PayThink | October 20-22, 2014 | Phoenix

Easy Banking: The Simple Strategy

Simple customers can make purchases with their Visa cards, deposit checks using their smartphones, pay bills and withdraw cash from over 40,000 ATMs — just like they might at any bank. But Simple isn’t a bank. What is it, and why should financial marketers care?

By Jim Marous, SVP/Corporate Development at New Control

Simple could more aptly be described as a storefront — a front-end banking veneer — than a bank. Simple has very carefully fashioned themselves as a web and mobile front-end interface for basic banking functions that are provided by their back-end partner. Customers’ funds ultimately reside in FDIC-insured accounts held with The Bancorp Bank, a private-label banking and technology operations back office.

Invites And a Waiting List

Financial marketers should not underestimate consumer demand for a simpler banking experience. More than 150,000 people have requested “invites” from Simple, and the company continues to maintain a waiting list with some having waited two years or longer.

simple_invite

The Simple homepage is one long scrolling ad for the company’s innovative approach to retail banking services. Near the bottom of the page is a bare-bones “request for invitation” which some 150,000 people have filled out.

Simple is opening thousands of new customers each month, and has processed around $400 million in transactions — not a shabby start at all.

Simple CEO and founder Josh Reich attributes the success they’ve found thus far to the company’s mission: “To help consumers worry less about money by building a new banking brand that is modern, cool, transparent, and trustworthy.”

Inasmuch, Reich built the foundation of Simple’s user experience based on the following principles:

  • Simple, engaging and fast account opening process
  • Integrated and responsive online and mobile customer interface
  • Intuitive account management tools
  • A highly personal and humanized communication style that is never stuffy or patronizing

Simple’s revolutionary approach to the customer experience has helped the not-a-bank achieve what 99% of financial institutions can only dream of: raving fans. (To get a sense of how rabid some Simple fanatics can get, check out this Twitter user who takes Wells Fargo to town after making the switch.)

Kiosk & Display | Digital Merchandising for Financial Institutions

A No-Fee Strategy

One of the biggest differentiators is that, unlike most traditional banks, Simple says it doesn’t profit from any fees. According to their website, Simple believes that fee-based business models create an adversarial relationship between a bank and its customers, because the bank usually profits when customers make mistakes.

This means no account maintenance fees, no low balance fees, no monthly debit card fees, no overdraft fees, and no fees that may surprise customers. This also means they have no fees for domestic fund transfers or fees when using a domestic out-of-network ATM. However, if the owner of the out-of-network ATM charges a fee, Simple will pass that along to its customers.

So how does Simple plan to make money? Purely off the spread and interchange, both of which are split with Bancorp.

No Lingo With a Breezy Brand Tone

Simple avoids the use of jargon while having a high level of transparency with everything they do. For instance, customers phoning the call center will receive a casual salutation like this: “Hey, my name is Ryan, how can I help you today?”

It’s subtleties like this — changing “hi” or “hello” to “hey” — that define Simple’s straightforward and humanized approach to customer communications. It’s informal, familiar and easy-going… the opposite of most banks with their stiff, corporate tone.

Simple Timeline & Milestones

July 2009 – Founder Josh Reich sends an
email to some friends: “Let’s start a bank”

May 2010 – Alex Payne leaves Twitter
to become CTO at BankSimple

Oct 2010 - BankSimple hires 1st employee

May 2011 - Employees get debit cards

Oct 2011 - Name changed to just “Simple”

Nov 2011 - Beta/pilot with customers

May 2012 - iPhone App introduced

July 2012 - Full public launch

Aug 2012 - New PFM tools rolled out,
including Reports and Savings Goals

Nov 2012 – Simple partners with CFPB

Nov 2012 - Mobile deposits launched

Ask Ryan, a call center reps at Simple, about his breezy style and he’ll tell you he tries “to talk to anyone who calls in a way I would communicate to a friend.”

“I don’t want to be formal and ‘stiff’ unless it seems like that is preferred by the customer who calls,” Ryan adds.

The challenge for Simple is that they don’t have branches – which many banking consumers still want very much from their bank. Since Simple is a fully digital bank, they need to work harder to give customers a human, connective experience over the phone and via text support (typically rather detached channels).

“Our customer relations team does not work from scripts, which leads to a more authentic — sometimes informal — conversation,” Krista Berlincourt, communications manager of Simple.

It goes beyond the predicable social, digital and phone channels, however.

According to Berlincourt, “Another way we’re humanizing Simple is by introducing plain-English explanations of our Account Agreement and other customer documentation.”

One example is the rather straightforward FAQ section of the Simple website, devoid of the traditional legalese and banking acronyms and cliché terms. Prospects and customers can get the majority of their questions answered in plain English.

simple_office

Simple has several desk styles to suit employee preferences, including standing, sitting, and straight-kickin’-back. The atmosphere is decidedly relaxed. This is definitely not what your typical bank looks like — inside or out. Interestingly, they say their company meetings resemble a campfire circle more than a traditional boardroom.

Opening an Account: Smooth and Intuitive

Online account opening experiences are getting better in the financial industry, but are far from perfect. According to the 2011 Online Account Opening Report from Javelin Strategy & Research, roughly half of the customers who started opening a new bank account online abandoned the process before the opening was complete. But from the very outset, the account opening process at Simple is extraordinarily easy. Each step is straightforward, with a series of progressive screen shots leading consumers along the way. There is no legal jargon within the account opening screens at Simple.

simple_debit_card_package

Simple’s debit card — and the 5″ square cardboard mailer they send it in — are unlike anything you’ve ever seen in the financial industry. Instead of the typical dull “official” envelope loaded with legalese, the stark white Simple debit card is delivered in a  carrier that celebrates the experience. It’s almost like receiving a gift in the mail. For customers who really want to read Simple’s terms and conditions, the company gives new customers a link where they can find them online.

If an account goes inactive for an extended period, Simple continues with the onboarding process using follow-up communications that include a certain amount of encouragement, product education and lightheartedness to cultivate engagement.

simple_activation_email

PFM Tools

One of Simple’s goals is to provide everything required to plan and track spending so a customer can save more. They try to make budgeting relatively effortless by automatically categorizing transactions and visualizing spending behavior in reports. Unlike most PFM applications, Simple enables users to search their entire history in natural language to better understand spending (e.g., “dinners in Cleveland last month over $50”). Recently, Simple has reintroduced, updated and polished many of the tools that have made Simple somewhat revolutionary. In the past few months, they introduced Goals, Reports and Photo Check Deposit.


A fascinating two-minute overview demonstrating how
intuitive and powerful Simple’s new PFM tools are.

simple_pfm_activity_report

Simple PFM Reports – The visualization of the spending and transaction activity rivals some of the better PFM applications available today.

simple_savings_goals

Simple Savings Goals – Give Simple an amount, a date and an initial contribution (optional). Users will be able to see how much money they move from your Safe-to-Spend to your Goal each day.

Attaching Memos, Notes and Even Photos to Transactions

simple_annotated_transaction

An example of a Simple transaction
that’s been annotated with a photo
attachment and personalized note.

Users can add a memo to a transaction within the Simple online banking app. This helps them create a diary of what they spent money on and why. A very neat touch is the ability to add photos or documents to a specific transaction. In the web app, users can drag-and-drop an image or PDF and attach it to a transaction. This allows users to, for instance, upload a receipt so they don’t have to carry it around in their wallet.

But Simple envisions more creative uses for transactional annotations. A user could attach a picture of a meal they just had, a photo of whomever they shared the meal with. While the photo memo feature is not yet available within the mobile app, Simple says it is coming soon.

iPhone App

While many are still waiting for the Simple Android application, the iPhone application from Simple is pretty slick.

Customers can access the Simple application with just a 4 digit code, similar to what they are accustomed to on ATMs. Once you’re into your Simple mobile account, the look of every screen is consistent and very easy to navigate.

Because Simple is truly a virtual bank with no bricks nor mortar, they knew it would be essential to include an ATM finder in their mobile app. They also recently rolled out a mobile remote capture platform allowing users to simply snap photos of the checks they want to deposit.

Getty Images | Content Marketing

Twitter, Facebook and a Blog

Unlike most banks that use Twitter as a self-serving broadcast tool, Simple leverages Twitter for real time customer service and new product idea generation. Their @Simplify account tweets provide insight into current challenges customers may be having (which are always responded to quickly and publicly. Simple has 23,448 followers on Twitter, and has sent 7,702 tweets.

simple_tweetsThe majority of conversations between Simple and the customers are relatively informal in tone and include the real initials of the customer service representative. Check out some of the Simple’s wild Twitter dialogue here.

On a regular basis, people visit the Simple Facebook pagesimple_facebook_likes to request invites and posts from those still waiting in the virtual waiting line outside. To date, over 6,500 people have indicated that they ‘Like’ Simple on Facebook.

Simple has a very active blog that combines financial education with updates on their product offerings. Over the past few months, the blog has covered topics from estate planning to auto leasing.

Insights, Analysis & Takeaways

Bank and credit union marketing executives need to keep their eye on Simple. For starters, Simple is directly competing for your customers. Their business model is built purely around banking’s major pain point: it sucks.

Most of today’s financial institutions seem to think that checking accounts are fixed, concrete, immutable — that there is no need to innovate around the basic, fundamental service they provide because consumers “understand it” or “are comfortable with it.” However, Simple proves that consumers are interested in- and indeed very receptive to new ideas in banking, specifically checking products and transactional services that make their life easier.

But be warned: Making banking easy isn’t easy. Perhaps the only reason nascent financial institutions like Simple and Ally have found success with an “easy banking” brand position is that they started from scratch. It’s probably a lot easier to build an “Easy Bank” from the ground up than to try to retool and tweak an existing institution.

As is almost always the case (in any industry), real disruption in financial services usually comes from startups and outsiders — not the big, dominant established players. While consultants consistently nag financial marketers to “be more innovative,” real innovation is hard and expensive. It’s much safer and easier to learn from the experiences of others.

What’s interesting about Simple’s storefront reseller arrangement with a backend provider is that it proves you can still run an “easy bank” on the same backend systems pretty much everyone else is using today. You don’t necessarily need to build a brand new backend core DP system — just a new user experience with a front-end interface.

However, as tempting as it may be for financial marketers to want to mirror Simple’s approach, there aren’t many who can pull it off. The strategy takes more work that most banks and credit unions have the appetite or capacity for.


Jim MarousJim Marous is a recognized financial industry strategist and publisher of Retail Banking Strategies for The Financial Brand. Marous publishes the Digital Banking Report and is a consistently highly rated speaker worldwide, presenting on global trends, distribution strategies, customer experience, digital banking, advanced marketing and marketplace disruption. You can follow Jim on Twitter and LinkedIn.

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Comments

  1. Agreed that this is a company to watch, but it isn’t a bank and likely is not profitable. More likely it is running very negative figures right now as it tries to scale its business.

    The company is effectively competing with Mint, Quicken, with a bank partnership which allows them to brand their activities and be the front facing focus for the bank. In the interim, The Bancorp Bank is making the money on this relationship. The business is a technology company that will ultimately be acquired by a bank or an Intuit/Deluxe/Fiserv type firm.

    I like what they are doing and would love for a cost effective solution for my bank to provide a similar experience but right now the market price is not there yet. In time, this type of online relationship will be closer to the norm for banks.

  2. It is good to see experimmentation and an atempt to create something different in the banking marketplace.

    Ignoring all the obvious financial issues for the moment, is the combining of Simple with PFM as the core product a far greater faux pas? PFM cannot be Simple

    Also as Virgin discovered in the UK you can white label and talk the talk for a while but ultimately the final conversations will be bank.

    So maybe not in it for the long haul as Andy suggests.

  3. The takeaway for banks and credit unions isn’t about Simple’s profit/business model and how they charge (or not). It’s not a question of “Will Simple succeed or fail?” Simple is showing existing retail financial institutions ways they could be making banking easier. Simple could fail miserably as a business, but succeed wildly at transforming the retail face of banking. The bottom line for bank and CU execs is that there’s a lot to learn and study here, whether the Simple company is still around 5-10 years from now or not.

  4. Agreed that the takeaway is the experience/customer facing interaction and how banks and CUs can tailor their products to better meet customers needs/wants. Brett King talks along these lines as well. From my earlier comment, I wish my bank had some of these capabilities, some of them I think are irrelevant (pictures and attachments to transactions I think are pointless attributes).

    How their business model works still is relevant as the post leads with positioning, competition, and the impact to your bank. We are also in this exact business so the economics play into executive decision making and budgets. It is hard to sell something to management if you cannot define its cost/benefit analysis.

  5. Andy, there are two separate things here:

    1) Does an “easy banking” strategy make sense?
    2) Does Simple’s decision to build its business model without any fees make sense?

    The two strategies are not inextricably linked. Simple could have easily chosen to deploy a fee-based “easy banking” model. But Simple didn’t want to be just the “easy” bank. They wanted to be the “easy” and “free” bank.

    Most bank/CU executives should be able to articulate the cost/benefits of a simplified, streamlined, intuitive user experience (e.g., how much does it cost to redesign simpler account opening documents that will lead to more forms completed).

    Conversely, most would probably struggle articulating how a no-fee business model pencils out.

  6. Something that most have yet to mention is the brilliance of the “waiting list”. Just like a “hot” bar or club, those waiting outside can’t wait to get in. And unless something goes terribly wrong with their experience, they’re likely to stick around for a while…because they earned their place. I think it’s a brilliant idea. Mass market-type clients won’t want to wait, but I’m not sure that’s who is being targeted. Those that do decide to wait will be fiercely loyal, like Apple customers tend to be after waiting in line for the newest iWhatever.

    I do agree with others that the point isn’t their ultimate survival, but what they’ve brought to the marketplace. Almost any research about Gen Y (let’s make no mistake, that’s who they’re after here) will show you they desire transparency and honesty. Simple seems to understand that. Given how financial institutions have behaved the last 10 years, I’d suggest we all would like a little more transparency as well.

  7. It is interesting how, as bankers, we continue to ask questions like ‘how is it profitable’ or ‘is it not scaleable’ while companies like Square, Google, PayPay and others nibble around the edges of what makes banking a viable business. Instead of wondering about if they will beat us, shouldn’t we wonder why a traditional bank can’t build the same customer-centric front facing technology on their current infrastructure.

    And don’t get complacent, because Movenbank will be introducing a similar model in the next few weeks, again offering what customers are asking for without needing to go through regulatory approval to get a bank charter. And banks in Australia, the UK and elsewhere are innovating in this space aggressively.

    I don’t know about my friends in banking, but I would not be very comfortable being simply a wholesaler for innovative digital companies that have the foresight, focus and spirit to respond to quickly changing customer behaviors.

    The article’s purpose was to make readers of The Financial Brand aware that there are new entities in the marketplace that look, feel and operate like a bank in ways that are more responsive and engaging than what is offered by many banks today.

    Caveat Venditor

  8. Excellent article and great comments too. I am also curious to see if this pulls together as a solid business model. I’m not sure how I’d feel about being referred to as a “Simple customer” but I like what they’re trying to do with this brand. This kind of emphasis on design, elegance, and UX minimalism still hasn’t really made a huge mark on our industry, so we always notice when a company like Simple or Umpqua comes along. Come to think of it, both of these are from Oregon. Hmm.

  9. Interesting to see how defensive most readers are. Current banking businessmodels are being eroded left and right, customers are angry and/or disappointed with banks. Along comes a party who ‘gets it’ and all we can do is try to shoot them down? Remember quotes from other industry insiders who didnt recognize innovation if it bit them in the face.
    In 1943, Thomas Watson, the chairman of IBM said, “I think there is a world market for maybe five computers.”
    Harry M. Warner, one of the founders of Warner Bros., famously said, “Who the hell wants to hear actors talk?”
    Steve McArthur, a senior vice president at HP: “It’s way too early to say whether tablets will eat into sales of other products. Clearly there will be some overlap, but H-P’s data show it won’t be huge.”
    The customer is looking for a new way of banking. Maybe Simple is not the end-all-be-all-answer, but banks remaining on the current track will be reduced to billing factory backoffices within a few years…

  10. I agree that the defensiveness is interesting. What will be more interesting will be when Movenbank raises the stakes in the near future or when growth numbers are posted for Bluebird. Traditional banks need to realize that consumers want a better way to bank, plain and simple (pun intended).

    Delays by traditional banks in recognizing behavioral trends and responding to them could create disintermediation of valuable customers.

  11. Wow, waiting for 2 years to get an invite? Seems like a long time but I guess it’s worth it.

  12. I have just seen Go bank is that me too or what?

  13. Great Post, In the past few years i think banking as a sector has improved by leaps and bounds because of use of technology and also biggest improvement is seen in customer service. It will be exciting to watch what happens next and how banks use new technologies to give customers a great service.

  14. Having seen more maybe I was too hard on them (but they will have to make money sometime). I was looking at PFM AS Simple but maybe Simple AND PFM is an equally valid way to look at it and that was your take Jim.

  15. It’s fair to describe Simple as a blended solution: PFM with a “checking account” (or more aptly, a “transaction account”).

  16. While Simple could be considered one of the first in the U.S. market to offer an integrated UI solution that makes banking easier and more intuitive, they obviously are not alone. Bluebird from American Express, while building around a prepaid card, simplifies banking and eliminates fees. Just introduced GoBank has raised the bar and is definitely focused on an improved customer experience with a direct banking solution. At the end of the month, Movenbank will be the newest, and potentially most innovative solution to hit the market with a truly card-less banking model.

    Each of these new entrants can provide their services at a much lower cost than traditional banks because they are not saddled with the branch and heavy operational infrastructure. In addition, by limiting their product lines to retail transactional products, they can deliver very innovative digital tools that can make financial management fun and easy without needing to worry about disintermediation from existing products or needing to devote resources to hundreds of different banking priorities. In other words, a strong focus on the consumer benefits both the consumer and the new banking entity.

    Change will continue in the marketplace as we truly move to a Bank 3.0 reality.

  17. Idea appreciated. Banking is really a hard topic to discuss most of the time since our future also lies in it. Thanks for posting this article.

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  1. Moven: From Mobile Banking to Mobile Money | BANKNXT

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