BankSimple: A Bank That Doesn't Suck | Hacker News Reader

BankSimple: A Bank That Doesn't Suck

fastcompany.com

150 pointsssclafani97 comments

Who is Fast Company serving with this article? So the PR firm BankSimple hired pitched an article; fine. Declaring that a product that hasn't even launched to anyone outside of family "doesn't suck" is irresponsible reporting. "Aims to not suck" is accurate. There's nothing in this article to indicate that the writer has been using the service (just perhaps seen the interface). I'm as excited about BankSimple launching as anyone else but these type of articles rub me the wrong way.

Who does Fast Company ever serve with an article? The charter of Fast Company is to identify what the cool kids are talking about, digest it, and regurgitate it for the kinds of people who use magazines like Fast Company to keep up with trends.

With a few notable exceptions this is how all print tech journalism works.

I think you're looking for a semiotic value to Fast Company stories that doesn't really exist. They aren't getting written up because something important is happening. They're getting written up because people have been talking about them. That is probably literally the only element of newsworthiness underpinning the story.

I never heard of BankSimple anywhere except for the HN and al3x's Twitter which I happen to follow (and I read lots of technical news). There were maybe couple of mentions on TC. BankSimple is not Foursquare or Facebook, I seriously doubt anyone, leave alone cool kids, talks about it.

So, yeah, it apparently was just a pitch from the PR firm.

Eh, I for one have been talking about it. I hate banks and bank apps and things that only work with mint some of the time. If they solve this problem I'll be a happy man and I'll tell everyone I know. I don't care if this is just self serving PR. Here's hoping I'm pleased with the product and that they get the hype / exposure needed to become profitable.

Doesn't it say on their site that they aren't really a bank, but just a simple... umbrella for other banks? I think they are just supposed to provide front-end tools for big banks so users don't have to deal with the banks. I'd rather it be a all-in-one bank.

I'd much rather it be what it is..But that's a case of its incentives.

Banks don't necessarily have the incentives of being any more user friendly than fits the needs to attract and keep customers, and they can use, to some degree, lockin and acquisitions to do that job. Bank Simple, on the other hand, doesn't make money from anything but attracting savings and checking customers, which is the service i want from it, and as that's its only profit stream, its likely to work pretty hard to keep us happy...by doing the work of securing the best banks to work with, rather than leaving that work to me.

And if they don't secure the bank I'm with?

You might want to try USAA's bank rather than waiting around then. They have had an option to deposit a check with your iPhone for almost two years (out much before Chase had theirs), have consistently scored high in customer satisfaction, and have been mentioned in several places as having some of the lowest fees around. FWIW...

I'm a USAA customer and unless you have ties to the military, you can't use the iPhone check cashing service. USAA is quite great (debit card points, ATM fee kickbacks, interest on checking balance), but I'm still very much looking forward to BankSimple, mostly for the iPhone check cashing and Mint-style finance tracking.

USAA doesn't let me put in future transactions such as bills, savings for vacations, etc, which puts me back into using some finance app to track that (which sucks).

Except their mobile deposit option requires you to be a member of the military or a qualifying family member, so for the general population, the feature might as well not exist.

HN is the coolest kids, dog!

Tangent to the article, but what I really want is a bank that allows me to do funds transfers immediately. I understand they make a lot of money off of the floating period, but there's got to be a way to place some other kind of restriction on me so that I can transfer funds quickly. Or, just find a bank that offers both a checking account and a high interest rate...

FWIW, USAA does fund transfer immediately, at least perceptively. When I transfer from a BoA account to USAA, funds are available within 10 minutes (close enough to "immediate" for me).

USAA also does interest on checking accounts, debit-card-as-credit points, and ATM fee kickbacks.

I use USAA for my general banking, but their savings interest rates just aren't competitive. I've had smaller transfers go that quickly, but larger ones still seem to take a couple days.

I've noticed that while funds show as arrived/available in USAA, the originating account stills shows the funds available as well. This tells me it might be a convenience offered by USAA, even if the transaction hasn't processed yet. This is similar to cashing a check that the bank hasn't collected from yet. They take your good standing with them into account, and give you the money.

That's what they do with deposit@home. I don't think USAA cashes the checks immediately when you cash your checks online. That's why they require you to have a line of credit with them. When you cash a check they give you an interest free loan for the amount of the check. When the check clears the loan is paid off. And if the check doesn't clear they have the ability to take the money out of the account, or they actually give you a loan to cover the check if you have drained your acccounts.

I use deposit@home and have no formal line of credit with USAA. It may be something they're doing internally, but my only products with them are debit accounts. (My credit and insurance is done elsewhere due to non-competitive rates charged by USAA).

Yeah, I think its done internally, but according to the requirements you need to have either an active property insurance or an active line of credit, and you need to be qualified for both. So I don't know what's going on there. But I have noticed some of the bank's rates are not competitive. https://www.usaa.com/inet/pages/bank_deposit

You basically have to be P&C eligible to use deposit @ mobile / home. To be P&C eligible you need to be military or spouse / child of military.

Delays in fund transfers are due to ACH network rules and processes, not float.

Some institutions only process ACH files once or twice a day.

I've waited > 1wk before for middle-sized transfers. What network rules are there? I wasn't aware of anything other than float causing delays in inter-bank transfers.

Banks generally delay ACH transactions longer if the respective clearing houses are in different federal reserve districts. When I worked with them, 7 business days was the max.

In my opinion, 7 business days is excessive, even in the mainframe/batch world of banking.

Why does it take 7 business days? Even if they run a batch process once per day, then shouldn't it take a max of two days, one day to export and one to import?

There are two answers as far as I know.

1. The sending bank can reverse an ACH (electronic transfer) within a certain period of time due to fraud, death of the recipient, etc. (Up to 90 days in some cases.) By holding up the money, a bank protects itself from losing money on a reversal. If anything seems fishy, the receiving bank might hold the money for a few days.

2. The bank can get a little more float. Back when WAMU was going down, they started taking a week or more to clear large ACH's and deposits.

Most banks don't hold innocent-seeming transfers for more than a day. The larger than usual transfers are the ones that often are delayed.

I currently work at an all student run credit union that has the same rules as any other bank in regards to ACH transactions so I think I can clarify some points here. Institutions are allowed up to 5 business days to accept or reject an ACH based debit or credit if it is between non-local banks. However, business days are really the days in which the Fed are open. So there are days when you could potentially have to wait up to 8 days for a transfer to be completed (ie 5 business days + weekend + holiday). If it is between local banks which is defined as being in the same Fed region, the rule is 3 business days.

These rules are very outdated and need to be updated. I think this is one of the most hindering rules in the current financial system. Back in the day, I could see the need for there to be different time allotments between local and non-local transactions, but today it is pretty much instantaneous. However, I don't see these regulations being changed in the near future and the reason is very simple. Big banks have more time to use this "float" money to make money, as well as to secure the money via overnight loans if they are short. Thankfully, most banks process ACH twice daily (morning and night), but not all. And some even delay transactions on purpose. Also if anyone is curious how much money it really costs a bank or credit union to do a ACH transfer, it is $0.000133 per transaction. So when your institution charges you $5 or $15 or even $25 to do a incoming or outgoing transfer, they are literally making bank.

In the UK, pretty much all of our banks have this now, so it is technically feasible (it's almost instant between banks participating in the scheme).

I'll get downvoted for this, but Bitcoin transfers are immediate. There are so many things wrong with the current financial system that the best solution is a new system altogether.

They're not immediate. They need to be validated by the network, and that takes time.

Compared to ACH, they are pretty fast (hours in the worst case). If you pay a small fee, like 0.01BTC, they are pretty much immediate.

Comparatively sure, but can that scale? The transactions can happen quickly know, but if the volume was comparable to ACH volume, could it keep up?

It depends on how many transactions are there compared to how many people mining. The people who mine are the ones who spread the transactions across the network. The mining computing power is increasing way faster than the people using bitcoins.

Paying 20 cents for a faster transaction (assuming a value of around $20/BTC) isn't really a small fee, that's in the ballpark of what credit card gateways charge.

Or a case of iteration and improvement. As mentioned in a previous comment - most UK banks participate in a scheme which allows instant transfer between accounts.

Here's the other thing about UK banking for consumers. It is free - and most ATMs are part of a 'Link' scheme which means that you can use any ATM from any bank with any bank card and get out cash without being charged a fee.

Oh, and of course I forgot the other great thing about UK and Europe - Chip & Pin. Instead of signing for every transaction in a restaurant etc - the server brings a device to your table where you then have to enter your pin number - it drastically cuts down on fraud - your card never leaves your sight and you need a PIN rather than a signature which no one ever checks or cares about.

Not so much a new system, just a better one - which many places already have

ING and USAA are two really good banks that have no physical presence. I use both of them. USAA has mobile deposit of checks, too. I can't see how BankSimple can beat them, but maybe they can.

Of note: ING direct was sold to Capital One last week. Capital One has til now addressed an entirely different demographic, so it'll be interesting to see if there are changes...

USAA is good, but it's interface doesn't compare to what BankSimple is shown so far.

And many banks have mobile deposit of checks... PNC, Schwab, Chase, State Farm etc.

I personally really like Schwab bank.

Edit to reflect that USAA banking is now open to all

To be honest, ING was one of my favorite banks. They handled security very well, and the customer service always knew what they were doing. After hearing this, well, I'll keep my account for now, but prior experience with Capital One makes me very leery.

Just a minor addition to the parent post. What was sold to Capital One appears to be ING Direct USA. Other branches of ING Direct in other countries were not affected by this operation. See https://secure.wikimedia.org/wikipedia/en/wiki/Ing_direct#IN...

Edit: kirpekar was faster than me a few comments below.

ING direct was sold to Capital One last week.

Wow. That's the first I heard of the news. A quick Google News search shows many ING customers (like myself) are upset.

This could be a boon for BankSimple. If Capital One botches the ING experience over the next two years, I'll definitely defect to BankSimple (assuming it's comparable).

You're only mad because you don't know anything about the company that used to own ING Direct (a Dutch bank called ING, currently heavily state supported because of over the top cowboy banking).

USAA's online banking is open to everyone.

It's their driving insurance and some other products that are not.

True, but their mobile deposits only work for full USAA members, taking away one of the largest benefits.

That said, if you have family that served in the military, give them a call. I was able to get a full account by asking my dad to sign up for a $27/year jewelry insurance plan. He didn't even have to switch his auto/property insurance.

I was able to sign up by just having my Dad get an online account.

You can also deposit checks at UPS stores... You give them a check and your debit card, it funds show up immediately (mobile deposit takes some business days).

Of note: ING direct was sold to Capital One last week.

Nooooooooooooooo! Well, if they screw it up, I'll move over to USAA. I also have a Schwab account, but don't use it as much as I used to.

I've also got USAA and no one has ever been able to come close to their rates, service and features. They came out with the mobile deposits before anyone else and continue to constantly improve. At this point, you couldn't pay me to leave USAA.

That being said, they've proven you don't have to have a physical presence to build an awesome bank. So I'm excited to see what happens with BS.

Are there any other online banks that you can suggest? I'll move to the US within the next few weeks and I'm currently looking for such a bank. Unfortunately I'm not eligble for an USAA acount and ING requires an existing US checking account for account creation.

I've never used, but for a general purpose bank, I hear good things about Ally. A pretty good site that gathers info and allows for some research is http://www.mybanktracker.com/

http://www.bankfox.com/savings

is a good comparison site. I would check out Ally, Schwab, and Capital One.

Capital One just bought ING Direct (USA only)

USAA is awesome. walking around NYC and seeing how many BUILDINGs with HUGE space for banking just kills me. Their BANKS, not a restarant, they store your money and thats it! I am also a huge fan of TD Bank as they are open 7 days a week and deposit checks into your account next day (none of this waiting crap like BoA). The recent, Chase/WaMu fail seem to drive customers who had Free Checking to pay a Fee or leave, why do banks do this? The MBA bankers of America are killing the industry in a bad way. It's time for no physical banks and tech to make a difference. I am really excited to see what BankSimple does.

> Their BANKS, not a restarant, they store your money and thats it!

Do you know what banks actually do? For starters, they don't actually store your money...

I really do think there is a great opportunity for a better bank! However, I think BankSimple is making a big mistake by not becoming a real bank, and instead acting as a front end interface. BankSimple claims that all accounts will be FDIC insured "at launch." However, from what I am gathering, it will be impossible to keep these accounts FDIC insured in the long term especially since the company claims it will be transferring money around from bank to bank in order to acquire the best rates. Really? Banks are going to be open to opening a new account for every new customer (which is what would have to happen in order to be FDIC insured)? I am skeptical. Also, a big concern of mine is the claim they will move money between savings and checking automatically for you. Recent legislation prohibits more than 6 electronic transfers from the savings to checking accounts in a month. So if a computer is pushing your money around; you might be out of luck towards the end of the month when you need some extra cash, but all six of your transfers have already been used. Also, at the credit union I work at, we charge the normal returned ACH payment fee if you surpass these 6 charges ($25! yikes!!) and BankSimple states all fees will be passed onto the consumer. So in actuality, BankSimple is really just a nice mobile experience that moves money around the top few banks (which really aren't that great). You still incur the same fees. Just doesn't seem like a very good business structure to me.

However, I would invest in BankSimple because a big bank would pay big $$$ to acquire the technology the company is developing. Mobile is the future of banking and that is what BankSimple recognizes so perfectly. Look for a big acquisition in the next few years.

Recent legislation prohibits more than 6 electronic transfers from the savings to checking accounts in a month.

IIRC, this is regulation DD, and is quite a traditional rule. On the books, banks account for savings and checking funds separately, and have separate capitalization requirements because checking accounts are assumed to be more liquid.

Under these circumstances, you don't want consumers to treat savings accounts like checking accounts (which they have an incentive to do, because of traditionally higher interest rates), so you create a disincentive through transaction limits.

For BankSimple, this is probably not much of a problem. Reg DD allows for more than six transactions if you charge a per-transaction fee. Most banks charge a buck or two (or $25), I'm not sure if there's any regulatory problem with them dropping the fee to $.01 or $.001

Regulation D was amended in 2009 to take away the 3 sub-limit that applied previously increasing it to 6 in all circumstances. But you are correct in that this is really a traditional rule that has been around for years. It is definitely becoming more of an issue as more and more people rely on online transfers and shy away from in-person banking (which is exempt from the rule as is ATM transfers).

Are you sure about your last point? I have never heard of this, but I wouldn't be surprised if the bank lawyers found some type of loophole. But just to clarify the $25 I referenced is a returned ACH fee. The money is never actually transferred out of savings into checking when this happens.

Ahhh, you're entirely right, I misremembered. Fees aren't required at all under Reg D (not Reg DD, damn alphabet soup). The FI does have a responsibility to monitor excess transactions and prevent non-occasional violations by either converting the account, or removing transactional abilities. So yeah, a token fee wouldn't be a viable strategy.

Getting back to the topic at hand though, I don't think this would be much of a problem for fancy automatic transfers. Deposits to savings accounts aren't covered transactions, so something like "If I spend less than x budget this week, send the rest to savings" would work.

If the FI designed a product that would see more frequent withdrawals, they could just designate it a transactional account and skip the whole issue entirely. Fits in the spirit and the letter of the law.

And have been waiting,.. and waiting,... and waiting.... shocked nobody has come around and beat them at their own game it's been so long...

I feel the same way... but building a bank from scratch is very very complicated, so I understand.

I am sure it is very complicated, but they need to be careful with the hype, especially since it the meanwhile some other online offerings (such as ING direct) have been getting better, to the point that it seems to me that the opportunity to truly impress is getting smaller.

Beat them at their own game ? BankSimple is a front-end for existing banks. They will still get their cut and control much of how this works.

+1 I wrote this above. They are just a front-end, nothing more.

Saying they're "nothing more" detracts from the value you can provide with a frontend. Mint was a frontend for Yodlee and sold for $170m.

That's true, but I guess I expected a true online bank who was dedicated to customer satisfaction, not just a middleman.

I'd argue that USAA is already trouncing BankSimple.

USAA competes with the same sort of value proposition (convenient banking with great service, but without a B&M presence), and is a fortune 500 company with millions of happy customers.

It's hard to find discussion about retail banks on the Internet without finding satisfied USAA customers telling their stories.

I agree -- I've been a USAA customer for twenty years, and they by far have one of the best mobile banking products around. From what I've seen on BankSimple, USAA has already been there for years.

Yup. I've been a USAA member for about 10 years now and I've never once had an issue with their service, not to mention that I know I can always get an actual human on the phone who is happy to help me. As someone who travels quite a bit, I can't imagine using any other bank.

In the end though, I can't see how having another option in the marketplace could hurt.

Any company seeking to offer better banking services gets a high five in my book.

Sadly, like all computer programs must expand to include email, all banks that don't suck must eventually get bought by those that do.

I was really impressed with the concept back in January when I tried to get a beta account. Being a 20-something and born into the tech generation, I would be comfortable with a bank that didn't have a brick and mortar presence and used the strategies that BankSimple uses (will use) to get great rates, etc. I can see how older generations would be very wary of truly online bank. I know people who were baffled when I told them I would be switching to ING or another online only bank.

I really can't image using a brick and mortar store. I've used USAA all of my life, so I don't see any need to talk to a banker face to face. My father has bought several houses through them, and he has been able to do everything over the phone and at home. Any documents that need to be signed are 1-day fedexed. And local notaries are paid to come by and notarize docucments. So online banking is really convenient.

"We’re reinventing personal banking." means absolutely nothing. Marketing drivel, like when Chase says "Chase what matters." It's meaningless. It's not simple. It's not direct.

Interesting that the article mentioned one of their main revenue sources is planned to be debit cards.

I use a credit card that I pay off monthly for all my purchases. I chose the credit card because it has the best rewards I could find (1.5% back for all purchases, anywhere VISA is accepted).

Would BankSimple not work with that model?

1.5% seems very nice. Who's your bank?

My credit card is through Fidelity, here's the link:

http://personal.fidelity.com/products/checking/content/inves...

Would BankSimple not work with that model?

Debit cards are going to be a lot less profitable due to the Durbin amendment. There's still some money to be made if you can scale up, but it won't be nearly as lucrative.

Interchange fees currently average out to $0.44 a transaction. Come this July, the interchange fees will be capped at a flat $0.12 if the FRB maintains their current draft rules.

Do they do at least two-factor authentification? Do they accept international wire transfers? Can they do online wire transfers? Is the transaction history accessible from some banking software? Do they not send me spam? Can I use their credit card abroad without a hassle? Does the credit card use the chip for authentification instead of the insecure magnetic strip? Do they transfer money instantly without holding back my money for days? Do they have 24/7 and helpful customer support? Can I call them without negotiating with some computerized voice for minutes? Can I call them without suffering through several minutes of elevator music? Can I call them for free? Can I withdraw money from every/enough ATMs without paying a fee? Can I manage account details at a bank franchise other than the one where I created it? Do they have a helpful, easy to use website? Do they have employees that are more than human computer interfaces and are actually helpful?

Now that would begin to sound like a bank that does not suck indeed... (Suckage assembled from several countries)

I'd hate to see your list of questions posed to a potential mate.

All these articles about BankSimple are fine and dandy, but I feel like I've been waiting for my beta invite for at least a year. Meanwhile, companies like Dwolla are springing up and poised to pull the rug out from under them.

As long as everything is bulletproof secure, just launch already.

We don't actually know that they dont suck..they have not launched yet.

I was really hoping to move to a better bank. I am ready and BankSimple still is not available so I need to go shopping and exclude BankSimple from my list. I wont switch twice that is for sure..Lost my business.

I think a lot of the ideas that revolve around making things more convenient for clients have a lot of merit. It's not about gimmicks, but solid business sense: Convenience drives consumption.

If they truly can make banking simpler for real people then hats off to them.

....aaaaand, didn't read it. Why? Cause I was confronted by a stupid countdown advert. At least when it's a movie or a tv show I file a "remember to go steal that" ticket in my brain.. but in the case of a magazine article, I'm certainly not gonna go torrent the thing. Just stupid.

There's already a bank that doesn't suck: Charles Schwab.

Is it just me, or does the article date say "July 22, 2011" when it's June?

Do they trade in BitCoins?

I'm going to be honest: it's hard to trust a bank who's founders look like people hanging out at my local dive bar. For them to get my money I need a more professional look from the company. This whole informal startup look only works for companies that provide non-critical services.

I disagree, I think people should dress however they like. If I'm going to trust them depends on there skill. In a normal bank i feel like I'm not talking the people im talking to what the were orderd to be.

In IT this works much better, some really good programmers walk around in suits others walk around well like Stallmen.

This appearance works well for the hacker crowd, but do you really think it helps for people over 40? I seriously doubt it

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