BankSimple Launches Preview Site

I'm very excited to see how this pans out. Even though i'm not a country they're going to support, if they do well it will set a good precedent and maybe we can finally see banking stirred up a bit. Banks are my most hated companies as a whole.

I'm still trying to nail the business model here.

"BankSimple account plus BankSimple debit card replaces your existing personal bank account. Make deposits, withdraw cash, pay bills, earn interest, and more.

However, BankSimple is not a "bank." We partner with chartered banks who provide FDIC-insured products, leaving us free to concentrate on designing the complete consumer banking experience, via the web and your smartphone."

From the looks of it, it appears as if Bank Simple is going to be gathering deposits for the actual banks they partner with. In exchange, those deposits will be fenced in and administered by Bank Simple via the online and mobile presence.

The mention of debit cards at first made me think that maybe they would be able to split fees, so Bank Simple would get a cut of the interchange fees that occur whenever a debit card is used... but those fees will go away because of the Durbin Amendment (this is putting the squeeze on every major bank in the US and will result in an increase in fees for customers -- see Jamie Dimon's comments at the recent Barclays Conference).

Maybe the partner banks will split some of the interest they make off of the deposits? Presumably, Bank Simple's value proposition to them would be that they are providing something that is slightly more than zero cost funding but less than a CD rate. So they could earn a little bit in that area.

The only thing that is left then, that I could think of, is that Bank Simple will mainly try to make money by cross-selling products. Bank Simple Brokerage Accounts. Bank Simple Mutual Funds. Bank Simple Pre-Paid Debit Cards. That sort of thing, where they'd be able to gain market share. This would work out pretty well I think.

For reference, the average American uses 16 different financial products, with about 2 products per bank. A good bank like Wells Fargo boasts a ratio of 5.5-6 products per customer. Your typical bank earns its money on an 80/20 split, where 80% comes from the interest spread (borrow at 3%, lend at 6%, net 3%) and 20% comes from fees (overdraft, interchange, fees for other products). But a trust bank will have a 60/40 split, where they earn extra fees by offering wealth management services to the majority of their wealthy customers.

Is this going to support third-world countries? Will I be able to sign up and get the card and bank account running?

I like new design. Very cool. Good luck guys.

When I first started scrolling I got a little confused b/c I didn't realize the header was fixed. The sign up button disappeared and I couldn't figure out how to get it back.