I've wanted to do something very much like this in a future startup. Banking does suck.
Unfortunately, it's debatable how much of banks' suckiness is avoidable. Retail banking is caught in a vice-grip between fierce competition for low margins and government regulations. For example, from what I understand you pretty much have to run mainframes with certain antiquated, government-approved software to process stuff through ACH. KYC rules prevent extremely efficient account openings. Etc, etc.
For my American friends: all "checking" in the UK is free. All ATM use for normal ATMs (those you find at banks, not the shady ones at the convenience store) are free, even if that bank isn't yours.
This is obviously only a day-to-day thing, but I think most people have expressed feelings of ambivalence about banking in the comments here: it's somewhere to store money. In the general case, the UK banks do that better.
I do not have any experience with anything advanced like mortgages or loans.
Also bank transfers, direct debits (Paying bills automatically) etc, online banking, are all free and work really pretty well. Typically a bank transfer will be in the recipients account within a few hours if it's to a different bank, or within less than that if it's the same bank.
I'm interested in some examples of the differences. One thing that struck me when I lived in Japan was how easy it was to set up automatic payment of things like rent and utilities and I thought, wow the US needs these things (I also thought it was cool how I could deposit cash and the atm would count it and update my passbook and how there were signs saying please don't take out more than 100 bills at a time) but all that is here now and I find US banking rather non-sucking overall.
Well, we must be living in a different UK then. I would be actually willing to pay a monthly fee for a bank account at a bank that has a call centre with staff who actually speak English.
Try an American bank some time (I had a British bank account for much of the 27 years I lived there, and have had various US banks for the past 6 years). Of course there's always room for improvement, but if you haven't tried banks in both countries, you really don't know how good you have it in the UK.
Barclays is pretty good, but all the in branch staff are good.
All call centers suck, and all telephone support sucks IMHO.
I certainly wouldn't pay extra just to get telephone support. How often do you need it? If you need it a lot, then that's a really really niche use case.
It may be due to the Barclays online banking being pretty solid. HSBC is also fairly good.
Well, it's not really when I call them (I don't call them, I either try to sort out stuff online or if I can't, I just walk into a branch) - it's when they call me. Like when someone is fraudulently trying to use my card details (happens every now and then). It is really annoying when you need to discuss urgent and important matters and you simply don't understand what they're saying.
My bank, one of the 3 biggest in the country, has offered me nothing but excellent phone support. Quick to pick up the phone, knowledgeable staff, and quick and correct answers to my problems. So obviously quality phone support is far from impossible.
UK Banks, hahaha. Don't make me laugh. While it is great to have a bank that actually pays interest, they have only just started to move away from signatures for all transactions, and towards pins.
Plus, they have required huge bailouts as well, I think the RBS is now 70% owned by the government.
Australian banks are actually ones that have come out very well, limiting there exposure to toxic assets, no gov bailouts. Of course, Australia has maintained a very strong economy so far.
>UK Banks, hahaha. Don't make me laugh. While it is great to have a bank that actually pays interest, they have only just started to move away from signatures for all transactions, and towards pins
UK has been chip+pin for some years now. Most places won't accept non-chip cards any more.
Also the story with banks isn't the same all over. For example, Barclays, one of the biggest banks in the UK accepted no government bailout, and continues to post big profits.
The amount of banking suckage is very dependent on what country you live and bank in (I say this from experience of living in the UK and the US). I'd be really interested to know how much of the variance is due to local laws, and how much is just "this is the way we've always done things here".
Of the value props he describes, the only one that remotely resonates with me is: "A bank that puts your money to work automatically."
He writes that nobody LOVES their bank. But does anybody really HATE their bank? Maybe some vocal folks, but a bank to me is a utility-- a hole in the wall where I stick my money. I've never felt gouged by fees (when I was young and stupid, I've been annoyed by overdraft fees, but they seem justified). I've never been overwhelmingly frustrated by the design decisions of my bank. They decidedly don't treat me like crap. Every time I've needed to interact with my bank(s) it's been a pleasant experience.
Given the switching cost/inconvenience, I think this is going to be a hard sell for most people.
Have you tried to pay a friend an amount of money that would be inconvenient to do in cash? The best way to do it through your bank is to have them chop down trees into paper checks, physically mail them to you (this takes a few days), have you scribble down a number on the paper, hand (or mail... wait a few more days) the check over to your friend, who feeds it into an ATM, which scans the number you scribbled down, then you wait a few more days and eventually a few bytes in your bank's servers change to reflect your intended payment.
The last time I tried to make that entire process electronic-only, Bank of America said I needed to know my friend's account number and routing number, and even then they wanted me to show up to a bank branch in person to complete the deposit.
Sure, you could use Paypal, but it's an additional layer of complexity and risk, and if you're not careful they'll skim 3% off the top of your transaction.
Let's see... what else? Debit and credit cards. I live within my means. I don't want credit. I pay off my balance in full every month. Other than a hypothetical emergency, I would have no use for a credit card... except consumer protections for credit cards are much stronger than for debit cards. I'd be a fool to use my debit card instead of my credit card. And even though I've paid my credit card balance off in full every month for years, the one time I slipped by 3 days, I got slapped with a $30 late fee on a $200 balance (180% APR!).
Speaking of debit/credit cards... I visit my family in Mexico 3-4 times a year. Every time I go, I have to make sure to call Bank of America twice, to let both their credit card and debit card departments know that I'll be traveling. I'll have to wait on hold an average ~30minutes each time I call. If I forget to do this, and I try to use my credit or debit card while in Mexico, my cards will get frozen due to "suspicious activity", again necessitating a call to Bank of America. I do appreciate that they're looking after my financial safety, but I really do travel to Mexico quite frequently. There's nothing anomalous about my using my cards while I'm there. Once I do call they're incredibly helpful, but it's annoying that I have to call at all.
And don't even get me started on the fees and shitty exchange rates for using your card outside of the US...
Banking in America really is broken. If they're as good as they say they will be, I look forward to giving BankSimple my business.
You need to use credit cards for the rewards too. Credit card rewards eat a couple % of the merchants' profits, which they pass along to all customers in the form of higher prices. Therefore people who pay by other methods are effectively subsidizing the frequent flier miles and Red Lobster gift cards of those who use credit.
He writes that nobody LOVES their bank. But does anybody really HATE their bank?
I did love the bank I used in the UK (Lloyds-TSB - they gave me an indefinite interest-free 2000 UKP overdraft when I was a student, and have never charged me any fees that I can remember). Conversely, I hate every American bank I've had to do business with (WaMu/Chase and BofA so far).
I hated my bank (BofA) enough to close my accounts and move everything to a local Credit Union. CU's are far better, IMO, than banks; and their rates are generally lower across the board (credit cards, CD's, savings, auto loans).
I've been banking with a regional bank for years, and while I suppose love is too strong a word for my relationship with them, I would gladly use the words trust, respect, and appreciate.
Of course, even they apparently had a little too much subprime exposure, and were bought up by a larger bank last year, to be fully integrated this summer. If the customer experience goes away with the old name, I'll consider Al3x's new project, but that's the only way.
Agreed. I've been doing my banking through a small, local bank since I had my first account many moons ago. I don't pay fees for normal banking activities, and have always had good experiences when dealing with the bank employees face-to-face. I don't LOVE my bank, but do I need to LOVE my bank? I'm not sure...I need to be able to trust them.
I hate most banks. I put up with my current one. I don't know -- this is an area that could stand some innovation. Whether the old guard will stand for it: that's another question.
I was just as dubious about what could really be done until I talked to the guys who are now my co-founders. There's actually a ton of good stuff that can be done, today, in the current regulatory environment. The future looks good.
Unfortunately, it's debatable how much of banks' suckiness is avoidable. Retail banking is caught in a vice-grip between fierce competition for low margins and government regulations. For example, from what I understand you pretty much have to run mainframes with certain antiquated, government-approved software to process stuff through ACH. KYC rules prevent extremely efficient account openings. Etc, etc.
I'll be curious to see how this goes.