
The Story of BankSimple - ssclafani
http://www.carnegiemellontoday.com/article.asp?aid=977&page=0
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johnnygood
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.

~~~
meterplech
Millions of people love using Mint.com, and they had a huge exit and it didn't
even have any of the bank-ish features that BankSimple is offering. BankSimple
revenue model could easily include the same types of things as Mint: Credit
Card Offerings, Life Insurance plans, even car insurance. And, they even earn
additional, perhaps lower margin, revenue from their banking features. Think
of the banking money as the long term huge opportunity to disrupt banks, and
the Mint type offering as the short term profit that will allow them to grow.

For the consumer, if they can offer some of the analytic capabilities of Mint
combined with the ability to make cash withdrawals from ATMs, deposit checks
from your phone, and even get (some) interest it's an incredible product. It
can roll most of your online financial needs into one company with a
dedication to customer service. Sure, they may provide slightly worse interest
rate. But how many people actually know their exact interest rate right now?
Compare that with the number that have been adversely affected by overdraft
fees and who would appreciate real customer service.

I wish them the best of luck! I hope they become the Zappo's of banking

~~~
greatreorx
Yes, I've never seen them admit to it, but I think lead gen has to be part of
their business plan. Mint predicted (and got) about $30/user per year from
lead gen. If banksimple can be the trusted first place people go to for
financial advice and products (mortgage, retirement planning, etc), they
should have no problem getting extra revenue on top of the usual bank checking
and savings revenue that goes to their partner.

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gatsby
I like their site: <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
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.

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

~~~
gyardley
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.

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corin_
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
...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
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
Quick differentiator : Do UK banks charge you for a cheque book?

~~~
corin_
No, although cheques are (in the UK at least, I'm not sure about
internationally) about to become a thing of the past.

~~~
Lewisham
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.

------
SkyMarshal
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."_

