7 ms·

The Story of BankSimple

48 points by ssclafani 16y ago

corin_ 16y ago
Not often do I really care when a product/service is only availale in a country other than mine (UK), but with BankSimple I am genuinely gutted. Desperately hope they find huge success and expand overseas.
- Lewisham 16y ago
  ...but why? Free checking/current accounts are par de course. You can use any cash machine/ATM you want. You can actually speak to a bank manager. One of things things I miss in the US from the UK was a banking system that wasn't entirely set out to screw you. It wasn't your friend, but it didn't wish you as ill will as the national banks here.
  - semanticist 16y ago
    As someone who has worked for a bank and has many contacts still at the 'front line' of UK retail banking, my experience is that the system is entirely set out to screw you, while simultaneously training its employees to believe the opposite. So you have institutions staffed by people who honestly want to help you as much as they can, and a corporate regime that wants to fuck you as hard as it can. I've no idea how that compares to American banks, but it's pretty screwed up.
    - mdda 16y ago
      Quick differentiator : Do UK banks charge you for a cheque book?
      - corin_ 16y ago
        No, although cheques are (in the UK at least, I'm not sure about internationally) about to become a thing of the past.
        Lewisham 16y ago
        Cheques/checks are more common in the US as there is no national system like Direct Debit. Bills can be paid by card, but sometimes you are penalized for that due to the processing fees. The government always requires cash or check. I had to buy a check book just so I had the privilege of sending The Man more tax. They are also used (bizarrely) as a proof of your bank account number for various things. It's not uncommon for a company that is doing banking with you (like your payroll) to ask for an invalidated check so they can get your bank account number right. I really hate checks.
gatsby 16y ago
I like their site: https://banksimple.com/ https://banksimple.com/ Simple design, easy navigation, and a nice overview of the important features. My favorite part of the site is at the bottom of the page: "The BankSimple Team." It's rare but refreshing to see people attach their names, bios, and pictures to banks and financial companies. I'm excited for their launch - these guys are clearly taking some steps in the right direction.
- nir 16y ago
  Isn't their site in current form basically an "About Us" page? I'd love a great banking UI as much as anyone and hope BankSimple will deliver, but so far all the hype around them is just that.
dusing 16y ago
There is getting to be too much hype about BankSimple and too little public launching...
- gyardley 16y ago
  When dealing with other people's money, it's worth taking the time to get it right. As for hype, this is a college magazine doing a little boosterism for one of its graduates. Just like every other college magazine on the planet.
johnnygood 16y ago
I guess I don't see how BankSimple can be truly better. First, there are already no-branch banks like ING-Direct. Second, Credit Unions exist. BankSimple seems to be a no-branch bank like ING-Direct. They're presenting themselves as being better. How are they different? Well, they're pushing the idea of no-fees, better customer service, and better mobile banking. In order to achieve that, they'll have to be more efficient or accept a lower profit margin. Banks have healthy margins so there is some room there, but there are other industries with higher margins. The second piece is that there are already not-for-profit banks. They're called Credit Unions. They exist to give their customers (who are their owners) the best deal they can. In order to be better than credit unions, they'll have to be significantly more efficient rather than simply relying on lower margins. Part of what makes me skeptical is that they aren't creating a bank. They're partnering with currently chartered banks. This is probably because it's very difficult to create a bank and there's a lot of regulation to deal with. However, this somewhat limits what they can do to give me a better deal than a bank (since they're just reselling the product of another bank). Now, banks vary in how good of a deal they give you so part of their product might simply be getting you a good account under their brand. But part of this means that BankSimple won't be doing what banks normally do with deposits. Banks normally lend it out or invest it. BankSimple will be parking it in another account. So, if they aren't charging fees, how will they make their money? Maybe they've found an account that will give them 1% interest and they'll pass on 0.5% interest to me. However, why shouldn't I just bypass them? If they're doing things like refunding ATM fees, covering overdraft fees, etc. will the interest difference cover that? I'm not saying that it can't be done. They stress no-fees and earning more interest. If they aren't lending the money out themselves, that will be hard to do - especially considering that they're claiming the best customer service, best software, etc. Where are they making their money? Not off fees and they aren't lending it out, but rather relying on other banks. I'd really love to see their business plan since I assume they've addressed these things. Maybe wholesale banking exists and offers them a lot more. Maybe credit unions are woefully inefficient. I'm excited for their launch, but I'm not unhappy with my credit union.
- noodle 16y ago
  iirc, this is how it works: banksimple negotiated high rates in exchange for banksimple doing all of the overhead/grunt work. the partner bank ensures the money and will lend it out, just like a normal bank. banksimple is basically building a slick customer service and user interface business on top of an existing bank, not building a new bank. they make money on the difference in what they're paying in interest and what they're getting, and kickback on the card usage.
SkyMarshal 16y ago
Pertinent section about BankSimple, after the bio writeups for the three principals: "As the months go on, Reich and Karkal research and refine their idea. They discover that starting a bank, charter and all, is a cumbersome process that could take three to four years and would plunge them into a world of regulation and compliance. They decide that their main goal is to improve customer experience, because, as Reich says, "Banks in America fundamentally make money by keeping customers confused. ... A confused customer is a profitable customer. We've joked that one of the greatest innovations in banking is ever-decreasing font size." They realize the best way to improve customer experience is as a technology company, and it's what they both do best. They're now developing the technology Reich believes is so lacking in current U.S. banks. This technology will be transparent to the average customer but will make their banking easy, hassle-free. Even the product's name will be easy-BankSimple. BankSimple will be exclusively online. Customers will have one easy-to-access account and one card. They'll have free ATM access to the nation's largest network and free online bill payment. They'll have no overdraft fees, in fact, no hidden fees at all. They'll be able to deposit checks in such innovative ways as using pictures taken with their smartphones. They'll have real-time, useful data and the tools to clearly and easily manage their money. In the consumer's eyes, BankSimple will function as a bank, but in reality it's purely the front-end experience. Reich and Karkal will work behind the scenes with chartered banks that hold FDIC-insured deposits and make loans. Their company's system will move funds as needed between checking, savings, and credit accounts to make life easy yet yield the most for the customer. The company will make its profits not from myriad fees, but by sharing lending and credit card profits with their partner banks."

48 points by ssclafani 16y ago

Not often do I really care when a product/service is only availale in a country other than mine (UK), but with BankSimple I am genuinely gutted. Desperately hope they find huge success and expand overseas.

Lewisham 16y ago
...but why? Free checking/current accounts are par de course. You can use any cash machine/ATM you want. You can actually speak to a bank manager. One of things things I miss in the US from the UK was a banking system that wasn't entirely set out to screw you. It wasn't your friend, but it didn't wish you as ill will as the national banks here.
- semanticist 16y ago
  As someone who has worked for a bank and has many contacts still at the 'front line' of UK retail banking, my experience is that the system is entirely set out to screw you, while simultaneously training its employees to believe the opposite. So you have institutions staffed by people who honestly want to help you as much as they can, and a corporate regime that wants to fuck you as hard as it can. I've no idea how that compares to American banks, but it's pretty screwed up.
  - mdda 16y ago
    Quick differentiator : Do UK banks charge you for a cheque book?
    - corin_ 16y ago
      No, although cheques are (in the UK at least, I'm not sure about internationally) about to become a thing of the past.
      - Lewisham 16y ago
        Cheques/checks are more common in the US as there is no national system like Direct Debit. Bills can be paid by card, but sometimes you are penalized for that due to the processing fees. The government always requires cash or check. I had to buy a check book just so I had the privilege of sending The Man more tax. They are also used (bizarrely) as a proof of your bank account number for various things. It's not uncommon for a company that is doing banking with you (like your payroll) to ask for an invalidated check so they can get your bank account number right. I really hate checks.

gatsby 16y ago

I like their site: https://banksimple.com/ https://banksimple.com/ Simple design, easy navigation, and a nice overview of the important features. My favorite part of the site is at the bottom of the page: "The BankSimple Team." It's rare but refreshing to see people attach their names, bios, and pictures to banks and financial companies. I'm excited for their launch - these guys are clearly taking some steps in the right direction.

nir 16y ago
Isn't their site in current form basically an "About Us" page? I'd love a great banking UI as much as anyone and hope BankSimple will deliver, but so far all the hype around them is just that.

dusing 16y ago

There is getting to be too much hype about BankSimple and too little public launching...

gyardley 16y ago
When dealing with other people's money, it's worth taking the time to get it right. As for hype, this is a college magazine doing a little boosterism for one of its graduates. Just like every other college magazine on the planet.

johnnygood 16y ago

I guess I don't see how BankSimple can be truly better. First, there are already no-branch banks like ING-Direct. Second, Credit Unions exist. BankSimple seems to be a no-branch bank like ING-Direct. They're presenting themselves as being better. How are they different? Well, they're pushing the idea of no-fees, better customer service, and better mobile banking. In order to achieve that, they'll have to be more efficient or accept a lower profit margin. Banks have healthy margins so there is some room there, but there are other industries with higher margins. The second piece is that there are already not-for-profit banks. They're called Credit Unions. They exist to give their customers (who are their owners) the best deal they can. In order to be better than credit unions, they'll have to be significantly more efficient rather than simply relying on lower margins. Part of what makes me skeptical is that they aren't creating a bank. They're partnering with currently chartered banks. This is probably because it's very difficult to create a bank and there's a lot of regulation to deal with. However, this somewhat limits what they can do to give me a better deal than a bank (since they're just reselling the product of another bank). Now, banks vary in how good of a deal they give you so part of their product might simply be getting you a good account under their brand. But part of this means that BankSimple won't be doing what banks normally do with deposits. Banks normally lend it out or invest it. BankSimple will be parking it in another account. So, if they aren't charging fees, how will they make their money? Maybe they've found an account that will give them 1% interest and they'll pass on 0.5% interest to me. However, why shouldn't I just bypass them? If they're doing things like refunding ATM fees, covering overdraft fees, etc. will the interest difference cover that? I'm not saying that it can't be done. They stress no-fees and earning more interest. If they aren't lending the money out themselves, that will be hard to do - especially considering that they're claiming the best customer service, best software, etc. Where are they making their money? Not off fees and they aren't lending it out, but rather relying on other banks. I'd really love to see their business plan since I assume they've addressed these things. Maybe wholesale banking exists and offers them a lot more. Maybe credit unions are woefully inefficient. I'm excited for their launch, but I'm not unhappy with my credit union.

noodle 16y ago
iirc, this is how it works: banksimple negotiated high rates in exchange for banksimple doing all of the overhead/grunt work. the partner bank ensures the money and will lend it out, just like a normal bank. banksimple is basically building a slick customer service and user interface business on top of an existing bank, not building a new bank. they make money on the difference in what they're paying in interest and what they're getting, and kickback on the card usage.

SkyMarshal 16y ago

Pertinent section about BankSimple, after the bio writeups for the three principals: "As the months go on, Reich and Karkal research and refine their idea. They discover that starting a bank, charter and all, is a cumbersome process that could take three to four years and would plunge them into a world of regulation and compliance. They decide that their main goal is to improve customer experience, because, as Reich says, "Banks in America fundamentally make money by keeping customers confused. ... A confused customer is a profitable customer. We've joked that one of the greatest innovations in banking is ever-decreasing font size." They realize the best way to improve customer experience is as a technology company, and it's what they both do best. They're now developing the technology Reich believes is so lacking in current U.S. banks. This technology will be transparent to the average customer but will make their banking easy, hassle-free. Even the product's name will be easy-BankSimple. BankSimple will be exclusively online. Customers will have one easy-to-access account and one card. They'll have free ATM access to the nation's largest network and free online bill payment. They'll have no overdraft fees, in fact, no hidden fees at all. They'll be able to deposit checks in such innovative ways as using pictures taken with their smartphones. They'll have real-time, useful data and the tools to clearly and easily manage their money. In the consumer's eyes, BankSimple will function as a bank, but in reality it's purely the front-end experience. Reich and Karkal will work behind the scenes with chartered banks that hold FDIC-insured deposits and make loans. Their company's system will move funds as needed between checking, savings, and credit accounts to make life easy yet yield the most for the customer. The company will make its profits not from myriad fees, but by sharing lending and credit card profits with their partner banks."