I've seen in a community that simply can't be replicated by a focus group or board meeting.
Simpel just means simple. Maybe it is not seen like the simpleness which American people try to express with the word but either it just means simple.
I love to have more simpleness in Germany. Please do consider to expand to Germany or Europe!
http://www.gutefrage.net/frage/du-simpel
Don't hear it used much though, and it's unlikely to be the first thing that pops into someone's head.
I'm all for introducing new types of banking entities, and I'm willing to even try this company out, but in the age of post-Madoff and personally having my identity stolen, how do I know who these guys are, and that they will protect my money and my information?
it means that "simple"/"banksimple" is not a bank itself. you deposit your funds through their interface into actual banks while simple provides an interface to track and visualize your money. thats my understanding, at least. they definitely can't bill themselves as a bank when they aren't one.
> your cash is deposited with our bank partners in FDIC-insured products.
If I trust Joe Schmo with my money, he can put that money in a FDIC insured bank. In a way, you could say that I am protected by the FDIC insurance because if there is a run against the bank or something, my money would still be safe.
However, the mere fact that Joe is storing my money in an FDIC insured location doesn't mean that I get the same legal protections. What if Simple goes out of business? If it goes bankrupt?
I infer from this comment that my money would go nowhere if Simple went out of business, that I actually have a relationship with some bank that I could access and completely bypass Simple if I so chose, and that would continue to exist even if Simple went out of business. I would absolutely not trust you without this explicitly stated in the FAQ though.
Since it's pretty much the standard for startups to tell about themselves on their web site, this must have been a deliberate choice. What advantage does it have – especially in the case of Square and Simple – not to show who you are?
We had a "team" page on our previous site (under the BankSimple name). We plan on revising and reviving that page, it just didn't make the cut for our updated site for the Simple rebranding.
I like knowing who's behind the products and services I use too.
From a regulatory perspective, we're a lot like a prepaid card. It's a well-known model that banking authorities, legal experts, and the government is comfortable with. You probably already use financial products that work similarly to the way we do.
That said, we hold ourselves to the same security standards that "real" banks do. I'd like to think we're going above and beyond when it comes to security.
HN is not a financial forum, thus he should be precluded from asking about the details of this startup, who, is trying to brand themselves as a simple banking system based on their technical prowess. Further, you state he is asking technical questions which are irrelevant... how can TECHNICAL questions be irrelevant on HN - especially after you claim he shouldn't be asking financial-forum-esque questions here.
What then should he be asking.
Personally, you appear to me to be attempting to stifle perfectly relevant questions on HN and trying way to hard to filter commentary rather than add to the discussion.
Frankly, I am quite wary of Simple - especially when they state things such as "we are a lot like a prepaid card" -- you know why? Prepaid cards are largely targeted at low income/bad credit users and they pay a premium fee for such use and are bilked as a result.
I don't want to think that just because al3x and Simple are posting to HN they should automatically receive my trust.
ESPECIALLY given the inherent and complete corruption we know to exist at all levels of banking (if you have not been paying attention this last few years) Simple better make damn sure they set themselves apart.
It looks like their business model is "oooh shiny! and we are not a BANK!"
That doesn't cut it.
If they are simply an abstraction to the known egregious practices of other institutions, then simple needs to be very clear what advantage its customers gain from this model.
So far - I see not much gained.
Now do you see the problem?
I guess it's also somewhat logically defensible, since FDIC-insured credit unions are just as qualified to be Simple's back-end partners. Though it still feels like a dodge, given how foggy the relationship is between Simple and their partner institutions. It feels like they want people to not think about Simple accounts supporting places like BofA, while still being free to partner with BofA in the background.
That said, I wonder if they've considered a "community-focused" account option, where people can specify that they only want their funds to be deposited with credit unions, accepting whatever slightly worse terms come with less competition.
It's extremely unlikely that we'd ever partner with an institution like BofA. We chose bank partners who are comfortable with our vision, and that includes not charging outrageous fees and engaging in other customer-hostile practices. The big banks have shown time and again that they're not in business to act in the best interest of their customers, and that makes them poor partners for us.
We don't currently have plans to allow customers to select the institution with which their funds reside, but it's something we'll take under consideration. Thanks for your thoughts.
I don't mean to snipe, but you did partner with Visa, right? I understand that real life doesn't always present ideal choices, but that was rather part of my point. That people might switch to Simple with the idea that they won't be supporting those kinds of institutions, when via a partner deal, they may still be.
Or, in other words, if BofA woke up tomorrow and offered Simple a great customer-friendly back-end deal, while remaining customer-hostile to individuals who deal with them directly, would Simple's philosophy prevent a deal? And how happy would a customer be, if they switched from BofA to Simple only to find out that their money is technically in a BofA account?
And please don't take the criticism as something that it's not; I'm only posting because Simple sounds interesting and I'd like to see it do well.
We're focused on banking right now, but one of the things we like about the Simple name is that it gives us room to grow.
Another thing the new name gets us is freedom from both legal issues around the term "bank" and negative associations with the retail banking industry.
Plus, people kept mixing up "BankSimple" and "SimpleBank". That was driving me nuts :)
"No partnership, common law trust or association, or individual using a trade name, shall use, either as a part of its name or as a prefix or suffix thereto or as a designation of the business carried on by it, the word "bank", "banking", "banker", "bankers", "trust" or "savings", "
http://www.cga.ct.gov/2011/pub/chap620.htm#Sec35-2.htm
Who is the relationship with?
As in... who has my money?
I read it as them hiding that from you for simplicity... you get this one interface and customer service which is wonderful, but to achieve this they are the proxy to your bank?
So... do they set up the bank accounts, or do you? Do you have the ability to go straight to your bank, or does Simple preclude that ability?
In this text:
> Simple is not a bank. Simple replaces your bank. We build the services and support you need to manage, understand, and automate your everyday spending and saving. Meanwhile, we integrate with chartered banks who manage your deposits in FDIC-insured products. We take care of you, our partner banks take care of your money, and jointly, we’ve designed a better financial experience.
I come out confused. Who has the money, can I go straight to them to get it?
That's the missing bit of clarity that would make me feel the love (trust).
What if you took mint.com, and instead of interfacing with hundreds of banks, you interface with a single bank. You can integrate much more closely and provide a better experience, and the customer shouldn't really care what the underlying bank is.
We work with partner banks who hold on to deposits. For all intents and purposes, you never have to think about who that partner bank is, but if you ever need to contact them directly, you'll know where your funds are.
You might find our FAQ informative: https://www.simple.com/faq/.
Is the account at the partner bank in my name, or that of Simple?
Your money must be in your name for it to get the FDIC's "$250,000 limit per depositor" insurance coverage. Having one big mattress with Simple's name on it would preclude your money being insured. Ergo, the account must be in your name.
If the money were not in my name, that would be deal killer.
EDIT: for clarity.
The accounts would technically be "in your name", since the funds are yours, but you never have to interface with the other bank, so it becomes a question of: do you want to know the technical specifics, or stick to what's pragmatic? Pragmatically, your account would be with Simple. Your money is in an FDIC insured depository bank, so you don't face any additional risk because of the "partner" distribution.
The bank pulls a credit check on you, the individual, to mitigate risk. A company like Simple would secure a bond or insurance to mitigate this risk for the partner bank, reducing the friction for a business critical action (moving partner banks).
Pragmatically, Simple wouldn't survive very long if every customer were hit with a hard credit pull every time Simple moved their funds. I'm not even sure that would be legal.
I would be interested in knowing who the partners are so that I can assure myself that they are doing business in a way that differentiates them from the megabanks.
On a side note: I was onboard with the BankSimple idea when I thought they were building a bank, now, I'm not so sure. I think it's a good idea, but not a great idea.
Yes, you'll know what institution your funds are at. When you get your Simple card, it'll say "issued by {Bank Name}" on the back.
(Also, what bank do you currently work with? What will the first round of cards say?)
You call us if you have a problem or question. We'll let you know what bank your funds reside at, but you should never need to contact them. We have our own in-house customer relations staff.
Thank you for taking the time to answer some of our questions on what is surely a busy day.
Do you plan to use customers leverage to get better terms with the actual banks? Like could you move all the accounts to another bank if it paid better interest or something like that? Do you take a cut of the action?
Banking is a commodity product. Other than access to ATMs, customer service, and online banking there's not much difference between banks (other than rates & fees, of course).
Same goes for the customers, honestly. If the bank doesn't extend you credit anyway, its a "your money is green" situation.
Yet the marketplace is still inefficient, and they think they can make money by making it efficient.
To do so, Simple has defined a standard checking account, if you will. It has x% interest, y fees, etc. Since banks and customers are a commodity, Simple can then say "we have 10000 customers at this price. Any FDIC insured bank - do you want them?" and perform a reverse auction of sorts. Its very much like LendingTree or FeeFighters.
The obvious obstacle is the same with internet banking - what if I need to talk to someone or get money out of an ATM? You're not going to convince me a random bank in New Mexico is interchangeable with Wells Fargo when I need cash.
They are handling this objection by providing a front-end which standardizes the customer service, ATM access (they pay the fee so use whatever ATM), and online banking pieces, and hopefully that standard is high quality.
So you still have an account with XYZ bank in Nowhereville, USA, but you've got a nice front-end instead of a questionable online banking product/customer support. All XYZ bank does is hold your cash for you, and its insured anyway so they can't screw that piece up.
Sounds great to me.
That doesn't sound very great to me.
EDIT: Yes, I know they are FDIC-insured. But inside accounts setup by Simple. Are those accounts also in Simple's name, or jointly setup? What could potentially happen then during the lawful unwinding of the company?
Edit: I would liken it to startups that are built on top of some cloud; I don't need to know that because ultimately I hold the startup responsible for their reliability/security, not their underlying provider.
I put my money in a bank because there is an assurance that I'll be able to get it out later and that it is safe there.
My bank (USAA), for example, is pretty good. The idea of putting a startup between them and me just seems odd.
It all just seems like a glorified IT system for banks.
Most banks do use "glorified IT systems". Very few of them develop their technology in-house.
Think about it this way: you can have a bank that buys their technology from another company, or you can have a technology, design, and customer service company that partners with banks. Both are viable options, but I think our approach is going to better for retail banking customers in the long run.
This isn't a knock on the team you're putting together, or your ability to build a great company. It's caused by the realities associated with venture capital.
Now that you took VC money, there's countdown to an exit, and I have to think about likely buyers. If you're successful, one of the top possibilities is a strategic acquisition from a major bank. This basically means that if I buy into the vision and support it, I'm likely to end up right where I started.
I want to like this idea, because I want to see more great, customer-service oriented banks. But I just can't quite bring myself to like it, because of the guaranteed change in ownership that is pending and the lineup of probable buyers.
There's a ton about when and how and if we exit that's out of our control, and I wouldn't presume to predict exactly what's going to happen. But, please know that our goal is not to sell out to a big bank. We're building this because we want to use it, and part of what we want to use is a banking service that's provided by people who are acting in the best interests of their customers.
Unfortunately, I'm not sure that going with a smaller or local bank provides a more solid guarantee that you won't be banking with a giant down the road. The economic crisis of the past few years has seen a ton of consolidation in retail banking, and I think there's even more to come.
When Josh proposed the idea to me I asked a few people about their experiences with their banks. One of my friends told me how she had accidentally double-booked an airline ticket. This overdrew her account and--since she uses her debit card for everything--she started incurring overdraft fees on everything she purchased. She ran up several hundred dollars of overdraft fees before she even realized she was overdrafted. When she called Bank of America to explain, she was given the runaround. They eventually refunded half the fees (their standard offer) but refused to refund the rest without her jumping through hoops.
My friend is a single mom with two kids and a full-time job. She did not have time to constantly monitor her bank, nor the time to jump through the bank's hoops. Paying the fees caused her significant hardship.
The big banks in this country make their living by preying on those least able to protect themselves. They are evil. Again, I can't speak for the other investors, but I am not interested in selling out to a big bank. Success for me is either beating the other banks or forcing them to compete on Simple's terms: by treating their customers like people.
That said, I can't help but think about the capital required to scale the business due to the high customer acquisition costs in the sector. This large capital requirement seems likely to reduce the ability of Simple to have meaningful control over their exit, as it won't all come from impact investors.
I hope the Simple team makes a mark on the market, but I still fear that success means that a large bank purchases them, increases the cross-sells, adds incremental fees, and "streamlines" customer service. I hope my concern is misplaced.
Either way, I'm excited to see what develops, and I think you made a great investment.
Simple would do well to match USAA's service, but in reality they are competing with the BofA's, Chase's, and WF's of the world, and beating them on service shouldn't be too difficult. I think Simple is a step between your bank's actual web interface and a service like Mint.com. It's certainly a gap in the market. The question remains "is there a market in the gap?"
I don't think we're likely to allow customers to choose which partner bank holds their funds, but we do make that information transparent.
Edit: it looks like you disclosed two partner banks at http://www.simple.com/blog/Simple/partners-funding/, but I'm not sure that this is a conclusive list.
It wasn't a cheap domain, but our investors felt it was worth the expense. It's memorable, flexible, and to-the-point. We're generally not a profligate company, but we felt strongly about this.
(Josh - CEO, Simple)
In addition to the co-mingled account, everyone gets an individual interest baring account, which is directly titled in the name of the customer.
Either way, you can access your funds at any time.
In the case of the co-mingled account, we generate pseudo-account numbers that correspond to your portion of that account.
It is a complicated answer, but unfortunately, banking is complex. We do a lot of heavy lifting on the back end to make it as simple as possible for you.
I understand that your goal is to create the appearance of simplicity via complicated obfuscations. Those of us who are concerned about where our accounts live, and how they're structured, are not your prospective customers. So while I have no need for an invite, I wish you the best of success. Certainly some people will enjoy your service.
Banking with us does not obfuscate where your funds reside. It does, however, mean that you don't have to deal with a bank for support and technology issues. Instead, you get to deal with a company that's focused on those things rather than on managing a treasury, making loans, etc.
I put my money into a bank and take it out when I want to spend it. I look at my statement to see where I spent it. It's simple. There is absolutely nothing else I want a bank to do for me. I do want a clean and useful mobile-optimized interface, a friendly and helpful customer service staff, and to not be charged a penalty (sorry, 'fee') every time I make a mistake. That's the Simple proposition. Why would you want it to be complicated?
Why?
-They have multiple backend banks, so I suppose that keeps you the customer from getting locked into one bank's crappy fee policy.
-They can focus on customer satisfaction and UI rather than be bogged down by becoming a "real" bank.
Any doubts about their trustworthiness because they're not a bank is nothing but FUD, since they explicitly stated multiple times that your money is in a bank.
"Simple" is definitely a generic term, but brands are built over time. Personally, I love our new logo (by our own @3n), and I think it'll resonate when you start seeing it on actual debit cards and such :)
Obviously, I support your business idea, and I look forward to it shaking banks up a bit. If the product is strong enough, a generic brand won't kill the business. I still believe
BankSimple was a better name (in my opinion), as it actually positioned you as a new player in a game to change the status quo. I can understand if there were potential legal issues with a non-bank calling itself a bank. If this is the reason a change was made, then I'm wasting my keystrokes.
Send me a beta invite!
Now, the other angle here is that banking might simply be their entree into the abstraction business at large. So maybe today I bank through Simple, but in a few years I buy insurance through them. And maybe my cell phone plan.
There's a lot of confusion and noise interfering with the efficiency of consumer markets as mediums of value exchange. Abstraction, quantification, and objective selection could be a neat way to cut down on some of the inefficiency, misinformation, and confusion.
The logo though. Good type, horrible website icon. It has the Star of David on it. The only ethnicity to Google auto-complete to banking conspiratorial pages is represented by this symbol. There are lots of idiots in the world, I know, but I wouldn't go with this logo. The one on the actual card is much, much better.
There's a study by the EU on this topic: http://ec.europa.eu/consumers/rights/docs/study_bank_fees_en...
I never visit my bank website, partly because it sorta sucks, but partly because I have no reason to—I really just care about the balance. Additional views would be nice, but I need it at the macro level to incorporate all my accounts (which Mint, admittedly, falls short on). I don't use my debit card for anything other than ATM cash.
My checklist for a checking account is pretty short:
1. No fees. (Including ATM fees. I'm reimbursed if a third-party charges one, too.) 2. Smartphone check deposit. 3. Features / Customer Service / Interest Rate, etc.
Simple's down in that third bucket (and they don't meet criteria #1).
https://www.simple.com/faq/
Although you may be referring to third-party ATM fees. I'm curious which banks still reimburse for third-party ATM fees. Can you share the name of your bank?
[1] http://www.schwab.com/
Anecdote: I have been with Schwab for years and love their offering. One weekend in Vegas I accumulated something like $150 in ATM fees and they refunded every penny of it. Like Alex said, this was only possible through previous trade commissions/fees they've generated from me.
And yeah, you have to open a brokerage account but you can leave it with $0 and no positions forever. That said, Schwab has some pretty killer deals on ETFs on the brokerage side..
Fidelity also has a similar account although it is a joint checking/brokerage account and the interface is tailored towards the brokerage side.
Glad to see more competition in this space. Give me something even better than Schwab :)
Also no foreign transaction fees (very nice for a traveller).
So, we may not be a perfect fit for you, but I hope you'll give us a second look with that in mind.
You're right that user experience is a primary concern for us. The interface that most people have their financial data is extremely poor. This makes answering questions about your financial life slow and clumsy, if it's even possible given the tools your bank provides. That keeps a lot of people from making the right financial decisions to stay debt-free and grow their savings.
To your point about your checking account: many checking accounts don't actually have simple terms. Increasingly, they're full of hidden fees and complex conditions.
More broadly, we're doing what we're doing because many banks aren't investing in design, technology, and customer service. Instead, they're investing in new ways to squeeze as much money as they can out of their customers without innovating. We're here to continuously experiment and improve. That may mean that we're not the right banking solution for everyone, but we think a lot of people are going to like what we've built.
I'm not sure if your ability "to see" anything is relevant, but your characterization seems extremely shortsighted. Do you honestly believe that innovative startups of this kind launch with one set of features and never make improvements or add features later? I can think of lots of ways a company could innovate in the banking world, so I guess they are only limited by imagination.
Some people are driven to change banks because of interest rates, but those people are not the majority. Most people change banks around major life events: moving, getting married, getting your first job, etc. Or, they change banks when they have an extremely negative experience with their current bank.
Either way, changing banks is a hassle, and we really have to make it easy and compelling. But interest/rewards aren't the only motivation, or even the primary motivation, for switching one's bank according to bank industry research.
Who can use Simple?
To be eligible, you must:
- Be a resident of the United States and over the age of 18; - Have a Social Security number; and - Own a smartphone (iPhone or Android).
Do I really need to have a smartphone?
Well, you need to have an iOS (version 4.2 or higher) or Android device. Android phones and iPhones are preferable so that you can deposit checks using your smartphone’s camera and receive push notifications when you buy things.
I can't believe you need a smartphone to sign up. That seems absolutely crazy to me. Why can't you just accept scanned checks from a scanner? I would hazard more people have access to a scanner (even the one at work) than own a smartphone.
We require a smartphone for more than just mobile check deposit. We want people to have our app installed so we can use it for multifactor authentication, for example. We also want to do rich push notifications of account activity, and SMS (the only viable non-smartphone option for that) isn't a great experience.
Today, there's still a bunch of people who don't have smartphones. But the previous generation of iPhone is now basically "free" at some carriers, as are many Android phones. By the time we're off our invite list and open to anyone who wants to sign up, it's going to seem crazy to support anything that isn't a smartphone.
A number of Internet banks used to say "hey, you could mail us checks, or you know, just keep a brick-and-mortar account open and transfer them over." The way the FAQ reads to me is that Simple are a bit bloody-minded about it, what if I never get checks? (I must have had about 2 or 3 this year, total). Then I wouldn't need a smartphone, but Simple would still not let me sign up. Saying things like multifactor authentication would help push the idea that the smartphone is really required, rather than just something helpful.
Simple (from what I can see on their site) is about creating a wonderful banking experience for its customers. There is nothing wonderful about scanning and uploading checks. If the service requires a smartphone, so be it.
From a strategy standpoint, it can be assumed that most of their launch market is going to have an iOS or Android device.
That's probably not true; Reading The US smartphone landscape (http://www.asymco.com/2011/11/06/the-us-smartphone-landscape...).
Also, Nielsen points out that 43% of all cell phones in the US are smartphones; it's just a matter of time before every cell phone sold is going to be a smartphone. Apple's iPhone 3GS is free with a two-year contract.
62% of users 25-34 years old own smartphones: http://blog.nielsen.com/nielsenwire/online_mobile/generation...
So requiring a smartphone (iOS and Android have a combined installed base of 63 million devices in the US) isn't as whacky as it sounds.
Q: Are you like Mint?
A: No. ... Also, we hate pie charts.
Couldn't agree more.
One question, though, I can't find on the site, is whether I receive any interest. And, if so, at what rate?
I don't know when we'll start publishing our interest rates, but we have some additional info about interest rates on our FAQ: https://www.simple.com/faq/
> When you get your Simple card, it'll say "issued by {Bank Name}" on the back.
How does that fit around moving money around behind the scenes? Will each customer's money be limited to a single bank, and moved around between account types? Will all Simple's customers be using one bank that you have partnered with?
If not, could one Simple account actually have its funds stored between multiple different banks (or multiple accounts within a single bank)?
And when you say "we automatically move your money..." are we talking about the automated equivilent of when a bank phones / writes to you saying "looking at your behaviour over the last 5 years this account might fit you better...", or is it more like "every day your money might move somewhere else", or (I assume this) where between those two?
If I weren't English then I'd be signing up for sure, good luck :)
The way it works is the card gets linked to an account on signup. This account is a non-interest bearing card account. When you deposit funds, we place those funds in other accounts. The other accounts are determined by what products we have available from our partner banks, and your historic usage patterns.
For example, if you start spending less, we'll move more of your money into an interest bearing account so that you can benefit from your financial restraint.
As you spend money, we (in real time) move funds to the card account from your other accounts to cover the cost of anything you buy using the card.
As our portfolio of financial products grow, we'll continually rebalance your money across these products to maximize your return.
This system automates what most people try to achieve, but banks make difficult to do: namely, earn as much interest on money you have and pay as little interest on money you borrow.
We do this because it is the right thing to do for our customers & quite easy for a computer to manage. Other banks don't do this because they earn significant revenue when people make mistakes in managing their money. We have none of those punitive fees, so our interests are aligned with our users.
(PS: I'm in London right now. What's up with English Bacon??)
My usage patterns might suggest that every month I spend around $2200, so you could leave that on the card and play around with say $7k. What happens if I then want to go out and, in a single transaction, spend more than $3k. Do you let me go technically "overdrawn" without charging me a fee and instantly move money in from elsewhere to replace it? Or do I have to inform Simple in advance of spending that much? Or do people without enough money to give plenty of buffer just not get their money moved around as much?
Thanks for your answers - and what's wrong with our bacon, it's amazing! How long are you over here for?
We don't have the notion of 'overdraft'. Instead, we set up a special savings goal for each customer called an Emergency Fund. We automatically start saving a small amount each day towards the Emergency Fund. So, you might have $1,000 in your account and $500 in your Emergency Fund. If you then went to a store and spent $1,200, we would draw $1,000 from your Safe-to-Spend and an additional $200 from your Emergency Fund. Again, no overdraft fee. In fact, instead of paying a fee and then paying interest on the overdraft, you will be earning interest on any money in your Emergency Fund. A small tweak on how overdrafts typically work, but a huge bonus for customers.
I'm just here for the day. I came to town to speak at The Economist's banking conference. Flying back tomorrow to celebrate the launch with our team.
It drives me nuts. I haven't had a decent bacon sandwich in years :(
Seriously broken website, at least it is in IE8.
http://browserling.com/explorer/8.0/https%3A//simple.com