Twitter's Alex Payne quits, heads onto something new.
al3x.net
al3x.net
I don't want a bank started by a guy called al3x, and who just left twitter. It sounds innovative, but it doesn't sound...dependable.
And if there is one feature I want my bank to have, it's dependable.
Time is in short supply, and fees eat away at my little pool of cash.
I'm willing to take the risk, and willing to put my money in the hands of people who are young, smart and innovative, instead of bureaucratic, slow and set in their ways.
Not only that, but if you'd checked, your cash will be FDIC insured through their partners. I certainly don't have a quarter of a million sitting around.
Finally, the way things are going now, the government is the only reason those "grave old men in suits" still have your money at all.
Also, you only get charged fees if you use a "service" of the bank, such as overdraft protection.
If their revenue model of "interest margin" uhm.. interests you, I would suggest joining a local, state-chartered credit union. It is how they have been doing it for years!
[EDIT] and if you are young, time is not in short supply and is actually on your side
This is not something I'm willing to take their word for without seeing a copy of a legal opinion from someone independent. I don't want to find out after they go under that they've simply been depositing their reserves in an FDIC-insured account with another bank, and that as long as that partner bank stays afloat the FDIC won't pay out.
edit: Why the downvotes? I use ING Direct as my main bank. I love it. BankSimple will need to differentiate themselves from ING Direct to win me over.
edit #2: I have nothing against BankSimple. I hope they succeed. The market could use another friendly, efficient, tech-savvy bank. Perhaps they will drive innovation in the banking industry.
I'd love to hear if there are other easily accessible savings accounts out there that can tie into your checking account, with no minimum balances or withdrawal fees, that offer comparable interest rates.
My finances aren't stable enough right now to look into anything like CDs, Bonds, etc - it needs to be an interest bearing savings or checking account.
The downside to HSBC, is that their web interface and operations of business are antiquated. While I have an online checking and savings account with them, I really only use the savings account. I just can't bring myself to deal with them because the user experience of ING Direct is so much better. For example, if you want to transfer money from checking to savings (or vice-versa), with ING it's instantaneous; but with HSBC you have to wait a business day! Ridiculous, I say.
HSBC is great if you're traveling/living in east Asia. I traveled through nine countries in Southeast Asia last year and never paid an ATM fee. Their ATMs are all over, and they're also partnered with many other Asian banks.
If you live in the USA (like me) I'd say keep your 6-to-12-month cash reserve in HSBC. And do your day-to-day banking and short-term savings with ING Direct.
My bank (RBC) is run by old men in suits, plus I pay no mandatory fees. Optional fees are another thing. If I want the convenience of using an ATM not run by the bank, I pay a surcharge. But, it's a big bank, with ATMs everywhere I go. The surcharge is never paid. :)
Perhaps a bank which is based on customer service (in the age of the internet) and being up-front about their policies and how they will invest your money and reduce your risk is actually what we need. Even if it is co-founded by someone called al3x.
It could sound worse: http://www.bankofinternet.com/
Before Amazon came along people probably thought that retailing can be done only in physical stores but it changed.
Another example is Netflix over Blockbuster. I think its time for online only bank. I don't remember visiting my bank ever after opening my account with them. We definitely need ATMs but not banking centers.
but that's worked out SO well over the last oh, year or so.
The grave old men in suits I mean.
You know, the ones who weren't actually able to stay in business and the ones who didn't go under were acquired by another bank that totally and utterly screwed you. Or your bank was simply shut down by the FDIC.
It's time for new thinking - FDIC insurance will protect you up to, I believe, $250,000 now.
If these guys can beat the big banks on overhead and usability, they'll do extremely well.
Your mother in law sounds smart enough to realise that she can not tell the difference. A rare commodity these days.
If everyone were as "smart" as you say by refusing to interact with processes they don't understand, e-commerce would be dead in the water. It's not thriving thanks to the <1% of us who know how it works in detail :-)
Just because your card is in your physical proximation, doesn't mean it's safe.
There _are_ risks with shopping from your PC. Largely from key-stroke recorders. However, the 2 times I've been victim of fraud were both from card-skimming in a physical store.
I understand where you're coming from.
The simplest answer is: if you don't want to bank with us, then don't. We don't imagine that we'll replace every bank ever. There are plenty of traditional banks that may be going bust left and right, but hey, you're free to do business with them.
A more complicated answer is that BankSimple will have the backing of established, traditional financial entities who are fully FDIC insured from the get-go, so the risk to you as a customer is quite low.
There's no such thing as banking without risk, but I understand why you feel drawn to more traditional financial institutions. They certainly do a good job of marketing themselves as stable and dependable.
It starts with a disingenuous comment and it barely addresses the most basic of concerns(FDIC) and does so in a snarky and somewhat rude manner.
I would think you would have learned how to handle criticism and concern for a product of yours a lot better than this working at Twitter.
Financial world desperately needs to be fixed anyhow - I am happy to hear about folks who accept that challenge.
My first thought when I read maxklein's comment was that he is perhaps saying it half in jest. But in case he was serious, I don't think one can just deride a person/organization based on stereotypes. (Hey you programmer of some web application, what do you know about banking, where's your suit and your MBA, you'll do a shoddy job for sure ... etc)
Let's see what they come up with and critique/praise them on what they actually do, rather than carrying prejudices.
He didn't actually give any information on what their plan entails that would remove doubts. They've said their money comes from two places loans and cuts from credit card fees. While what if they have a bad run with their loans/investments(like big banker banks) or not enough people use there credit cards? That makes them just as vulnerable as the existing banks so saying existing banks don't work doesn't tell us why you will.
Yeah, I would also be eager to see more information on their plans. I hope they would start talking more about them on their blog. I am sure they could get some good inputs if they can get a good community going. (It could be one place where his programming/OSS experience might come in handy.)
If you are trying to differentiate yourself from other banks, I would stop referring to your users as "customers". CUs call them "members". I have always preferred "comrades".
That's highly worrying. My understanding is that FDIC is a guarantee of last resort - i.e. a guarantee that ultimately a customer cannot lose his/her money.
i.e. there is no risk.
So are you saying there is no risk - or that there is some added risk to banking with yourself? I'm confused.
Banksimple is only trying to achieve what no other bank thus far has, which is to be genuinely liked by its customers.
Everyone seems to be incredibly worried about the dependability of these guys, yet I don't really see what's so 'dangerous' about this situation. All the deposits are FDIC insured, they clearly have their model laid out; interest margins (and interchange fees) have kept banks running for years, and those are banks with likely 50% more operational costs due to running actual branches.
It's obvious that opening this sort of bank and not selling high-interest rate loans and not charging fees for everything isn't as profitable as it could be if they did, but is it that far fetched that these guys will gladly make less money, but in exchange offer you service that you can actually enjoy?
Zappos could easily save millions every year by shipping UPS ground for everyone, charging for shipping and cutting back on it's customer service, but then it wouldn't be zappos. I, for one, am entirely happy to see a bank that actually took the time to speak with me personally, and offer a banking experience completely unlike what I've had to deal with as long as I have been banking.
Unfortunately, it's debatable how much of banks' suckiness is avoidable. Retail banking is caught in a vice-grip between fierce competition for low margins and government regulations. For example, from what I understand you pretty much have to run mainframes with certain antiquated, government-approved software to process stuff through ACH. KYC rules prevent extremely efficient account openings. Etc, etc.
I'll be curious to see how this goes.
He writes that nobody LOVES their bank. But does anybody really HATE their bank? Maybe some vocal folks, but a bank to me is a utility-- a hole in the wall where I stick my money. I've never felt gouged by fees (when I was young and stupid, I've been annoyed by overdraft fees, but they seem justified). I've never been overwhelmingly frustrated by the design decisions of my bank. They decidedly don't treat me like crap. Every time I've needed to interact with my bank(s) it's been a pleasant experience.
Given the switching cost/inconvenience, I think this is going to be a hard sell for most people.
But agree that they are one of the very, very, very few banks where this applies.
I did love the bank I used in the UK (Lloyds-TSB - they gave me an indefinite interest-free 2000 UKP overdraft when I was a student, and have never charged me any fees that I can remember). Conversely, I hate every American bank I've had to do business with (WaMu/Chase and BofA so far).
Of course, even they apparently had a little too much subprime exposure, and were bought up by a larger bank last year, to be fully integrated this summer. If the customer experience goes away with the old name, I'll consider Al3x's new project, but that's the only way.
Have you tried to pay a friend an amount of money that would be inconvenient to do in cash? The best way to do it through your bank is to have them chop down trees into paper checks, physically mail them to you (this takes a few days), have you scribble down a number on the paper, hand (or mail... wait a few more days) the check over to your friend, who feeds it into an ATM, which scans the number you scribbled down, then you wait a few more days and eventually a few bytes in your bank's servers change to reflect your intended payment.
The last time I tried to make that entire process electronic-only, Bank of America said I needed to know my friend's account number and routing number, and even then they wanted me to show up to a bank branch in person to complete the deposit.
Sure, you could use Paypal, but it's an additional layer of complexity and risk, and if you're not careful they'll skim 3% off the top of your transaction.
Let's see... what else? Debit and credit cards. I live within my means. I don't want credit. I pay off my balance in full every month. Other than a hypothetical emergency, I would have no use for a credit card... except consumer protections for credit cards are much stronger than for debit cards. I'd be a fool to use my debit card instead of my credit card. And even though I've paid my credit card balance off in full every month for years, the one time I slipped by 3 days, I got slapped with a $30 late fee on a $200 balance (180% APR!).
Speaking of debit/credit cards... I visit my family in Mexico 3-4 times a year. Every time I go, I have to make sure to call Bank of America twice, to let both their credit card and debit card departments know that I'll be traveling. I'll have to wait on hold an average ~30minutes each time I call. If I forget to do this, and I try to use my credit or debit card while in Mexico, my cards will get frozen due to "suspicious activity", again necessitating a call to Bank of America. I do appreciate that they're looking after my financial safety, but I really do travel to Mexico quite frequently. There's nothing anomalous about my using my cards while I'm there. Once I do call they're incredibly helpful, but it's annoying that I have to call at all.
And don't even get me started on the fees and shitty exchange rates for using your card outside of the US...
Banking in America really is broken. If they're as good as they say they will be, I look forward to giving BankSimple my business.
FWIW, This may be true in the US, but certainly isn't a worldwide phenomenon.
For example, UK banks pretty much work really well. Seeing US banking in comparison is like using a time machine to go back to the 1950s.
All call centers suck, and all telephone support sucks IMHO.
I certainly wouldn't pay extra just to get telephone support. How often do you need it? If you need it a lot, then that's a really really niche use case.
It may be due to the Barclays online banking being pretty solid. HSBC is also fairly good.
For my American friends: all "checking" in the UK is free. All ATM use for normal ATMs (those you find at banks, not the shady ones at the convenience store) are free, even if that bank isn't yours.
This is obviously only a day-to-day thing, but I think most people have expressed feelings of ambivalence about banking in the comments here: it's somewhere to store money. In the general case, the UK banks do that better.
I do not have any experience with anything advanced like mortgages or loans.
Plus, they have required huge bailouts as well, I think the RBS is now 70% owned by the government.
Australian banks are actually ones that have come out very well, limiting there exposure to toxic assets, no gov bailouts. Of course, Australia has maintained a very strong economy so far.
If by "only just" you mean around 5 years ago.
US banks still haven't moved to chip and PIN.
Also the story with banks isn't the same all over. For example, Barclays, one of the biggest banks in the UK accepted no government bailout, and continues to post big profits.
More than once I'll be typing banksimple and hitting ctrl+enter so I'll go right to a phisher's page ready to empty my bank account as soon as I type my id/pass.
Really, get a dot com.
I'd be curious if incorporating outside the U.S. is the best option for them here to avoid the regulation. Or going on a SeaStead :) They'd still need relationships with Visa and Mastercard though.
It may then be tough to compete with existing banks whose insurance is subsidized by the gov though.
previous discusion at: http://news.ycombinator.com/item?id=1049961
My previous comment in that discussion:
I work for a bank (not from USA though) and what I see as the toughest barrier in initiating a Bank is the massive amount of banking regulation that every institution must comply (not negotiable). Also the impact of new regulations on the systems running the business are usually non trivial. Missing any of these, means that you cant operate (or you can't do certain operations, generally critical).
As I said, the effort put in keeping with all this is very big. Usually the split is 50/50 with regulation vs new features (my view is as a software developer). The bank being global only makes things worse, as only adds more regulations from different places to equation.
Well that was the boring part. I think theres a place for new financial services but perhaps the way to get started is providing those new services and avoiding being a bank. As the institution adds more services and grows, it can begin to take into account the regulation little by little. That was my simplistic view ;)
My bank in Norway has no physical offices and conducts all of its services over the internet, phone or mail. There are (practically) no fees and the interest rates on its savings/checking accounts (there are interchangable, since there are no fees) are within 0.2% p.a. from the best that can be obtained anywhere in the country, regardless of capital amount. All funds are insured from bankruptcy through the national bank security fund. The young crowd almost never uses checks in Norway - all bills are paid online. The only problem with this system is speed and service - if you suddenly lose your credit/debit card, you will have a few days of worry while the bank sends you a new one. Identification can be complicated, since there isn't a person 15 minutes away that can physically talk to you and verify your identity.
All in all, I think this is very promising. Someone needs to pull American banking into the 21st century. This guy will have problems with legislation and bureucracy and huge competitors, though..count on that.
You also need to understand the banking industry.
And you need to be focused on reliability. Twitter's reliability history is not adequate for a bank.
So do I think he can do this by himself? Not a flippin' chance. But I do think he could contribute some innovative ideas, if teamed up with people who have deep experience in the industry.
Don't get me wrong if they pulls this off it will rock.
But we've discussed this before... and it is a hard problem. Extremely Hard
it is a hard problem. Extremely Hard
Isn't that exactly what an ambitious entrepreneur should look for? Especially someone who's had some startup success in the past?
There is no such think as a bank that doesn't suck. If there are, they are called credit unions. For profit banks have customers. Non-profit credit unions have members.
It's not clear what happens with the statistics of your bank usage nor where your money actually is.
Is this version 2 of Mint with banking 'features'?
Anyone know any details?
http://banksimple.net/blog/2010/03/23/status-update/
>When we first started thinking about starting a bank we looked into the de novo banking process. This is the process by which new banks are formed from scratch. This is both expensive and, more importantly, it takes too long to launch. It is near impossible to innovate with an imposed three year launch delay. The best way to serve your needs is to launch quickly and to adapt our offering to meet your individual needs. Modern technology lets us do that. To achieve this we are planning to launch with a special corporate structure. We are bringing together a group of financial institutions to provide our underlying banking services. Our partner banks hold all deposits in insured accounts.
And if you can get in, it's definitely worth it. I've used them for several years now and have zero complaints. Their customer service is awesome, their website is very good, and the iPhone/Android apps are great.
https://www.usaa.com/inet/ent_utils/McStaticPages?key=why_ch...
USAA's insurance is top-notch, too.
Is this really secure? I know there are some people doing cardreaders as an attachment to the phone, but pictures of checks?
The sooner North America weans itself off cheques and external for-profit inter-bank transfer systems (Paypal, grrr), the better off we'll be.
Technically, you can make a valid check out of a napkin with a Sharpie.
The real innovation will be cutting out things like the 3 day "clearing" window for funds. Or eliminating the delay for ACH'ing funds (an all electronic transaction).
The problem, banking is too regulated to really innovate, though I applaud the attempt.
Edit: If they create an iPhone app for depositing checks (Just like USAA). I am sold. I would also like to think that many tech-savvy people would be sold also.
Is "al3x" from twitter really up on all the details and security concerns of running an online bank? Will his company do a better job than Charles Schwab? My gut feeling is no.
As I mentioned, the features of SimpleBank do not appear to be much different from what is available from my current internet bank. As far as the team goes, they may be bright, but none appear to have worked at a bank before, either brick and mortar or digital.
Starting a bank from scratch is not impossible but will certainly be no easy feat. I wish Alex Payne and the team he is going to be working with good luck in cracking existing banking structures.
I really hope this works, but due to switching costs, BankSimple will have a very uphill road to climb if they aren't planning to pay very high interest rates or otherwise attract people with some savings.
Also a graph and projection of your bank balance would be neat.
Actually, an API for a bank would be really cool.
A lot of banks have some sort of bill pay feature. I have a feature that is exactly like this in my Schwab account including being able to view the bills to see what's on them and pay in one click.
My Banks have sort of a bill pay feature though it's not like I described, it's just a pre-populated list of payees like Electric, Gas, Water etc. companies and it's not even that simple because each company often has several accounts so you have to pick the correct one.
My bank offers the same "services" now for almost ten years. It always feels like the 90s all over again when I have to manually handle csv files. I don't even want to talk about advanced stuff like processing of invoices. I don't care enough about it to really have some script scraping it for me automatically and the lack of an API does contribute to that. There is so much overhead to all of this it's unbelievable.
Best of luck to him. Also, I think I want in. On being a customer, not an employee. I just got my dream job.
A bank that display funny pics when system goes down... The money in your account is eventually consistent... A bank allow users to type command to transfer money, e.g. "accept $1000"...
This sounds interesting. I don't know how they'll succeed at this while making money, keeping risk low, and beating the rates that something like Ally Bank will give you.