Simple (formerly known as BankSimple) is finally opening its virtual doors to new customers. While arranging a bank depository partnership (necessary to hold customers’ deposits in an FDIC-insured institution) took 2 years longer than founders anticipated, the well-financed start-up, with its impeccable credentials is, apparently, open for business. Or is it?
Every start-up has its can’t miss plan and this is Simple’s: it’s an Alternative to Traditional Banking which appear to mean that it’s a prepaid VISA card with the reporting detail of a traditional online bank and the nimble savings features of SmartyPig.
The Simple account is accessed online or by mobile device and the account displays both cleared and pending transactions. This allows the Simple interface to show its customers their spendable funds (“safe to spend” which reflects pending transactions, coming bills and savings goals), rather than just the balance based on cleared transactions.
Recurring payments can be scheduled and with both checking and savings functions, customers can allocate direct deposit savings to be parsed multiple ways. An example could be that a customer using direct deposit wants to save $500 a month. There could be a rainy day fund ($100/month), house down payment ($250/month) and a vacation fund ($150/month). Like SmartyPig, Simple can split that single deposit according to the customer’s directive and show each savings bucket separately when the account is viewed.
One of its nifty features is that the Simple software is set up to search for the best savings vehicle for each savings bucket. Without the customer having to set up multiple accounts, Simple can deposit funds into its own variety of accounts (rather like a traditional trust account) which allows the home down payment to go into a longer-term, higher interest rate account while the rainy day fund remains in a traditional savings account and can be accessed at will or even act as an overdraft account.
So all of this sounds fantastic, but it has taken 2 years to get even the most basic functionality up and running. First there was the problem of the bank partner but now Simple is using The Bancorp Bank ($3.4 billion in assets) and CBW Bank ($8.5 million in assets). Second, there was the lure of account openings but none seem actually to be open.
Back in 2010, 20,000 individuals had registered with Simple, expressing their interest in opening an account with a non-bank committed to doing banking differently. Currently, its CEO, Josh Reich, says that Simple is activating 100-200 accounts a day. But where are those customers? The Net is usually afire with news from early adopters of any technology or service, but to date, the only comments from current Simple customers sound a lot like the chirping of crickets.
The site has high expectations to meet, in part because its team includes one of the engineers who helped create Twitter’s technology platform. It has received $13.5 million in start-up funding from the premier early stage investors in Silicon Valley.
— Elizabeth Rowe, February 2012