Banks are always crowing about how they aren’t going to have fees for this or that, but somehow, over time, the monthly bank statement comes and there are a load of fees on there. And most of them are worded in such a way that the consumer has absolutely no idea what they are for.
Australian Josh Reich has certainly felt the bewilderment. “Banks make money by keeping customers confused,” Reich told the New York Times. “There’s no incentives to make the experience better.”
So what did Reich do? He partnered with a pal, Shamir Karkal, and started an online bank, Simple, a “worry-free alternative to traditional banking” that doesn't charge any fees.
Formerly known as BankSimple, the Portland, Ore.-based startup which has now processed more than $200 million in transactions, offers its 20,000 customers data-rich analysis of expenditures as well.
By enabling banking services as a front-end provider (competing with virtual financial services brands such as Mint and Obopay), Simple aims to act as an intermediary to simplify banking, building “slick apps for the Web and mobile devices to give customers an overview of their accounts and transactions.”
Its goal is, well, simple: “it encourages customers to treat it as a bank, closing their more traditional accounts and only using Simple,” as the Times notes.
Hence the brand's Facebook page pitch: "Simple is a worry-free alternative to traditional personal banking. No surprise fees plus the customer service you deserve. And that’s just the beginning." It's also beautifully designed, with its scrolling website and Visa debit card packaging (at top) resembling a luxury retailer's gift card presentation.
Still invitation-only, its customer base is being kept relatively small at this point so the startup can work out any initial problems. As the New York Times points out, though, actual funds its customers deposit and withdraw are handled by Simple partners CBW Bank and Bancorp, providing FDIC reassurance to customers. Beyond the debit card for payments, it doesn't offer electronic fund transfers or savings accounts.
The Financial Brand website ponders its business model: "So how does Simple plan to make money? Purely off the spread and interchange, both of which are split with Bancorp." That means that "Simple customers can make purchases with their Visa cards, deposit checks using their smartphones, pay bills and withdraw cash from over 40,000 ATMs — just like they might at any bank. But Simple isn’t a bank."
Those who join may want to be sure they have strong phone and Internet connections. There are no physical Simple locations and none are planned. Sounds Simple — and revolutionary, if evolving. But are customers, increasingly adopting mobile banking, ready to adopt a virtual banking enabler?
Below, a look at Simple's Android-powered mobile app: