
Why it’s so hard to fix banking: An interview with Simple’s exiting CEO - jseliger
https://slate.com/business/2018/05/why-its-so-hard-to-fix-banking-an-interview-with-simples-exiting-ceo.html
======
sakopov
I've been using Simple for close to 5 years now and have been incredibly happy
with my experience. The customer service is hands down the best I've ever come
across and all updates to the app made the experience much better. Simple
being a partner bank instead of a stand-alone bank has definitely held them
back. I'd wager they lost quite a few customers when switching from Bancorp to
BBVA. Even I considered leaving due to lengthy switch process and generally
thinking that such a hard change is not acceptable, but I stuck around and the
entire process was exceptionally smooth. I'm still somewhat surprised they
haven't made strides to become an actual bank entity, but having experienced
regulations working at a banking SAAS company myself I can imagine the
monstrous effort required here. Either way, it's sad to see the original
founders leave. I really hope this doesn't change the vision and direction.

~~~
dcosson
Huh. I had exactly the opposite experience, simple was mostly fine when I used
it but the web experience of chase these days is also fine. A clear, simple UI
for seeing statements and setting up credit card auto-pay, deposit checks in
the app. Plus, having branches if you absolutely need to use them is nice, and
finding atms in most us cities for a big bank is much more straightforward
than finding the partner atm brands that work with simple, or whatever you
have to do there.

When simple goes wrong though, the leaky abstraction of being a thin wrapper
around another bank makes it much more painful. I forget the details now, but
some fairly straightforward things broke for me a couple of times. And as
friendly as their support might be, they were completely useless for fixing
the problem because it was due to the underlying bank they built on top of.
Canceling my account was also somewhat opaque.

So I can’t really relate to this article or most of these comments at all.

The underlying money transfer infrastructure in the US (between banks and
merchants or banks and other banks) on the other hand really needs an upgrade
from the arcane ACH system, that’s the last thing that sucks about consumer
banking as far as I can see.

~~~
maxyme
I agree Chase's web UI is solid now. Except for the part where I have to spoof
the user agent on Chromium (Linux) otherwise I'm stuck with the abysmal mobile
UI...

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tokyodude
If someone wants to fix banking they should figure out how to do it in Japan.
For all of the supposed idea that Japan embraces the future Japan's banking
system must be among the worst in the 1st world.

A couple of examples

No interest: A typical interest rate is 0.015%. No that is not a misprint.
It's X * 0.00015 annual interest rate
([https://www.boj.or.jp/en/statistics/dl/depo/tento/te180516.p...](https://www.boj.or.jp/en/statistics/dl/depo/tento/te180516.pdf))

No checks: Not sure about other countries but in the USA sending a check to
someone usually costs nothing. In Japan checks really don't exist. Instead to
send money you do a bank transfer which costs anywhere from $3 to $8 per
transaction. For a regular person they might only have 1 payment like that
(rent). But for a company that adds up quick. Electronic payment (sign in to
your bank, send payment) uses the same $3 to $8 per transaction system.

Byzantine hours: I recently got a business bank account and signed up for the
online banking (costs extra). I'm only allowed to send payments from 8am to
3:30pm.

ATMs are still not 24hrs. 7/11 (Shinsei Bank?) and a few others open 24hrs.
Most ATMs still close at some point ever day. MUFG ATMs are currently 7am to
midnight.

Japan is still a very cash oriented society. They do have things like Felica
(digital cash) but getting around with paper cash is not easy. Note, I don't
mind the cash thing since cash = anonymous but I know lots of foreigners east
and west that are surprised as they can generally get by cashless in their own
countries but not here.

I'm not even scratching the surface. I'm sure the people in power and
regulations in place make it nearly impossible to fix the system but someone
one out there must have a way.

~~~
justincormack
Interest rates are basically zero all over the world. Its not a banking issue
thats an economic issue.

As others point out, checks don't really exist outside the US, but electronic
money transfers are usually mandated to be free. Most countries are starting
to have some sort of mandated "basic banking" to allow anyone to have and use
a bank account as a replacement for cash.

~~~
Karupan
> Interest rates are basically zero all over the world

Interest rates for savings account in India is usually 4% p.a. It’s higher for
term deposits.

~~~
lowkeyokay
Is that real (adjusted for inflation rate) or nominal?

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wffurr
There's already a solution for what is wrong with banks: credit unions. They
just don't waste money on advertising so they get less visibility than they
should.

~~~
christophilus
I'll second this. I used to do a good bit of work for credit unions. Every one
of our clients were great folks who genuinely were trying to do the best thing
for their customers. I'm a happy customer of USAA and Simple. If they didn't
exist, I'd use a credit union. Without question.

~~~
kasey_junk
Usaa is the single best “bank” in the USA. Unfortunately their charter
prevents lots of places from using them.

I’ll note they are much different than a “small” credit union in terms of
reach & technology.

~~~
leetcrew
i have a zero fee, zero minimum account with schwab that also gives me access
to their ETFs with no trade commissions or monthly limits, and the ETFs
themselves have extremely low expense ratios. also they reimburse any ATM fees
in full every month. what advantages does Usaa have over this setup?

~~~
wffurr
Among others, USAA doesn't require a brokerage account to bank with them. I
don't think it's really a comparable situation.

In their competitor comparison[1], you'll note they don't list USAA or any
credit unions, because it would look basically the same as the Schwab account.
Low or no fees, low or no minimum balance, decent interest rates, etc.

There's no reason for you to switch, either, but not everyone needs or wants a
Schwab brokerage account too.

[1]:
[https://www.schwab.com/public/schwab/banking_lending/checkin...](https://www.schwab.com/public/schwab/banking_lending/checking_account#account-
basics)

~~~
volgo
Schwab refunds unlimited ATM fee, whereas USAA refunds up to $15. Schwab also
has worldwide no foreign transaction fee, something that USAA doesn't have.

IMO Schwab is still the best because I travel a lot. There's no downside to
keeping an empty brokerage account

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erikb
"Why it's so hard to fix <X>?"

Very easy question. There are people who profit from how <X> fails. The reason
it bothers you is because you are not one of the people who are profiting. You
might not be profiting from <X> but you are likely profiting from some <Y>.
And when it comes to <Y> you are probably not recognizing how it fails on the
cost of others and are not really bothered by it. So good luck convincing the
people who profit from <X> to change it.

~~~
galfarragem
I read somewhere, probably Nietzche, the following statement (paraphrasing):

 _There are only 3 types of people: the poor that wants to be rich, the rich
that wants to continue to be rich and the idealist, that using his ideals,
wants to be rich._

edit: I always read it figuratively. Getting rich meaning to improve position
in whatever hierarchy the person cares about.

~~~
Angostura
And do you think that’s true? Why category do you think - say- Tim Berners-Lee
falls into?

~~~
jeremyjh
He's worth tens of millions. Is it really hard to understand?

~~~
Angostura
I chose a poor example. Do you really believe there’s no such thing as
altruism?

~~~
kelnos
Altruism exists, but it very rarely makes you money. And that's really only ok
if you already have a good amount of money and can afford to give some away,
or work for nothing.

------
agsamek
I'm going to write a few words I always do this in the bank topics. In Poland
(post-soviet EU member, 36M people) we have many banks. Inter-bank transfers
are free for personal accounts. $0.50 for businesses in my case. We have free
transfer for phone number of up to $1000. Instant. We use mostly debit cards
tied to accounts without any fee with wireless payments. Our goverment reduced
transaction fees so you can pay as low as $.10 bill without complain. Of
course this moves us closer to cash-less full-control mode but who cares ;)

~~~
cbnotfromthere
"post-soviet EU member"

Poland was never part of the Soviet Union.

~~~
exegete
Poland was a Soviet satellite state, so I'm guessing "post-Soviet" here means
"post-Soviet controlled" vs. being an official member of the Soviet Union.

------
venantius
We came to many of the same conclusions.

This is why my co-founder and I decided to relocate to the UK in order to set
up our bank. The friendlier regulatory ecosystem here is just a huge advantage
compared to the US.

Plus, there's still a pretty clear path to getting a national US banking
license - it just requires you to expand in from abroad, rather than trying to
build it within the US.

------
jcrawfordor
> but the reality is that most millennials, like most Americans, bank at the
> top four banks.

I suppose I'm willing to believe this claim, but I find it pretty surprising.
In my social group, the commercial banks are viewed negatively almost to the
point of stigma against using them. Everyone uses credit unions for their
checking, and several credit unions in this area (Nusenda, Rio Grande,
USEagle) are at least as convenient as the major national banks.

I think a large part of the perception of convenience comes down to the Credit
Union strategy of federating services. An ATM network jointly operated by many
of the credit unions in the region (CU Anytime) has a large fleet and has
focused on placing ATMs in high-convenience locations like offices of major
employers and college campuses. Co-Op Shared Branching means that you can walk
into a branch of almost any credit union and they can access your accounts at
your own credit union. And as for avoiding ATMs and branches at all - the
online and mobile services offered by most credit unions are perhaps a bit
behind aesthetically, but they work just fine, and the credit unions seem to
have been offering free and easy person-to-person transfers for longer than
the commercial banks have.

So what's limiting adoption of credit unions? I'm skeptical that it's
awareness because the branches are everywhere and some of the larger ones
around here purchase billboards and TV advertising regularly. Is there a
feeling that they're more limited in their service offerings?

~~~
spyspy
As a card-carrying millennial, I've found my friends to be woefully ignorant
of how to bank, despite (or because of?) their often well-off upbringings.
People often tend to follow the lead of their parents when it comes to banking
decisions. They don't really explore the market for themselves or have strong
opinions on what's efficient or ethical.

------
comnetxr
I wanted to like Simple. But the budgeting and money tracking features were
never really that useful, I needed checks, and my card number was stolen and
used to purchase groceries in another state even though I had only used it for
a couple of transactions. Their customer service handled the transaction but
it really seemed like the card leak was probably on their end. I pulled my
money out then.

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freddie_mercury
They picked the worst possible time in 80 years to start a new bank. It meant
they couldn't actually get a banking certificate. This constrained every
technical choice & feature they wanted to offer.

I mean....I'm not sure there's a lot to learn from the Simple story beyond
that.

~~~
fwdpropaganda
Why do you say it's the worst possible time in 80 years to start a bank?

~~~
venantius
He's referring to the time Simple started - in 2009, in the peak of the
financial crisis and right after the Office of the Controller of the Currency
initiated what is now nearly a 10-year moratorium on the granting of new
national bank charters.

------
linsomniac
I've been using Simple for around 4 years now, and one thing I really hoped to
have was a very good system for tracking and managing my money. They had a
good start 4 years ago with their "envelope savings system" and goals and
their web interface. It had a few warts, and was only ok, and really didn't do
a very good job of categorizing the transactions. But, they were new and
surely it would improve, right?

4 years later I can say it is basically unchanged. It really isn't very
usable. I do still like how it implements the envelope savings towards your
goals, but for managing and tracking money it really isn't useful. Mint is
better for tracking.

I like Simple, but I wouldn't say I love Simple.

~~~
tc08
Agreed, I tried them for a while but now I've switched to Capital One 360.
Excellent app and web, savings account with 1.6% interest, free ATM worldwide,
no foreign transaction fees, etc. I tried Schwab as well but IMHO Capital One
is above and beyond the others when you look at everything offered.

------
savrajsingh
What’s the future of simple, though? With all the founders leaving, does it
have a future?

~~~
WJW
Surely, a company that requires the presence of its founders to function has
way less of a future than a company that doesn't? A great company should not
be dependent on any one person.

------
Justsignedup
Ugh. Looking at their info:

\- I can get same deals from Ally bank. No fees.

\- Ally bank reimburses 100% of all ATM fees I pay.

\- Ally bank savings account is 1.60% at the moment. It is no investment
account but better than any other bank period.

\- Ally's customer support is pretty darn good

I don't see ally going crying around about how hard banking is.

Simple was just sub-par.

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Cbasedlifeform
I was with Simple from the start and generally liked the app and the customer
support (based in Portland IIRC) was very helpful and friendly.

My problem was that I had a large check to deposit and before they cleared it
they insist I not only specify the source of the funds but also what I was
going to use the monies for! I understand they need to ask the former (per IRS
regulations and "Suspicious Activity Reporting") but the latter is frankly
NOTFB and no other bank has asked me that question. I told them as such and
closed the account.

~~~
ellius
They're supposed to ask both actually per AML laws. Which may be completely
overbearing but are not within their control.

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dnomad
Eh. This is not a mystery. Banks have tremendous lock-in and inertia working
for them. The only way to fix the industry is complete account portability.
Anybody should be able to wander into any competitor to their existing bank
and initiate a transfer of their account to that competitor. The transfer
should freeze the account and take no more than 48 hours. Do this and let the
free market work its magic. Just like American celluar providers used to suck
until number portability kicked in, American bank providers will suck until
account portability is a thing.

P.S. Banks should also be required by law to provide minimal services to every
American citizen. It is absolutely beyond stupid that there are 10 million
American households that don't have access to a bank account [1]. These
households are then forced into dealing with the Check Cashing/Payday Loan
businesses who are pure, unmitigated fucking evil. These firms charge
outrageous fees that trap many people in poverty.

[1]
[https://www.fdic.gov/householdsurvey/](https://www.fdic.gov/householdsurvey/)

~~~
azeotropic
What exactly prevents people from cashing checks at the issuing bank, or
walking into a bank or credit union with their paycheck and opening an
account? Or cashing it at a Wal-mart or a 7-11, which have low fees? These
people may trapped in poverty, but ultimately not by the check cashing/payday
loan business.

~~~
Retric
Many banks have a tiny number of branches so good luck finding one to cash a
check. Low fees are rarely low when you're talking a minimum wage income.
Walmart's 3$ fee for anything under 1000$ works out to 1/2 an hour of work.
Picture spending 1/2 an hour of your salary every 2 weeks simply to get paid.
Now make that worse by having 3 jobs...

~~~
watmough
I had no idea this was the case. That's shocking.

If I need cash, I walk into a Chase branch [Not my bank, but conveniently near
a Thai Restaurant I like to visit] and just ask for cash advance against my
VISA card. Done by a teller, there's no ATM fees.

~~~
rileymat2
Which cc does not charge interest before the thirty day grace period with cash
advance?

~~~
walshemj
Use a debit card which has no fees or do us banks not offer those

~~~
Larrikin
Is it a cash advance if you're using a debit card? Isn't that just a
withdrawal.

~~~
rileymat2
The op terminology must have been off.

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eweise
An alternative to to Simple is VaroMoney. Unlike Simple, they are trying to
get a bank charter which should give them more control over the bank
experience.

------
dogruck
In the interview, he talks a lot about the difficulty of navigating the
regulations.

Perhaps his criticisms of those regulations are valid — but those regulations
exist because of previous problems.

In many cases, the same people who scream, “banking sucks” would also scream
if their bank failed due to a reason that some existing regulation would have
prevented.

------
eklavya
Hey, so you are using all these expensive AND inadequate techs, could we at
least use something sane for this non critical stuff? I mean you don't have to
worry about this thing and you save a lot and you are using a much better
stack overall. What say you?

No.

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purple-again
The number of FDIC banks in the United States. Anyone working near this space
can attest to the flurry of mergers and acquisitions.

2002 7,870

2003 7,750

2004 7,612

2005 7,507

2006 7,380

2007 7,262

2008 7,061

2009 6,813

2010 6,506

2011 6,263

2012 6,061

2013 5,836

2014 5,596

2015 5,330

2016 5,102

~~~
cesarb
> 2016 5,102

In my country (Brazil), the bank identifier used by several banking protocols
is three digits. It's hard to imagine over a thousand separate banks in a
single country.

(For the curious, the full list of identifiers:
[http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPCNC.pdf](http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPCNC.pdf)
and
[http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPECNC.pdf](http://www.bb.com.br/docs/pub/siteEsp/compe/dwn/IFPECNC.pdf))

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ikeboy
So how hard is it now to open a bank with $20 million?

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watersb
I am glad they came along when they did. Works great for me.

