"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.
Can you cite your source please? or a source? thanks.
<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>
I'd pay for Mint + Bank in a single package. It looks great. However, it's hard not to be a little disconcerted when the "meet the team" bit doesn't have a single person who has any sort of financial title like "accounts manager" or anything. It's just a group of devs. That doesn't scream "we know finances" it screams "we know how to make web apps, hope you trust us with money too... it can't be that hard, right?"
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)
Hi. I'm Josh, the CEO. You can read more about our growing team on the /team/ page, but in summary, I have an MBA in Finance and Accounting, and worked with a multi-billion dollar investment portfolio. Shamir, our CFO (aka 'account manager'), spent the last few years doing banking and payments consulting for McKinsey.
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 think one of the lessons of the contemporary internet is that outsiders often have some really helpful, valuable ways to improve institutional products + services.
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.
BankSimple is not a bank. Think of them as a user-friendly GUI over a group of banks. As to where money actually gets deposited, it probably depends on which bank offers the best deal at any given time.
In the meanwhile, I've been very happy with Charles Schwab's checking account. Free as in beer, you're allowed to overdraft with no overdraft fees, free ATM fees at all ATMs (including international!)
Same. The web interface leaves something to be desired (e.g. focus events firing while I try to type my password, broken middle-click behavior, etc.), but the reimbursed ATM fees are so cash.
I'm wondering how they got around the state banking laws requiring them to be a chartered bank if they want to use the word "Bank" in their name (for example, in New York, Banking Law Section 132). All the confusion in this forum as to whether they are actually a "bank" makes me think they may not yet have heard of these laws...
We have certainly heard of that law and similar rulings and are in fairly regular contact with the regulators.
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.
The signup form doesn't work if you use autocomplete to enter your name and email address. Had to delete random letters and retype them to get the button to light up.
Yeah, they are probably using the javascript change event to trigger the enabling of that submit button. Unfortunately, most autocomplete functions don't trigger the change event.
It's a real pain; you end up having to poll the form fields for changes and then trigger the change event manually.
This should be working much better now, thanks for all the feedback on this. If you're interested we just open sourced the MooTools class that handles the validation - https://github.com/BankSimple/ValidateSimple
You mean like [email protected]? Mine does too (most gmail addys do), and it worked. It did say my email address was invalid, but focusing and unfocusing the textbox fixed it. I don't think it's an issue with the email format, just the form is buggy.
Good work guys. A few text/spelling errors you might want to fix. On the careers page after clicking for more detail in the "smart and talented?" section, there are about 5 places where two words are getting smushed together. Maybe a line break problem or something. And then in the thank you email after signing up, the first line, "thank you requesting ..." should be "thank you for requesting ..."
This bank "overlay" concept appears to be very similar to what SmartyPig (http://www.smartypig.com) has been doing for a couple years. The revenue model is slightly different (SmartyPig partners with retailers to offer cash back bonuses to customers if they convert their savings goal into a retailer gift card or load it on to the SmartyPig Cash Rewards Card), but the general model of leveraging existing banks for client deposits is the same. I will be interested to see how competitive BankSimple's interest rates are and if they can differentiate themselves in a meaningful way from the many great online banks that already exist (INGDirect, Ally, etc.).
I'm very excited to see how this pans out. Even though i'm not a country they're going to support, if they do well it will set a good precedent and maybe we can finally see banking stirred up a bit. Banks are my most hated companies as a whole.
I guess it is a testament to how messed up the banking industry is, that I actually dream (quite literally in my case) about the launch of this bank/site.
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.
I got a message from BankSimple telling me that I was going to get an invite soon and asking me for feedback. I got really excited and responded with an e-mail, but never heard back from them. I'm not sure if I misinterpreted the original e-mail, but this was a huge letdown.
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. :)
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?
Ok, probably this might be a bit beside the point, but I really liked the red-tinted logo. The new blue one looks boring. I'm guessing "blue signifies stability" or some reasoning for that, but still, the old logo looked much more distinctive.
[+] [-] jakarta|15 years ago|reply
"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.
[+] [-] chrisgoodrich|15 years ago|reply
> 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.
[+] [-] i2pi|15 years ago|reply
I don't have the latest numbers, but in '08, the large banks were making closer to 45/55, not 80/20.
[+] [-] pxlpshr|15 years ago|reply
[+] [-] uvince|15 years ago|reply
<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>
[+] [-] Lewisham|15 years ago|reply
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)
[+] [-] i2pi|15 years ago|reply
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.
[+] [-] thesethings|15 years ago|reply
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.
[+] [-] donpark|15 years ago|reply
[+] [-] rms|15 years ago|reply
[+] [-] marketer|15 years ago|reply
[+] [-] ndaiger|15 years ago|reply
[+] [-] dkasper|15 years ago|reply
[+] [-] grourk|15 years ago|reply
[+] [-] emmettnicholas|15 years ago|reply
[+] [-] spolsky|15 years ago|reply
[+] [-] i2pi|15 years ago|reply
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.
[+] [-] Qz|15 years ago|reply
[+] [-] jsdalton|15 years ago|reply
It's a real pain; you end up having to poll the form fields for changes and then trigger the change event manually.
[+] [-] puredemo|15 years ago|reply
[+] [-] tobysterrett|15 years ago|reply
[+] [-] nathanwdavis|15 years ago|reply
[+] [-] abp|15 years ago|reply
[+] [-] callmeed|15 years ago|reply
[+] [-] city41|15 years ago|reply
[+] [-] simonista|15 years ago|reply
[+] [-] tobysterrett|15 years ago|reply
[+] [-] wyclif|15 years ago|reply
[+] [-] jond2062|15 years ago|reply
[+] [-] Andrenid|15 years ago|reply
[+] [-] Dramatize|15 years ago|reply
[+] [-] yummyfajitas|15 years ago|reply
[+] [-] dschobel|15 years ago|reply
A nice UI, efficient operations and customer service which doesn't actively hate you can make a pretty compelling value proposition.
[+] [-] abp|15 years ago|reply
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 [email protected].
[+] [-] corin_|15 years ago|reply
[+] [-] marcamillion|15 years ago|reply
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.
[+] [-] joshuacc|15 years ago|reply
[+] [-] jamn|15 years ago|reply
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. :)
[+] [-] Q6T46nT668w6i3m|15 years ago|reply
[+] [-] csomar|15 years ago|reply
[+] [-] SupremumLimit|15 years ago|reply
[+] [-] julius|15 years ago|reply
(its explained at the bottom of the page)
[+] [-] KirinDave|15 years ago|reply
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?
[+] [-] elliotanderson|15 years ago|reply
javascript:$("signup-wrapper").addClass("signup-troll");
Havn't read the code to work out what triggers it just yet...
[+] [-] arithmetic|15 years ago|reply
[+] [-] vamsee|15 years ago|reply
[+] [-] rkwz|15 years ago|reply