If you are not familiar with Simple, they are offering a new approach to banking without the bank. Simple started out as a mobile banking app that provides free access to your money through a debit card and 55,000 ATMs. Simple was created to make banking, well, simple, and to help customer save with a built-in budgeting calculator that shows what is safe to spend before you spend it. The appeal is ease of use, customer convenience, and better customer service with spending management that consumers find truly useful.
Lest you think that Simple is just another banking app like so many others that have been appearing in the market, Simple is moving its accounts to BBVA Compass, which is one of the few American banks to have a real-time core system running Accenture’s Alnova. Simple had been using The Bancorp Bank, a BBVA white labeled subsidiary, but by moving to BBVA Compass, Simple can expand its product offering without sacrificing its customer service business model. As Simple CEO Josh Reich explains:
“BBVA gives us access to a much broader range of products that our customers wanted. Our customers are saving money and the number one thing they are saving for is a down payment. Our end game is to offer mortgages, be a full service bank, but we definitely won’t do it this year.”
Where Reich sees Simple winning the customer acquisition game is by offering a better customer experience. The web site is simple and easy to use. The app is easy to use and has a Safe to Spend calculator to help users save for their big life goals. And there are absolutely no fees; not even for replacing debit cards. As Reich explains it, banks who compete on interest rates view customers as “homo economicus” since the banks operate solely from a culture of finance, accounting, and risk. Simple has inverted the model, starting with the customer’s immediate desire to save and better manage their money to achieve their life goals, such as a vacation or a new home.
“I don’t care how pretty you make your Web site, if you hit customers with a $35 overdraft fee they are not going to feel good about your brand,” said Reich.
And now they have BBVA as the 500 pound financial gorilla lurking in the background with additional products and resources so Simple can cherry pick those components that best fit their business model. They can continue to focus on customer service while the BBVA system powers real-time transactions.
Today, the Simple business model looks like a true differentiator in the banking community, but Simple is using the same principles that have shaped retail and e-commerce for years – give the customers what they want and they will come, and remain loyal. As Reich clearly notes, their end game is to get into lending, mortgages, and other areas that will yield more revenue, but not at the expense of the positive customer experience.
Banks and credit unions can learn from Simple. If they work with customers and nurture the customer experience, focusing on customer needs rather than selling banking services, they will gain new customers and find news ways to save in the process. Simple estimates that to support the same number of customers they have now as a conventional bank, they would need 850 branches and 6,000 branch employees, but they don’t have a single brick-and-mortar branch. That says something for the benefits of keeping banking simple.
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