BankSimple Launches Preview Site
banksimple.com
banksimple.com
"BankSimple account plus BankSimple debit card replaces your existing personal bank account. Make deposits, withdraw cash, pay bills, earn interest, and more.
However, BankSimple is not a "bank." We partner with chartered banks who provide FDIC-insured products, leaving us free to concentrate on designing the complete consumer banking experience, via the web and your smartphone."
From the looks of it, it appears as if Bank Simple is going to be gathering deposits for the actual banks they partner with. In exchange, those deposits will be fenced in and administered by Bank Simple via the online and mobile presence.
The mention of debit cards at first made me think that maybe they would be able to split fees, so Bank Simple would get a cut of the interchange fees that occur whenever a debit card is used... but those fees will go away because of the Durbin Amendment (this is putting the squeeze on every major bank in the US and will result in an increase in fees for customers -- see Jamie Dimon's comments at the recent Barclays Conference).
Maybe the partner banks will split some of the interest they make off of the deposits? Presumably, Bank Simple's value proposition to them would be that they are providing something that is slightly more than zero cost funding but less than a CD rate. So they could earn a little bit in that area.
The only thing that is left then, that I could think of, is that Bank Simple will mainly try to make money by cross-selling products. Bank Simple Brokerage Accounts. Bank Simple Mutual Funds. Bank Simple Pre-Paid Debit Cards. That sort of thing, where they'd be able to gain market share. This would work out pretty well I think.
For reference, the average American uses 16 different financial products, with about 2 products per bank. A good bank like Wells Fargo boasts a ratio of 5.5-6 products per customer. Your typical bank earns its money on an 80/20 split, where 80% comes from the interest spread (borrow at 3%, lend at 6%, net 3%) and 20% comes from fees (overdraft, interchange, fees for other products). But a trust bank will have a 60/40 split, where they earn extra fees by offering wealth management services to the majority of their wealthy customers.
> If you don’t charge hidden fees, how do you make money? We make money from two sources: interchange and interest margin. Interest margin is the revenue earned from lending, less what they pay on deposits. For example a bank may charge a customer 12% to borrow money, but pay 5% interest on a savings account. The difference, less any defaults on the loan, is revenue to the bank. Interchange is a small revenue source that card issuing banks earn whenever that card is used at a store. Typically banks earn less than 1% for each time the card is used to make a purchase. These are both great revenue streams, but banks got greedy and started charging additional fees to bolster their revenue. Without hundreds or thousands of branches, our operation is low cost, so we don’t need to rely on extraneous fee revenue.
The model sounds interesting, but I hope these guys have stellar risk management.
I don't have the latest numbers, but in '08, the large banks were making closer to 45/55, not 80/20.
I don't know too much about how it works for an affiliate debit card like Bank Simple is proposing -- obviously they are partnering with large banks for the deposits, but I wonder how the process works for the debit cards.
While our relationship with banks is similar from a regulatory perspective, we have deep technology integrations that allows us to provide a much better end-to-end user experience.
This is why it is possible to launch an 'affiliate' card in a matter of weeks, but it is taking much longer for us. We first had to find banks that shared our vision, were willing to cede control of fees and user experience to us and had the technical chops to integrate with us. It was a tall order, but we'll be making some key announcements on this front real-soon-now.
I do hope that you tone down the designery stuff once you launch. Google Analytics gets a pass on the front end, but I definitely don't need XSR from MixPanel and TypeKit all up in my banking experience. I know it's heresy to designerbros, but the UX problem with existing banking has nothing to do with typography and everything to do with 3270 emulation & petty bureaucracy.
My personal opinion is that Mixpanel is part of the ever-rising bar of things rich application sites should start to include. If I see a complex company site that _isn't_ using mixpanel, it will put them down a peg in my estimation. The data you can collect is just that valuable.
How you can not understand this and still work at a fucking bank? (even an affiliate one)
And I'm pretty sure they would consider themselves to work at a fucking bank (an FDIC one).
I sure as hell hope not, and I trust Google a hell of a lot more than I trust MixPanel or TypeKit.
Hint: you don't know.
There is no way I'm going to be your customer if you intentionally leak my financial actions to two third-parties to get analytics or grant full client-side access to my bank account to them along with a third just for fancy fonts. Sure I could block them in my browser but I'm not going to use a bank that would even try that shit.
Congratulations. You're actually attributing a bit of reason to us. Conversations will be much more productive now. In any case, Mixpanel is easier to integrate on pages with secure data than typekit. There are ways, albeit ways that further narrow our browser compatibility profile.
But I can't get past the idea that you trust Google's scripts with your financial data. They're the single biggest target on the internet; if anyone wants a big score GA is going to be where they hit first. Even 5 minutes serving to GA pages could potentially result in millions of stolen passwords.
I don't trust Google that much, I just trust the others far less — there are degrees of infinitesimals! Besides, an untargeted score on GA would be such a hueg firehose that y'all would be way down the list of people to sift through data for much less prewrite an exploit for.
Even you writing your own code to ship specifically detuned events to MixPanel makes me somewhat uneasy.
Why this, specifically?
<i>For reference, the average American uses 16 different financial products, with about 2 products per bank. A good bank like Wells Fargo boasts a ratio of 5.5-6 products per customer. Your typical bank earns its money on an 80/20 split, where 80% comes from the interest spread (borrow at 3%, lend at 6%, net 3%) and 20% comes from fees (overdraft, interchange, fees for other products). </i>
Mint got away with this by simply being a front-end, and never touching your money. BankSimple should try a little harder to prove that it's not just a company that can identify why banks suck (not all that hard, really), but a company that can actually be relied upon to safely handle your money.
* I know that BankSimple are putting all your money into an FDIC bank, but as the intermediary and the company you are doing business with, the buck stops with them (pun somewhat intended)
In addition to our core team, we have multiple payments systems consultants, banking lawyers and former regulators working with and advising us. We are also actively growing our compliance and regulatory teams. The jobs aren't posted on the site, because that's not the best way to hire for those roles.
Not that any of that is really worth much. Innovation comes from the outside. A lot of the pain in banking stems from atrocious technology, so we're making better tech to drive a better experience.
I can't believe how bad many banks' online experience still is in 2010. Best of luck to you guys, hope you clean their clocks.
Can they realistically contract out the call center to any of the companies that service existing retail banks?
It is true that when the stakes are high it's a little nerve-wracking. But really there couldn't be a better moment in time for outsiders w/out finance cred to take a crack at this. so many people are like, "ok, we let the "experts" manage finance. this doesn't work out so well all of the time..."
SO many people are chomping at the bit for anything better. i read comments on twitter every day from folks who are totally frustrated with their banks not just from incompetence, but because the services don't fit their lifestyles/ ways of managing money. maybe banksimple's initial customers will just be nomadic alpha geeks, start-up folks, and high frequency money movers. that's OK. alpha geeks were amazon's first customers, too.
Is this what is referred to in the industry as a 'brokered deposit' ?
The next day I got a voicemail from one of their operators inquiring about my account with a number to call him back. The number went straight to him, and my account was straightened out in a few minutes. They also sent me checks, something I had never bothered paying for with my account at Chase.
And I haven't even put any money in the account yet. So far I'm very impressed.
I also have a USAA account, which reimburses up to $15 in ATM transactions AND has mobile deposit via Android or iOS.
BankSimple is the name of our product, our company is Simple Finance Technology Corp. (rolls off the tongue...) There is plenty of precedent for our situation - not being a chartered bank but having 'bank' in our product name and URL. BankFreedom, BankRate, FindABetterBank, etc. Not comparable businesses, but face similar issues.
IANAL, but, by god, we pay them handsomely to deal with this and many other banking issues.
It's a real pain; you end up having to poll the form fields for changes and then trigger the change event manually.
Regardless, I still don't see what the great value proposition is other than that they are friendly. My bank (a small local bank) has never charged me a overdraft fee, never had to wait more than a minute, and I can only remember one time that I paid an ATM fee. I must have just been lucky enough to get one of the non-evil banks.
We think that’s great.
In the past, we’ve shown animosity toward banks without too much distinction. In retrospect, this might’ve been a mistake. Hopefully, we’re a refuge for resentful and puzzled customers of a certain subset of national banks rather than a competitor to a non-profit credit union. We wholly realize the necessary and worthy function that credits unions fulfill that neither we nor any national bank could accomplish. While we realize we might not be the right fit for some customers, we believe we’ll be a worthwhile alternative for many others.
Lastly, I’ve personally spent a significant amount of time thinking about ways in which BankSimple and other financial service startups could further bolster credit union adoption and satisfaction to better pursue their mission (e.g. opening financial research to nonprofits and academics or technology sharing). I’d love to hear from anyone who has thoughts on this.
There's plenty of small local banks that are non-evil, at least until they get swallowed up by progressively more dastardly banks in a long chain of semi-annual M&A transactions.
For the time being, we are concentrating on the US market. Banking regulation and service levels vary widely around the world. After we launch in the US, we may look at international expansion.
I'm sure BankSimple trusts Banco Popular :)
A nice UI, efficient operations and customer service which doesn't actively hate you can make a pretty compelling value proposition.
I think the subconscious reaction is "yeah right, trust another banker?"
This got me:
"...designing the complete consumer banking experience, via the web and your smartphone.."
I am not sure how good this will be, I mean, credit unions were supposed to be the answer to big banks issues - but they are largely aggregating under umbrella ownership as well. Their overdraft fees are a large percentage of their revenue (mine for example advertises the $500K per month they take in in overdraft fees as a primary asset directly on the wall in front of the tellers (Valley Credit Union))
---
What people really need is fundamental help with managing their spending and finances.
Though the following is overly complex, for illustration imagine the following:
You bring home $10K per month. You allocate a particular budget online.
But you have certain cards for certain classifications which are allotted a % of your spending budget after certain bills are accounted for (rent, utils, ins, legal req's (child support/tuition, etc).
These cards can only be used for the intended purpose. You'd have a "Food card", "Car card", "Entertainment card" etc...
The types of cards, their budget % and what not could be based off understanding you spending needs, habits and goals dependent on your history and other factors that you've already been measuring through the use of Mint. And manually set based on your own preferences.
The "food card" works at any grocery, restaurant, cafe, etc (based on the establishments profile ID in Mint, as an example) -- but will not work at Kragen, the gas station, etc..
This system could be used to teach people to allocate funds to a bucket - and ideally prevent them from over spending.
(Sure, there will be plenty of people on HN who will say "PSHAW! only an idiot would need to have such granular control over their spending - look at me, I don't spend beyond my means, blah blah blah" -- but there are literally HUNDREDS OF MILLIONS of people who DO -- thus all the financial issues that people have, and the preying on such people that many financial institutions, rent-to-own etc type establishments that exist.
There really is a deep need for material hand-holding in financial issues in the world. Hand-holding to a degree that some people don't want or need, but many many others do.
If the system could have a measurable view; such as it requires that you select a >5% savings number that is not as easily accessed (e.g. like transferring from your savings to checking whimsically) and that gives you a constant and real-time view of your credit rating, payment standing and history on credit-based accounts etc...
With incentive offerings to provide a bit of gamification to the entire service "Pay your X bill on time for N months and get Y months free Z service", automatically - without the user required to do anything.
Rewards on brand loyalty simply built into their purchases, integrated group coupons for the users of the financial training instruments etc...
There is a serious and deep need for a pivot of the entire financial industry that differs from the centuries old taking that the industry is known for, and there is a universe of room for innovation in this area....
Check the "Know what you can safely spend" blurb under The Product section. It seems like it's in the ballpark of your grand vision. You can allocate spending/saving buckets, and it will tell you — based on your income/spending streams — how much discretionary money you have at any given point. Seems really handy.
Also, as they offer at the end of the faq:
Why haven’t you answered X?
If there is anything you’d like answered, feel free to shoot us an email at hello@banksimple.com.
The most annoying thing is that I don't live in the US any more, so even when this launches I won't be able to partake - but I have been longing for tech entrepreneurs to take a stab at some 'traditional' foundational businesses.
Banking is one of those things that really needs some TLC. Plus, there doesn't have to be branches.
We need a bank for tech entrepreneurs. Not just based in the US dammit.
Did this happen to anyone else? In any case, best of luck to BankSimple. I can't wait to actually get to try the service. :)
(its explained at the bottom of the page)
HINT: The site does have two easter eggs. I'll spoil one; try clicking in the far top left of the guilloche background. Didn't you wonder how we got the page to load so fast with such a huge image?
Try typing <script into one of the signup fields for the real easter egg!
Surely someone _told_ you about it. You didn't try to XSS our form just for fun, surely.
I really like their site, they put a lot of effort in it and it shows. Good work!
javascript:$("signup-wrapper").addClass("signup-troll");
Havn't read the code to work out what triggers it just yet...