Thoughts on BankSimple

Rod Begbie’s post on BankSimple resonated with me a lot this evening:

Reading the ‘about’ page of banksimple, the new online bank that Alex Payne has left Twitter to work on, I felt sad.

• A simpler bank that is easy to use.
• A bank that treats you with respect.
• No extraneous features.
• No hidden fees.

I already have that. I feel sorry for the people who don’t.

…

Seriously folks, if your bank is a bunch of dicks, look around for a local credit union.

Twitter API creator Al3x Payne is quitting Twitter to be a co-founder, which is why it is getting all the attention today – but I simply don’t get what they are trying to do.

Let’s look at this again:

• No extraneous features.
• No hidden fees.

Notice they didn’t say ‘no extraneous fees’, which is where I think some bloggers have got confused or caught up in the hyperbole.

My own bank, Citibank, doesn’t have any hidden fees that I have experienced. Ok, if I used my overdraft or bounced a check they probably would but I’m not in that position financially. Plus, surely BankSimple will have to have some kind of fees for overdrafts (or else not offer them at all) as they represent risk and will be abused if they are truely ‘free’. Why bother to keep any money in your account if you can run on the overdraft all the time?

Citibank makes things pretty clear: my personal account is free if I keep more than $1200 across the checking and saving accounts, and my business account is free if I keep more than $5000 in there. Which I do in both, so no big deal. And, well, simple 🙂

BankSimple has got to make money somewhere and so even if those fees ain’t ‘hidden’ no one is saying there aren’t going to be any fees at all. Perhaps it will be a $10/month charge or just a clearly advertised (ie not hidden) withdrawl fee.

The point is ‘No hidden fees’ doesn’t mean ‘no fees’.

And back to Citibank… well guess what? They do have lots of extraneous features! Like being able to convert an out-going international wire transfer into a check made out in the local currency that is delivered to the recipient in the local mail (great when I need to send money back home but don’t want my mum to have to deal with wire receiving fees). Or advanced bill pay features that give me a really fine control over my payments. Or deposit checks in any Citi ATM across the world. I kinda like those features and would be disappointed if I couldn’t do some of the really helpful, time saving and money saving things I can do with my account.

So I don’t really get what BankSimple is trying to do. A cut down, wishy-washy bank account that probably won’t have the features or convenience that most normal people want to see but will no doubt get caught up in bureaucracy both regulatory-wise from the SEC and also from it’s rivals who will no doubt make things difficult if they perceive BankSimple to be threat.

I notice the other founders are described as having experience performing technology consulting in the banking sector but it still seems like a bunch of startup people trying to create a 37 Signals-style bank rather than a serious banking contender that I would want to put my money in. Maybe I’ve not fully drunk the koolaid, but for some things I would rather go big/mainstream/known-quantity rather than small/startup/experimental. Cars, insurance and banking all come to mind.

Perhaps someone can tell me why BankSimple is a good idea – because from where I am sitting it doesn’t seem like a promising business, let alone one I would conclude vesting in early-stage Twitter stock for.