A young and hip Brooklyn-based company called BankSimple has been developing a simple, clean, and easy-to-use interface to basic banking products such as checking accounts and prepaid cards. BankSimple is not a bank, but it will soon become a middleman of sorts between bank partners and their customers.
To this observer, the key thing that distinguishes BankSimple is its focus on design. "That's fair to say," concurs Josh Reich, CEO, who visited today. "Our first employee was our creative director [Bill DeRouchey]."
Where banks fall down in online and mobile banking is they fail to create an integrated, holistic experience, Reich says. He relates the experience of being on the website of the bank from which he got his mortgage and clicking on the mortgage calculator to see how certain changes would affect his payments. "None of the information about my mortgage was included in that calculator," he says with shocked expression.
"It's one thing to say you have a feature, it's another for it to work," he observes. "To make it work well is still another thing."
Customers' expectations on the web get continually steeper. "In a test, Google tried making search response rates slightly lower," Reich says. "When they got to be a quarter of a second slower, queries dropped by 20%." A quarter of a second is quicker than the blink of an eye.
Mobile banking is another area with much room for improvement, according to Reich. "Mobile banking feels like an afterthought of an afterthought, not a first-class experience," he says. It's often cumbersome, with long, hard-to-type passwords carried over from online banking side.
BankSimple started out two years ago by designing a mobile banking interface and letting that inform its design of online and card products. Banks typically design online banking first and then extend it to work on mobile devices.
Attention to small design details is an important area where banks often fall short, Reich says. At some banks, one developer might design a bill payment section and another might develop the online banking portion of a site. The "transfer funds" and "cancel" buttons consequently may appear in different spots on different pages. "This leads to a moment of hesitation for the customer, and they may even think the bank has made a mistake," Reich says. "The last thing banks want to do right now is indicate that they're making mistakes." Simplified design also includes stripping out clutter, for instance by not including elements such as the SWIFT routing number if they're not needed.
An advantage BankSimple has is that not only is it starting with a clean slate (rather than, say, working with a 40-year-old core banking system), but it can attract savvy young talent. "It's hard for a bank to hire bright engineers," Roach says. "We're able to hire some of the best technologists out there. Alex Payne, who was one of the founders of Twitter, would never go to work in a bank. He saw what we were trying to do, what we believe in and our ability to innovate, that made him want to join us." Payne is now chief product and technology officer.
One thing BankSimple has worked hard for (and that its bank partners must execute) is real-time card transactions. "We want to close the engagement loop, let the customer swipe a card and know the impact of that purchase on their budget or savings goal immediately," Reich says.
BankSimple plans to ask bank customers what their financial goals are, such as saving $10,000, and then monitor their transactions to receive alerts when they're straying from the goal. It will automatically move money from one account to another to improve the interest rate the customer is getting.
Today, Reich says BankSimple has all its regulatory pieces in place and is working to complete its technology pieces; for instance, it's working to get its cards live. About 40,000 people have expressed interest in signing up for BankSimple, Reich says he and his staff will soon invite some of those people to join.
BankSimple is also setting up bank partnerships, through which it will provide the online, mobile and card interface and customer service and in return, bank partners will give BankSimple a portion of the interest and interchange income they receive from the products they deliver on BankSimple's platform.
BankSimple wants to eventually have about 15 bank partners. It has three criteria for the banks with which it works: 1. they have to believe in BankSimple's vision; 2. they have to cede control to BankSimple, for instance, not cross-selling unrelated products on the BankSimple site; 3. they have to be able to integrate their systems and products with BankSimple (too many banks don't integrate their channels and don't even integrate remote deposit capture with the rest of their mobile banking application, he notes). Everything is BankSimple branded, partnering with BankSimple won't help a bank build brand awareness, it's more for banks that don't have a consumer presence in a certain market but want to sell a product into it, similar to the ING direct model.