Simple Banking
There was a Twitter conversation earlier today about a Fast Company article that discussed Mint.com and BankSimple. The article centered on “banking that doesn’t suck”. Ron Shevlin’s post Banking Is Not A Technology Business is a great response to that article. I’d also like to add my $1.25 banker’s fee.
Ron makes a great point that banking is a service business that leverages technology. Working in IT for a bank, I can definitely confirm that. But I really took offense to Alex Payne’s quote in the article:
“Imagine, for a moment, a bank that doesn’t suck, a bank that doesn’t gouge you with fees. A bank that doesn’t treat you like crap. A bank that cares about design, but gets out of your way. A bank that puts your money to work automatically. A bank that’s building a platform for the future of personal finance.”
Now, why in the world would you do business with someone that sucks? Since most of us live in an area with plenty of banks and credit unions, moving our money isn’t that much of a problem. As for fees, those are completely avoidable. Banks will typically waive the occasional “oops” on an overdraft. You can also avoid those pesky ATM fees by using an in network ATM. As for design and platforms, unfortunately banks are at the mercy of their vendors. They just don’t have the expertise in-house, unless they’re typically a top 50 bank.
That being said, I think BankSimple has the potential of being very successful. They will really appeal to people that embrace online tools for managing their money. And honestly, if I were starting a bank, I’d go the same route of leveraging technology and building from the ground up. Not having to worry about the extra expense of branches is one less major headache. Whether they can pull it off remains to be seen. Like Ron said, at the end of the day, it’s all about service.
Posted on May 27, 2010, in Technology and tagged BankSimple, Fast Company, Ron Shevlin. Bookmark the permalink. Leave a Comment.
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The financial space is ripe for upstarts willing to challenge the status quo. It’s similar to the anti-incumbent sentiment driving American politics. That’s one of the reasons why Ally — who consumers believe is a new entity — is doing so well.
George: Thanks for citing my blog post.
To address a point you make here, in reality, plenty of people do business with firms that “suck”. The reasons vary, I’m sure, but here are two: 1) They don’t care enough about the product/service category to take the time a firm that doesn’t suck, and 2) They don’t think there are any alternatives.
Good example of the latter (my personal opinion, of course): Telcos.
Regarding the first point, I think there are plenty of people who simply don’t care that much about their banking “relationship” to go find another one. They spend more time choosing which videogame to buy than they do which bank to bank at.
Again, it is unfair of me to criticize BankSimple w/o having talked to them, but I’m pessimistic that ANY startup in the banking world is going to succeed in the short-term — IF its focus is going to be on checking accounts and/or a full range of financial products.
A new startup may aspire to “not suck” like existing banks do, but it will still be subjected to the same regulatory environment the existing banks face. In addition, it will likely appeal to younger consumers who are more likely than older consumers to be in the market for banking products. But these consumers don’t have that much money or assets (yet) — and if the startup isn’t going to make money be charging fees, than exactly how is it going to make money and stay in business?
A transaction account like a checking account is a service-intensive product. You know this, I’m preaching to the choir here. But I’m not entirely convinced that BankSimple does — BASED ON WHAT IT (and its new CTO) HAS SAID ONLINE.
It’ll be interesting to see how they do. But once the government steps in, I think they’re gonna find out just why “banking sucks”.
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