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In some ways, they're over-reaching. Sure, people hate the banks right now and it seems like a cash-cow industry that one could really disrupt. However, banki
by mdasen 15y ago
In some ways, they're over-reaching. Sure, people hate the banks right now and it seems like a cash-cow industry that one could really disrupt. However, banking has a lot of competitors including not-for-profit ones in the form of credit unions. It will be very difficult to offer higher rates, better service, etc. than a non-profit credit union while one is trying to make a profit.
However, if I were BankSimple and you said what you and I have said to me, I'd respond that banks are crap at IT. I'd say that we (BankSimple) are basically a better IT department for your bank. We're going to create a banking technology stack that you'll enjoy using while getting you better rates than the large banks (BofA, Chase, etc.) offer you and better terms (like ATM refunds). We're going to do this by using wholesale banking offers from FDIC-insured institutions.
Will it work? Maybe. I'm skeptical. Refunding ATM fees and better terms are going to eat into margins a lot. The wholesale bank is going to take their margin. That doesn't leave much for good rates. Plus, some banks are starting to get good at IT. Wells Fargo and Bank of America have deposit-scanning ATMs. Chase has an iPhone app that lets you scan checks. When it comes to terms, I already have a bank that offers me 0.55% checking and 1.25% savings with ATM refunds.
It isn't an easy road for them, but what they're trying to do is create a better technology package for users. That might mean making a card that can do both credit and debit in one card - I've wanted that. That might mean NFC payments faster than banks will support them. That might mean better Mint.com-like tools than Mint. That might be the plainer, easier to understand language they're pushing.
And, even if they don't completely succeed with a retail venture, they might end up with a great OEM package for banks and credit unions to outsource their web and mobile technology stack to. Most small banks do outsource their interfaces and BankSimple might be creating the best OEM package for small banks (if/when their retail ventures fail) inadvertently in the process. I've seen plenty of banks with horrid web interfaces and very few allow for check scanning on either desktop or mobile. BankSimple could do well in the OEM market even if it fails to convince consumers of its retail ambitions.
/just to clarify, I'm not affiliated with BankSimple, it was just a pleasant way of phrasing that paragraph.
- ydant 15y agoIn reading your second paragraph I did a bit of a double-take. You started to summarize almost exactly what Josh wrote to me in an email back when I contacted them with some questions. My point was that while I like the idea of a bank driven by new minds, ultimately I can't think of anything that they will give me that my current bank (Ally, if it's important) isn't giving me right now. So much of the banking decision for me is based on how well the bank gets out of my way, low fees, and high interest rate. My current bank manages the last two perfectly well, has excellent customer service, and the few issues I have with the web presence are minor. Josh mentioned that they won't be targeting the absolute rate chasers, but that they will be providing an experience that changes everything (my words, not his). I'm skeptical, but I've been surprised by plenty of other startups. I'm sure there's innovation to be had in the banking industry, I just don't know how much of a draw that innovation will end up being. Unfortunately every time I look at their site I don't see much that I don't get out of my current bank and my email conversation with Josh was heavy on the criticism of my current bank but light on exactly WHAT they are doing wrong. So for now I'll have to ride the hype with everyone else and just see what comes out.
- oasisbob 15y agoIt will be very difficult to offer higher rates, better service, etc. than a non-profit credit union Credit unions generally have disproportionally high overhead due to their size, and their rates are not great lately because of the corporate CU collapse. CUs face 38 basis points of assessments for the next two years to pay for the corporate bailouts.
- frossie 15y agoI am one of those people who asked for a Bank Simple invite. At the time I had an account at a bricks-and-mortar bank. Since then I have switched to ING Direct and in some ways I am a harder sell. But I will say this: UI does matter. It's not just about the fee structure. However it will have to be an awesome UI (by which I mean the money management layer available to the customer) to get me to switch again
- Zev 15y agoChase has an iPhone app that lets you scan checks. Only for small amounts. If the check is for a large amount (over $750? I'm not sure exactly what the limit is), the app will refuse to let you scan it in and tell you to go to a branch instead.
- ericd 15y agoIt's $1000. I've found that this is an issue with rent checks pretty regularly.
- jtheory 15y agoI imagine they also have a bank-by-mail option, which (I find) is useful if you don't go near your branch normally anyway and don't care about a few days delay in your deposits. True, it'd be nicer to scan in the check (and not have the mail delay) but it's not a huge pain point for me to drop the envelope in the mail; so I haven't been to my bank's branch in 5 years.