I'm sorry, but I want my bankers to be grave old men in suits. I also want my bank to have offices all over the world and I want to know that they are handling money many hundreds of times larger than whatever I have.
I don't want a bank started by a guy called al3x, and who just left twitter. It sounds innovative, but it doesn't sound...dependable.
And if there is one feature I want my bank to have, it's dependable.
That's why I'll be using it first, and lots of my fellow college students who have a lot less to use and a lot more to gain from using a bank like BankSimple.
Time is in short supply, and fees eat away at my little pool of cash.
I'm willing to take the risk, and willing to put my money in the hands of people who are young, smart and innovative, instead of bureaucratic, slow and set in their ways.
Not only that, but if you'd checked, your cash will be FDIC insured through their partners. I certainly don't have a quarter of a million sitting around.
Finally, the way things are going now, the government is the only reason those "grave old men in suits" still have your money at all.
ING Direct (ingdirect.com) is an amazing online-only bank that has virtually no fees. They've got amazing customer service. And they have the best bank web user interface I've ever dealt with. BankSimple will need to differentiate themselves from ING Direct somehow.
edit:
Why the downvotes? I use ING Direct as my main bank. I love it. BankSimple will need to differentiate themselves from ING Direct to win me over.
edit #2: I have nothing against BankSimple. I hope they succeed. The market could use another friendly, efficient, tech-savvy bank. Perhaps they will drive innovation in the banking industry.
When I first signed up, their savings accounts were yielding 3% interest, which seemed great considering no minimum balance and no withdrawal fees. With the dip in the economy, they're just barely hovering over 1% now. Even still, if you compare that with the two other banks I've dealt with (5/3 and Chase), they don't really have anything that comes close unless you have massive balances or you want to tie up your money.
I'd love to hear if there are other easily accessible savings accounts out there that can tie into your checking account, with no minimum balances or withdrawal fees, that offer comparable interest rates.
My finances aren't stable enough right now to look into anything like CDs, Bonds, etc - it needs to be an interest bearing savings or checking account.
HSBC Direct is an online-only bank that offers slightly better rates than ING Direct. In fact, their rates are possibly the best (and ING the 2nd best).
The downside to HSBC, is that their web interface and operations of business are antiquated. While I have an online checking and savings account with them, I really only use the savings account. I just can't bring myself to deal with them because the user experience of ING Direct is so much better. For example, if you want to transfer money from checking to savings (or vice-versa), with ING it's instantaneous; but with HSBC you have to wait a business day! Ridiculous, I say.
HSBC is great if you're traveling/living in east Asia. I traveled through nine countries in Southeast Asia last year and never paid an ATM fee. Their ATMs are all over, and they're also partnered with many other Asian banks.
If you live in the USA (like me) I'd say keep your 6-to-12-month cash reserve in HSBC. And do your day-to-day banking and short-term savings with ING Direct.
This was a great article, thanks for sharing it. I'm a huge fan of twitter myself, so I can only imagine how awesome this bank will be. I wish him luck in his future endeavors.
ING is part of AllPoint's network. You can get instant withdrawals. There are 32,000 surcharge-free ATMs located in all 50 states, including major retailers like Target, Rite Aid, 7-11, and many others.
For deposits, I use direct deposit via my employer which works great. I get my money the same day everyone else does. For depositing checks, I use my credit union (2nd bank). Since I only get a few checks/year, this is not an issue for me.
I use ING direct for checking, savings, bill pay, and personal money transfers.
I use e*trade's "Max-rate checking" product and it's amazing:
- Until recently they had a great interest rate on your checking account (2.5% APY).
- I also get direct deposits, and mail in checks (is more convenient than going to the bank for me, and I don't need the money right away).
- They offer ATM fee refunds at ALL ATMs. That's just awesome. Not only do they not charge you a fee, they'll instantly refund the fee the ATM charges you (comes in very handy in Vegas ;)
It's no-fee with great customer support. I've been very happy with them.
your cash will be FDIC insured through their partners
This is not something I'm willing to take their word for without seeing a copy of a legal opinion from someone independent. I don't want to find out after they go under that they've simply been depositing their reserves in an FDIC-insured account with another bank, and that as long as that partner bank stays afloat the FDIC won't pay out.
Is it clear that they are actually going to be a real bank? That bit about FDIC insured through their partners implies that they are more of a marketing driven company that off-loads the actual banking business to real banks providing white-labeled services.
My bank (RBC) is run by old men in suits, plus I pay no mandatory fees. Optional fees are another thing. If I want the convenience of using an ATM not run by the bank, I pay a surcharge. But, it's a big bank, with ATMs everywhere I go. The surcharge is never paid. :)
Also, you only get charged fees if you use a "service" of the bank, such as overdraft protection.
If their revenue model of "interest margin" uhm.. interests you, I would suggest joining a local, state-chartered credit union. It is how they have been doing it for years!
[EDIT] and if you are young, time is not in short supply and is actually on your side
The dependable banks... are those the ones that taxpayers just bailed out for hundreds of billions of dollars because they were about to destroy the entire financial system?
Notice how even when they screwed up, they were still bailed out. Obviously I'm not thrilled that any bank would screw up in the first place, but no one's bailing out BankSimple if they do too.
The simplest answer is: if you don't want to bank with us, then don't. We don't imagine that we'll replace every bank ever. There are plenty of traditional banks that may be going bust left and right, but hey, you're free to do business with them.
A more complicated answer is that BankSimple will have the backing of established, traditional financial entities who are fully FDIC insured from the get-go, so the risk to you as a customer is quite low.
There's no such thing as banking without risk, but I understand why you feel drawn to more traditional financial institutions. They certainly do a good job of marketing themselves as stable and dependable.
IMO, the response was right on the money (no pun intended).
My first thought when I read maxklein's comment was that he is perhaps saying it half in jest. But in case he was serious, I don't think one can just deride a person/organization based on stereotypes. (Hey you programmer of some web application, what do you know about banking, where's your suit and your MBA, you'll do a shoddy job for sure ... etc)
Let's see what they come up with and critique/praise them on what they actually do, rather than carrying prejudices.
Being sarcastic or dismissive of concerns isn't the way to deal with that type of criticism which was my point. Not that maxkleins criticism was valid or well based that said however, saying "yeah look how the existing banks" have done doesn't tell us anything about how you plan to better that and doesn't really say much at all since for the most part and most of the time the traditional banks do really well.
He didn't actually give any information on what their plan entails that would remove doubts. They've said their money comes from two places loans and cuts from credit card fees. While what if they have a bad run with their loans/investments(like big banker banks) or not enough people use there credit cards? That makes them just as vulnerable as the existing banks so saying existing banks don't work doesn't tell us why you will.
I take your point that Alex's tone was sarcastic and may be he could have avoided it. But, hey if someone dismissed me as being less dependable etc, just because I am a programmer (or anything else for that matter), I might also lose my politeness for a minute.
Yeah, I would also be eager to see more information on their plans. I hope they would start talking more about them on their blog. I am sure they could get some good inputs if they can get a good community going. (It could be one place where his programming/OSS experience might come in handy.)
Do you work for them or have insider knowledge of what they intend to invest in? You've mentioned this a few times but I've yet to see a response. If you do than what is it they plan to invest in/what kind of loans are they going to be offering to make up for the interest they will be paying out?
That's highly worrying. My understanding is that FDIC is a guarantee of last resort - i.e. a guarantee that ultimately a customer cannot lose his/her money.
i.e. there is no risk.
So are you saying there is no risk - or that there is some added risk to banking with yourself? I'm confused.
If you are trying to differentiate yourself from other banks, I would stop referring to your users as "customers". CUs call them "members". I have always preferred "comrades".
I'm honestly really surprised at the reaction this has gotten out of some people on HN.
Banksimple is only trying to achieve what no other bank thus far has, which is to be genuinely liked by its customers.
Everyone seems to be incredibly worried about the dependability of these guys, yet I don't really see what's so 'dangerous' about this situation. All the deposits are FDIC insured, they clearly have their model laid out; interest margins (and interchange fees) have kept banks running for years, and those are banks with likely 50% more operational costs due to running actual branches.
It's obvious that opening this sort of bank and not selling high-interest rate loans and not charging fees for everything isn't as profitable as it could be if they did, but is it that far fetched that these guys will gladly make less money, but in exchange offer you service that you can actually enjoy?
Zappos could easily save millions every year by shipping UPS ground for everyone, charging for shipping and cutting back on it's customer service, but then it wouldn't be zappos. I, for one, am entirely happy to see a bank that actually took the time to speak with me personally, and offer a banking experience completely unlike what I've had to deal with as long as I have been banking.
but that's worked out SO well over the last oh, year or so.
The grave old men in suits I mean.
You know, the ones who weren't actually able to stay in business and the ones who didn't go under were acquired by another bank that totally and utterly screwed you. Or your bank was simply shut down by the FDIC.
It's time for new thinking - FDIC insurance will protect you up to, I believe, $250,000 now.
Why do you care about any of that? The vast, vast majority of people don't lend their money to "the bank," they lend it to the government. If your deposits are FDIC-insured, you don't lose them, regardless of what your banker wears or where his offices are.
If these guys can beat the big banks on overhead and usability, they'll do extremely well.
Yes I want my bank to be dependable but you don't have any real point why online only bank can not be dependable?
Before Amazon came along people probably thought that retailing can be done only in physical stores but it changed.
Another example is Netflix over Blockbuster. I think its time for online only bank. I don't remember visiting my bank ever after opening my account with them. We definitely need ATMs but not banking centers.
Seriously. USAA may be a very stogy institution in general, but their banking arm has been on an absolute roll the last couple of years. Between their iPhone app, a great web site, and excellent customer service, they're setting the benchmark for online banking. And, by catering to service members who are literally strewn across the globe, they "get" remote banking.
Oh yes, because the banks seem so dependable right now. Good thing they're such experts at handling obscenely large amounts of money. I mean, it's not like we're funding them with our tax dollars or anything...
My mother-in-law thinks that shopping online is crazy because she thinks people can steal her credit card number from over the wires too easily and because you don't know if you're using a "real" shop.
She is correct. It is a real skill to be able to detect the dodgy websites from the real ones. There are lots of fake ebays out there as well. Sure, you and I can tell from the domain name, lack of SSL cert, spelling mistakes, or such, but so many people can not.
Your mother in law sounds smart enough to realise that she can not tell the difference. A rare commodity these days.
Trusting guarantees is a day-to-day part of life. The majority of people have no idea how a bank works but they still use them! The same argument goes for e-commerce. People should trust their credit agreements and ability to judge situations.
If everyone were as "smart" as you say by refusing to interact with processes they don't understand, e-commerce would be dead in the water. It's not thriving thanks to the <1% of us who know how it works in detail :-)
my mother is exactly the same. she thinks that doing anything online is inherently risky. I try to explain that when shes uses to pay for stuff in a shop, or over the phone, her credit card details are being transmitted over the internet too, but she wont listen.
There _are_ risks with shopping from your PC. Largely from key-stroke recorders. However, the 2 times I've been victim of fraud were both from card-skimming in a physical store.
The current lot of banks seem really dependable, given recent financial history.
Perhaps a bank which is based on customer service (in the age of the internet) and being up-front about their policies and how they will invest your money and reduce your risk is actually what we need. Even if it is co-founded by someone called al3x.
I don't want a bank started by a guy called al3x, and who just left twitter. It sounds innovative, but it doesn't sound...dependable.
And if there is one feature I want my bank to have, it's dependable.