Banking is a commodity product. Other than access to ATMs, customer service, and online banking there's not much difference between banks (other than rates & fees, of course).
Same goes for the customers, honestly. If the bank doesn't extend you credit anyway, its a "your money is green" situation.
Yet the marketplace is still inefficient, and they think they can make money by making it efficient.
To do so, Simple has defined a standard checking account, if you will. It has x% interest, y fees, etc. Since banks and customers are a commodity, Simple can then say "we have 10000 customers at this price. Any FDIC insured bank - do you want them?" and perform a reverse auction of sorts. Its very much like LendingTree or FeeFighters.
The obvious obstacle is the same with internet banking - what if I need to talk to someone or get money out of an ATM? You're not going to convince me a random bank in New Mexico is interchangeable with Wells Fargo when I need cash.
They are handling this objection by providing a front-end which standardizes the customer service, ATM access (they pay the fee so use whatever ATM), and online banking pieces, and hopefully that standard is high quality.
So you still have an account with XYZ bank in Nowhereville, USA, but you've got a nice front-end instead of a questionable online banking product/customer support. All XYZ bank does is hold your cash for you, and its insured anyway so they can't screw that piece up.
There are strict rules that govern how banks operate. As bad as that relationship may have gotten recently, there are some basic legally enforced assurances that I can take for granted in how banks will respond to requests about my money. If Simple is a middleman to this transaction, I no longer have those legal protections.
What happens to the deposits if Simple (the company) goes under?
EDIT: Yes, I know they are FDIC-insured. But inside accounts setup by Simple. Are those accounts also in Simple's name, or jointly setup? What could potentially happen then during the lawful unwinding of the company?
That's a good question. When you make a deposit how long does it (if ever) sit in Simples possession before being put int your FDIC insured account? This may not sound like a big deal, but if Simple were to go under this float would go under with them.
Banking is a commodity product. Other than access to ATMs, customer service, and online banking there's not much difference between banks (other than rates & fees, of course).
Same goes for the customers, honestly. If the bank doesn't extend you credit anyway, its a "your money is green" situation.
Yet the marketplace is still inefficient, and they think they can make money by making it efficient.
To do so, Simple has defined a standard checking account, if you will. It has x% interest, y fees, etc. Since banks and customers are a commodity, Simple can then say "we have 10000 customers at this price. Any FDIC insured bank - do you want them?" and perform a reverse auction of sorts. Its very much like LendingTree or FeeFighters.
The obvious obstacle is the same with internet banking - what if I need to talk to someone or get money out of an ATM? You're not going to convince me a random bank in New Mexico is interchangeable with Wells Fargo when I need cash.
They are handling this objection by providing a front-end which standardizes the customer service, ATM access (they pay the fee so use whatever ATM), and online banking pieces, and hopefully that standard is high quality.
So you still have an account with XYZ bank in Nowhereville, USA, but you've got a nice front-end instead of a questionable online banking product/customer support. All XYZ bank does is hold your cash for you, and its insured anyway so they can't screw that piece up.
Sounds great to me.