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. :)
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.
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.
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.
It could sound worse: http://www.bankofinternet.com/
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.
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.