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I think a good analogy is that they are an application layer over the banks, which typically have a horrible backend. If they can create a great customer-facing

I think a good analogy is that they are an application layer over the banks, which typically have a horrible backend. If they can create a great customer-facing front end in all aspects (customer service, funds processing, etc.) then they might do well. The way I understand it is that BankSimple has deals with the other banks (or maybe just accounts) in which they process transactions through. In that case, they can mitigate much of the pain the traditional bank puts customers through.

deleted 15y ago
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tedunangst 15y ago
I can imagine them improving the front end. But how do they get rid of the "hidden" fees if they're backed by normal banks? Is BankSimple just going to pay all those fees for you? Or are they going to reprint the fine print in size 48pt extra bold?
- bkudria 15y ago
  From the article: "The FDIC-backed firms, in turn, get additional customers without paying for marketing, meaning "there's enough revenue for both of us to be happy," says Pete Chiccino of Bancorp, which is slated to join CBW Bank as a BankSimple partner. Reich also promises his company won't charge the kinds of extraneous fees that netted U.S. banks some $36.5 billion last year."
- dkokelley 15y ago
  BankSimple's account never goes negative, so there is no fee. When your BS account (funny abbreviation) 'goes negative', BS can charge whatever they want, or nothing at all. BS only needs to ensure that their master accounts are in good standing, to avoid backend bank fees.
  - HoyaSaxa 15y ago
    If this was the case then you wouldn't be FDIC insured. BankSimple very clearly states that: "Sure. For day to day banking, we envision no fees. There are some things, like international wire transfers, where we will directly pass our costs on to customers. For example, if our partners charge us $15 for an international transfer, we will charge you $15. We won’t use these fees as a source of revenue and will always be on the look out for lower cost partners." So in actuality, they will charge you whatever the bank your money is currently in charges them.
    - dkokelley 15y ago
      Sure, for interactions outside of BankSimple there would be fees. Not so much 'gothca' fees, but services like wire transfers offered at cost. That point doesn't support your first assertion that the money wouldn't be FDIC insured. If the money is in the bank, it should be FDIC insured. It's really just a matter of WHO's insured. Is it you, or BankSimple? As for drawing a negative balance, I don't think the bank your money is in will charge BankSimple, because I don't think BankSimple would open up thousands of individual accounts for each customer. The easier way to do it would be to have a single 'slush' account where all of the money goes. In that case, BankSimple wouldn't be charged for your overdraft, because their account never actually goes under.
      - HoyaSaxa 15y ago
        Right but if BankSimple just uses 1 large slush account in each bank, then they can only be insured up to $250,000. And you are not allowed to have multiple accounts at the same bank that are FDIC insured so it is not possible for BankSimple to just open up a new account every time they reach $250,000. So the only way to properly insure your money at each bank would be to open an account under your name at each bank. My guess is that you are right in that BankSimple will probably just have large slush fund account at each bank. And they will be FDIC insured "at launch" as it says on BankSimple's website. But once that account reaches >$250,000 your money is not fully insured. Now BankSimple doesn't seem so transparent after all...
        deleted 15y ago
- nl 15y ago
  But how do they get rid of the "hidden" fees if they're backed by normal banks? It's easy: "We'll get you X thousand customers, you drop the fees". Banks do special arrangements like this all the time.

deleted 15y ago

[deleted]

tedunangst 15y ago

I can imagine them improving the front end. But how do they get rid of the "hidden" fees if they're backed by normal banks? Is BankSimple just going to pay all those fees for you? Or are they going to reprint the fine print in size 48pt extra bold?

bkudria 15y ago
From the article: "The FDIC-backed firms, in turn, get additional customers without paying for marketing, meaning "there's enough revenue for both of us to be happy," says Pete Chiccino of Bancorp, which is slated to join CBW Bank as a BankSimple partner. Reich also promises his company won't charge the kinds of extraneous fees that netted U.S. banks some $36.5 billion last year."
dkokelley 15y ago
BankSimple's account never goes negative, so there is no fee. When your BS account (funny abbreviation) 'goes negative', BS can charge whatever they want, or nothing at all. BS only needs to ensure that their master accounts are in good standing, to avoid backend bank fees.
- HoyaSaxa 15y ago
  If this was the case then you wouldn't be FDIC insured. BankSimple very clearly states that: "Sure. For day to day banking, we envision no fees. There are some things, like international wire transfers, where we will directly pass our costs on to customers. For example, if our partners charge us $15 for an international transfer, we will charge you $15. We won’t use these fees as a source of revenue and will always be on the look out for lower cost partners." So in actuality, they will charge you whatever the bank your money is currently in charges them.
  - dkokelley 15y ago
    Sure, for interactions outside of BankSimple there would be fees. Not so much 'gothca' fees, but services like wire transfers offered at cost. That point doesn't support your first assertion that the money wouldn't be FDIC insured. If the money is in the bank, it should be FDIC insured. It's really just a matter of WHO's insured. Is it you, or BankSimple? As for drawing a negative balance, I don't think the bank your money is in will charge BankSimple, because I don't think BankSimple would open up thousands of individual accounts for each customer. The easier way to do it would be to have a single 'slush' account where all of the money goes. In that case, BankSimple wouldn't be charged for your overdraft, because their account never actually goes under.
    - HoyaSaxa 15y ago
      Right but if BankSimple just uses 1 large slush account in each bank, then they can only be insured up to $250,000. And you are not allowed to have multiple accounts at the same bank that are FDIC insured so it is not possible for BankSimple to just open up a new account every time they reach $250,000. So the only way to properly insure your money at each bank would be to open an account under your name at each bank. My guess is that you are right in that BankSimple will probably just have large slush fund account at each bank. And they will be FDIC insured "at launch" as it says on BankSimple's website. But once that account reaches >$250,000 your money is not fully insured. Now BankSimple doesn't seem so transparent after all...
      - deleted 15y ago
nl 15y ago
But how do they get rid of the "hidden" fees if they're backed by normal banks? It's easy: "We'll get you X thousand customers, you drop the fees". Banks do special arrangements like this all the time.