With that said, how is BankSimple anything but a middleman? In my eyes, they fill one of two potential roles:
1. They're a customer service wrapper for banks, which means banks pay them to provide support. So banks are their customers, right?
2. They actually manage your money for you---a "broker for personal accounts." How do they generate revenue in this case?
#1 and #2 are both problematic. In a way, I'm the opposite of Aloisius: I clearly see BankSimple's benefits (Mint + support + SmartyPig), but I cannot understand how they will generate revenue while staying loyal to customers.
1. We're more than a "customer service wrapper". We don't license our technology or outsource our support staff to other banks. Banks are our partners, not our customers, and we only partner with a small number of banks who share our values and are willing to set aside things like fee revenue to work with us. We have a symbiotic relationship with those banking partners: we bring them deposits, and they make loans on those deposits and share the resulting interest margin with us. That is one of several sources of revenue for us, but not our sole source of revenue.
2. If customers like the way we help manage their money, we're able to connect them to a variety of financial products that are mutually beneficial to our customers, our banking partners, and to us. As above, our banking partners are happy because we're bringing them new customers for various financial products, many of which have a decent margin on them (CDs, for example). We share that margin with our partners, and that's another source of revenue.
Our business is all about aligning the interests of the banking industry with the interests of our customers. Where we can create that alignment, we profit.
That aside, I'm one more hoping you can bring some sanity, on behalf of the consumer, to this market.
I was able to do a lot of things like dispute charges, change address, and get information very easily on the phone with less than outlandish waiting times.
And I never incurred ATM fees either by using ATM's from my bank or just by using a credit card when I didn't have any cash.
The only real advantage I'd want is more ATM availability and higher interest rates. Otherwise, I can't say I've had that bad of an experience with a bank.
By skimming off a percentage of the interest your money is earning in their institutional account.
Alternatively, what kind of margin would they take off? 50 basis points? 100? Interest rates are already low, so a small cut right now looks very big to consumers.
EDIT: posts above suggest BankSimple will offer better rates than industry competitors. Where are the margins, then?
It's conceivable that a large institutional client would get even better rates than an individual ING Direct savings account, so there is plenty of money for BankSimple to skim off the top, as long as they have enough capital.