Simple Releases iPhone App to Help People Simplify Banking

Simple, formerly BankSimple, released an iPhone app today to complement its banking solution. The company, which is partnered with The Bancorp Bank, gives U.S. residents an alternative to traditional banks by providing a Simple Visa debit card, no-fee bank accounts, and online money management tools. Existing customers can download and use the app today, though the company is in closed beta, and anyone who signs up today can expect to get access in the fall. Currently the company has a waiting list of over 100,000 people.

Co-founder Joshua Reich said they created Simple because they believe banks make money by keeping customers confused. “Since deregulation, banks started earning more money from fees and charges than from banking. They make money when customers make mistakes, so it’s not in their interests for customers to understand their finances,” he said in an interview. “We want customers to understand what’s going on with their money. We want them to worry less about their money and simply get on with their lives.”

Simple offers consumers traditional features of a bank, like checking accounts, direct deposit, money transfers, and access to over 40,000 ATMs internationally through a partnership with fee-free ATM network Allpoint. Similar to online money management tools like Mint, they also offers users a glimpse into their spending patterns, and offer a “Safe-to-Spend” feature that tells users how much they available to spend at any given time. And they don’t charge fees for overdraft, account maintenance, money transfers, or out-of-network ATMs (though they do charge some fees, such as for international wire transfers). The iPhone app gives users access to web features including the ability to search and view transaction history, pay bills, and talk to a customer service rep.

Reich emphasized that the iPhone app is real-time, so the app will show a purchase about 10 seconds after it’s made with a Simple Visa card. The app also lets customers deposit checks by taking a photo with the app. “Everything that you can do on the web, you can do on the app. We’ve been beta testing the app with customers for a few months and we’re seeing that customers are using the app far more frequently than using Simple on the web,” he said. The company is also planning an Android app, and said it’s exploring tablet versions.

Simple makes money from interest margin (which they explain as the revenue a bank earns from loans, less the interest the bank pays its customers on deposits), and interchange, which is money made when a cardholder uses a card issued by that institution to purchase something. “Basic banking is a good business to be in,” Reich said about their business model. “Banking revenues are stable and well understood. If you remove the fees, they are fair to the customer and if you are online-only with a truly differentiated product, the costs are much lower.”

While only available to U.S. residents, the company plans to expand internationally but said it could take years due to regulatory issues. Reich said Europe is a likely first market because of their unified banking system and advanced payment networks. The company launched to its first batch of customers in November 2011, and though Reich couldn’t give a timeline for when it will open up to the public, he said they’re “bringing people on board as fast as possible.”

Though the money management side of their solution will draw comparisons to Mint, Simple’s solution is much different in that it’s a replacement for a traditional bank, not a place to aggregate a user’s different financial accounts. But convincing users to switch banks is no easy task. And with millions of users, Mint is the most-recognized money management tool, and acts as a complement to existing bank accounts, rather than requiring users to switch financial institutions. Reich said Simple’s automation features (they automatically move money in real-time to match customers’ spending behavior) are what sets them apart from both other banks and solutions like Mint. “It’s like automatic transmission for your money,” he said. “Banks today give you manual transmission and charge you when you grind your gears. That’s just not fair. Tools like Mint help people drive stick, but we think that those tools are solving a problem that shouldn’t exist in the first place.”

With 100,000 people on the waiting list and over $13 million in funding, Simple seems to have good early traction for its solution. But it will need a much larger user base to compete with the big banks, which will require winning over the trust of consumers across the U.S., and convincing them that their money is safe with Simple.

Erin Bury

Erin Bury

Erin has covered startups and technology for over three years in publications including Sprouter Weekly, The Globe and Mail, Business Insider, Mashable, and VentureBeat. She also writes a regular startup column for the Financial Post, and is a technology expert on CTV News Channel. Before BetaKit Erin worked as Director of Content & Communications at Sprouter from its launch in 2009 until its acquisition by Postmedia Network Inc. She was recently named one of Marketing Magazine's 30 Under 30 in 2012.

Comments are closed.