Today, I’m pleased to announce that we've closed our Series A investment round. We’re thrilled to have put together a syndicate of investors who will help us take BankSimple from idea to reality. Leading the round is First Round Capital, IA Ventures, and Village Ventures. We'd also like to thank Jerry Neumann, SV Angel, Nauiokas Park, and everyone else who has supported us through this process. We’ll be announcing the angel investors involved in this round once we’ve closed with them all.

This financing is a critical step towards taking BankSimple live. With money in the bank (no pun intended), we can finalize launch plans with our partner financial institutions. We’ve been carefully examining the operations of these potential partners to ensure that they’re financially sound and technologically agile. With this process coming to a close, we look forward to announcing our premier financial institution partners soon.

Our next step is to get our first cards issued. The card networks (Visa, Mastercard, etc.) don’t issue new cards during November and December so that they can manage the rush on holiday gift cards. Assuming we can get our cards issued before this blackout period, we’d like to do a “friends and family” test later this year. That test will help us iron out any technical issues with our partner integrations and provide us with essential feedback.

Once we’re satisfied that our initial service is stable and secure, we’ll begin bringing on customers who signed up for an invitation (in order of invite request date, of course). To encourage people to flex our systems early on, we’ll be rewarding active customers with additional invites.

We expect our service to remain invite-only for the immediate future. This invite system allows us to control quality and costs. Our goal is nothing less than stellar customer service, and to achieve this goal we need to regulate the number of customers as we train and staff our support team. Once we’re sure we can provide the best possible experience to everyone, we’ll drop the invitation requirement.

In the meantime, we love hearing from you. While our development team is working hard on preparing our product for launch, your emails and input can help shape our roadmap. We have exciting plans to address many of the pain-points that you face from your current banks. We’ll continue to share more of our plans as we approach launch.

Hi, I'm Alex Payne. I joined Josh and Shamir as BankSimple's third cofounder several months ago. My role here is Chief Product & Technology Officer. That means a bunch of responsibilities, first and foremost among them being building our technical team.

Rather than belaboring my own introduction, I'd like to publicly welcome the engineers that I'm proud to have brought on board: Dave Fayram, Thomas Lockney, Toby Sterrett, and Ian Collins.

Dave, Toby, and Ian come to us from search startup Powerset, by way of Microsoft. They've been working together for some time, and I'm happy to give them an opportunity to continue to do so. Thomas joins us after a long stint at Triactive, a systems management technology provider.

Dave will be BankSimple's Lead Engineer, focusing particularly on backend services. He's one of a very few people who have written Common Lisp professionally, as well as Erlang. His thorough approach to engineering and thoughtful application of functional programming made him, in my eyes, the perfect person to lead our development efforts. Dave is increasingly involved in the Clojure community, and I'm looking forward to learning more about that programming language from him as we work together.

Toby and Ian are brilliant front-end developers and designers, each with their own impressive personal projects outside of their contributions to Powerset and, more recently, Bing. Toby has been spending his free time working on laterstars, a supremely useful tool for keeping track of tweets that contain interesting links and photos. Ian is a contributor to the MooTools JavaScript framework, the author of stealth photography iPhone app NinjaCam, and the designer behind the witty annotated photography tumblelog The Big Caption. Together, Toby and Ian will be working on the part of BankSimple's system that our customers will interact with, both on the web and on Apple's iOS (but don't worry, we haven't forgotten about other mobile platforms!). Their skills complement those of our recently-announced Creative Director, Bill DeRouchey.

Thomas rounds out the engineering team with experience and enthusiasm. He enjoys working across the proverbial stack, and has built backend systems, frontend interfaces, and done operations work. Thomas is the founder of both the DorkbotPDX and PDXScala meetups, and has been a technical reviewer for several books on developer technologies. I've appreciated his organizational drive and community spirit, not to mention his smart commentary on technical topics over Twitter and the like.

Dave, Toby, and Ian will remain in San Francisco. Thomas, Bill, and myself will be working together in Portland, Oregon. Josh and Shamir are holding down our office in the DUMBO neighborhood of Brooklyn. Together, we're pushing BankSimple forward. We're just as eager as you are to actually use this thing, and we can't wait to get started as a team.

If we seem like people you'd want to work with, check out our open positions. At the moment, we're particularly eager to find a great ops/devops person.

Banking shouldn’t be difficult. Banks shouldn’t be your enemy. Like too many American industries, the finance industry now wields confusion as a weapon against their customers. I’m proud to announce that I’m joining a team that’s building a simplified banking service that really delivers a service, not yet another source of confusion and frustration.

Hi, I’m Bill DeRouchey, the newest member of the BankSimple team. I’ll be working to make sure the BankSimple experience lives up to our promises. In industry-speak, I’ll be the Creative Director, focusing on our user experience and brand. Stripping away the jargon, it’ll be my job to uphold the “simple” half of BankSimple. It’s essential that everything we do and say as a company feels as effortless to our customers as having a conversation. It’s my mission to hold us to that standard.

It’s my firm belief that one of the keys to success is avoiding the artificial, uniform face that most companies present. Success means being an accessible collection of genuine people that incidentally comprise a company. That’s why the idea of joining this team captivated me. It’s not just the amazing technology, or the product ideas that will rethink banking. It’s the willingness of Josh, Shamir, and Alex to speak publicly and bluntly about tricky subjects like banking and personal finance. They speak about the world of money like real people, and that made me want to join the team.

Most recently, I directed the interaction design team at Ziba Design, a globally-respected design firm focusing on consumer experiences. At Ziba, I was designing products, software, and websites. During that time, I served two years on the global board of directors of the Interaction Design Association (IxDA), where my primary contribution was acting as co-chair of the Interaction10 conference. I frequently speak at conferences on experience design topics and have, amongst other subjects, researched the history of the button.

One topic that I’ve talked about over the last couple of years is particularly relevant to BankSimple: the question of how to design humanity into products and services. (You can view a talk I gave on this subject at Business to Buttons, about halfway down the page.) Essentially, I believe that companies can connect with customers by letting the personality of their employees shine through, communicating informally, and treating customers as peers. A great example is Zappos. There’s no question that when you interact with Zappos as a company, you’re interacting with real people. That’s hard to say about most businesses.

Now, instead of just talking about how more humane corporate design and communication would be a great idea, I now have the opportunity to make this happen from the start of a brand new company. As BankSimple grows, aspects of our character and personality will continue to shine through, as they already have on BankSimple’s blog.

Be reassured that being more personable doesn’t mean being silly. Typically, banking and other financial concerns are treated with all gravity and seriousness, and for good reason: there are few things more private, personal, and essential than money. That said, companies can be serious without being paternal, and straightforward while being supportive.

I hope you join us as we redefine banking. I plan on being very accessible to discuss product features, ideas, and improvements. Fundamentally, we’re reconsidering how we relate to money. Doing so is going to be exciting, challenging, and fun.

Thanks for reading.

We're a data-driven company. We believe techniques like data mining and machine learning should be used, transparently, for the benefit of our customers. For us, data mining includes the extrapolation of financial behavior from customer transactions, and machine learning entails the methods that allows us to respond to that behavior based on data we've accumulated. It's worth discussing our process and product, and how it relates to customer privacy.

From my conversations with people interested in switching to BankSimple, I've learned that while most people take their privacy extremely seriously, many are willing to compromise a degree of privacy for a more useful product. So when we use your information, it should be perceptible and acceptable to you. And at no point will BankSimple share your information with third-parties without your explicit permission.

Out in the Open

On Saturday, Nicholas Carr remarked in an essay for The Wall Street Journal that "The greatest danger posed by the continuing erosion of personal privacy is that it may lead us as a society to devalue the concept of privacy, to see it as outdated and unimportant."

Carr reminisces about Scott McNealy's decree from 1999: "You have zero privacy." It's interesting that the recent debate about Facebook shares some of the same characteristics of the reaction to McNealy’s speech. It's both partisan and contentious. Some believe whole-heatedly that privacy is an antiquated concept. Others see their privacy as a fundamental right that should never be breached.

But Carr is appropriately pragmatic.

He contemplates that "information could be used to influence our behavior or even our thoughts in ways that might be invisible to us." But, he concedes, "most of us view personalization and privacy as desirable things, and we understand that enjoying more of one means giving up some of the other. To have goods, services and promotions tailored to our personal circumstances and desires, we need to divulge information about ourselves to corporations, governments or other outsiders."

Furthermore, he explains that the trade-offs each of us frequently, and perhaps, unknowingly encounter online are asymmetric. Most customers have incomplete knowledge about how their information is being used.

We share Carr's sentiment, so we're interested in finding the balance where customers are comfortable, aware, and assisted by means of the personal information that they are willing to let us use. We're using some of the techniques that Carr describes, but only when the customer is cognizant.

In the Conversation

We think it's in your interest as a customer to provide us relevant behavioral information. This might include how much you’ve deposited and how much you've withdrawn. Or, what you've spent and where you've spent it. We'd look for patterns, then use this information to provide a better service.

Our Safe to Spend feature is an example of how our use of customer information could result in benefits to your life and bank account. I'm excited about this feature because our approach to saving is not one-size-fits-all. I also think this feature demonstrates how we're clear in our use of our customer's information. When customers log-into their online bank, they're greeted by their account balance. What does this balance reflect?

Most banks provide no indication of how their account balances are calculated. This might sound trivial, or inconsequential. But it's not. In fact, this is a frequent customer complaint.

For example, suppose you purchased Nicholas Carr's The Shallows on Amazon. Your book might have been shipped, or even arrived, before your bank adjusts your balance. Therefore your actual balance is less than you think. I think most people see how this might benefit the bank rather than the customer. That is, it's better for the bank if you think you have more money than you do. Whether in spendy behavior or overdraft fees, there's a reward in it for them.

Better banks give a more accurate view of your account, showing the account balance, pending balance, and available balance. It may also provide a separate transaction history for pending purchases. This is an O.K. solution, but it has significant utility problems.

From a usability perspective, two separate transaction histories don't help. From a budgeting perspective, I'd much prefer if my purchases were integrated into a single comprehensible transaction history . As far as I’m concerned, once I've swiped my card, or pressed submit on the order page, that money is no longer mine. This method also fails to recognize that some of that money is spoken for. For example, if I sock away a few hundred dollars a month for a vacation I'm planning to take next year, I certainly don't want to undo the hard work of saving simply because the money is in a pot labeled "available balance." When all the dollars are unqualified, it become difficult to tell them apart.

From a utility perspective, the standard approach is constrained. Safe to Spend, on the other hand, makes a smart and conservative estimation. Our calculation won't limit you with an incomplete or at-the-moment balance. It will forecast too.

This feature demonstrates how we'll be using customer information. Safe to Spend is your account balance minus what you've saved toward goals, minus pending contributions toward goals, minus pending bills in the current pay cycle. Therefore your Safe to Spend balance is the amount you’re most likely interested in: how much could you spend without disrupting your budgeting, planning, and ability to pay bills?

Is there a best method to determine what's O.K. to assume, and what's not? I think a compromise exists by handling this on a per-customer basis using privacy that scales. We know our customers differ in their financial behavior. So it's safe to assume they differ in their approach to privacy.

This is easier said than done, it's a problem that includes a subset of smaller engineering and usability problems, each of which will be a challenge. If this is something that interests you, or you believe you have some solutions, we’d love to hear from you -- we’re hiring.

Over the past few days I've begun receiving emails asking why we are letting some people on before others. We are not currently live, and and that tells me that we haven't been as clear as possible in explaining our invite process.

In short, we are not currently live. While about 8,000 people have received responses to their invite request, a further 12,000 have not. We have been manually emailing people to explain that their request has been received and that is holding their place in the queue for launch. Our plan at launch is to bring people on in the same order that they requested invites. For example, those who requested invites in February will get on before those who requested them last week.

We have been sending out responses manually as that gives us a chance to do a quick bit of research on each person who has requested an invite to get a sense of the type of people who are interested in joining BankSimple. We also personalize these emails in the hope of starting a conversation to learn more about what people are interested in. Unfortunately, this takes time, but we think it is worth it. Also, we haven't been good at responding to invite requests in the order that they were placed. This means that some people get responses back from us before others.

Looking at what people have been saying on Twitter and elsewhere, it seems that people are excited to hear back from us and others are taking this as an indication that we are letting people onto the platform. We wish we were, but are not. Launching what we are building will take time. While we are committed to a rapid development process, our customers are placing an immense amount of trust in our technology. Neither we, nor our partners, want to violate that trust. We'll be putting up a blog post soon explaining our planned launch schedule. But for the bulk of those who are currently in the queue, early next year is our best estimate.

I hope this helps clarify the situation.

My Story

Fight Fees by Andrea_F (Flickr)

I remember opening my first bank account. Granted, it was only a few years ago right before I left for college, but I can remember how excited I was to have a debit card and a savings account. Being part of a generation who checks their email multiple times an hour, I kept a meticulous tab on my bank account even before my card came in the mail a few weeks later. However my fascination soon turned to annoyance after I discovered a small monthly fee looming in my savings account.

Unable to reach a representative on the phone, I decided to walk the few blocks to my local branch where I was informed that my savings account was not meeting its minimum required balance and that I would be charged monthly. Considering that this was my second week of college and I barely had any money, let alone a sum large enough to make the minimum balance, I closed my savings account. To this day, I have yet to reopen another savings account and rely solely on my checking account.

In my case, I was just annoyed. Annoyed that I lost a few dollars, annoyed that I was only told the minimum deposit and not the minimum balance, annoyed that my bank seemed annoyed with me when I didn’t have a few hundred dollars to fix the error and just wanted my money back. However, I was relieved that I caught the problem and would never make the same mistake again. But, of course, being subjected to fees is unavoidable. As a feedback email I received noted, “…large banks don't exist to make a customer's financial life simple because they value customers only by how much they can charge them.”

Your Story

The same potential customer opted to share his story with me:

We have banked with Bank A and its predecessors for decades. Currently, we have a minimum balance requirement for free interest bearing checking. Month after month they forget that we have free checking and charge our account. Ultimately, after numerous (time consuming) calls, they reverse it but it has more than once resulted in overdraft charges. If we did not watch it diligently it would slip by. I realize that errors happen, but not the same error month after month.

Another user wrote of their experiences, saying:

What made me draw the line happened this year. I was in Chicago for a conference, there was not a single Bank B ATM anywhere near to the hotel I was at. I had to use the ATM in the hotel lobby twice during my stay and I was charged the normal $2-$3 charge from the ATM. Bank B charged ADDITIONAL $2 for using some else's atm. I payed $10 in extra fees. This is simply not cool.

So, I decided to use my Bank B account as an emergency type of account. I have switched all my banking to Bank C for better rates.

However, this was not a trivial process. I had to write down amounts and due dates of every single bill, account, and service that was tied to Bank B's account. I effectively completed this in around 2-3 week period, gradually shifting money from Bank B to Bank C. Also, scheduling this around paycheck dates, it some what guaranteed that I wouldn't overdraft from the Bank B account from something I could have missed while switching.

Of course, these examples are only a few out of many that I’ve received over the past few weeks. Many of your emails make it clear that you are responsible for watching your money, but isn’t that your banks job?

Where Does the Buck (Literally) Stop?

It stops right here. There’s no reason to continue funneling your hard earned funds into large companies that barely provide you with a decent customer service center. In a majority of cases, there are no reasons for you to pay fees. Charging you for an overdraft is unnecessary, especially if you have a different account with sufficient funds. Charging you for an ATM seems absurd since you’re just trying to access what’s already yours. Charging extra for applications to have access to your account is just wrong. It’s your information, not theirs.

BankSimple can give you that extra cup of coffee, a lunch date with a friend, and much fonder memories than that four hour phone call trying to get a fee reversed. And no, it’s not through rewards for immense spending or charging you in excess. We do it a little differently here-- no fees for most services and certainly not for overdrafts or most ATMs. We keep an open API for developers to work with. But most importantly, we don’t expect you to pay us for good service. We just want to give it to you, free of charge. After all, it may be cheesy but they do say that the best things in life are free.

The Dodd-Frank bill was signed into law by the President today. Created as a response to the near collapse of the financial system in 2008, this is a landmark regulation. It aims to make the financial system safer, end the 'too big to fail' safety net of the large banks, and protect customers from the sort of lending practices that led to the sub-prime boom and bust. Unfortunately, the lobbying power of the big banks combined with a lack of will on Capitol Hill leave the final bill with very little chance of succeeding in its aims.

How banking panics happen

"Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone" - Walter Bagehot

Banks borrow money from depositors and lenders, and then lend it to other companies and individuals. They hope that the people who borrow money from them will invest the money productively and pay it back to the banks on time and with interest. That allows the banks to return this money to their own depositors and lenders, while keeping a nice chunk of the interest for themselves.

Of course this doesn’t always happen. Some borrowers will waste the money they borrowed and won’t be able to pay it back. Banks know that this will happen, and they’ve become fairly effective at minimizing the so-called default risk through credit checks, collateral, and a variety of other methods. They also hold equity as a buffer against the risk of default.

The bigger problem for a bank happens when its depositors lose faith in the safety of their bank. This usually happens because there is some bad news about the bank which causes people to panic and rush to the bank to withdraw their money. The only way a bank can prove that it is safe and sound is by returning all their depositors’ money immediately, and no bank can do that. When such a panic affects a large number of banks, it can put the whole financial system in danger of collapse.

The panic of 2007

The financial crisis began in the shadow banking industry in the summer of 2007. In effect, banks, hedge funds, insurers, and other large financial institutions lost faith in each other, and tried to get back the money they had lent to each other. FDIC insurance protects depositors up to $250,000, so most ordinary people didn’t rush to withdraw their money and there were no long lines outside branches. Companies and large banks transact billions of dollars in the shadow banking market everyday; these ‘repo’ transactions are equivalent to overnight deposits that are not covered by FDIC insurance.

Banks lost faith in each other when they realized that the housing bubble was bursting. Lots of people wouldn’t be able to repay the mortgages they had taken out, and banks would be left holding large losses. But with the growth of securitization and derivatives, nobody had any idea where the losses actually sat. All the large banks and institutions claimed to be safe, but it was clear that not all of them could be. In response, market participants simply stopped lending to each other. The entire market shut down for a couple of days after Lehman went bust.

Academics will debate the causes of this crisis for a long time, but a few things became clear as the crisis progressed:

• While some individual banks were safe, many of the largest banks in the country did not have enough equity to cover their losses. In the end, the government had to use tax-payer money to bail them out.

• Increasing securitization and the use of derivatives fuelled the growth of the shadow banking industry which is now bigger than the regular banking industry. Regulators lacked the expertise and the tools to understand or deal with problems in this industry

• Banks and other institutions became adept at manipulating the patchwork of financial regulators in the US. Between the Federal Reserve, the OTS, the OCC, the FDIC, state banking departments, the SEC, and the CFTC, nobody was looking at structural problems and acting to control them.

What the Dodd-Frank bill does

The Dodd-Frank bill has had many innovative clauses during its long journey through Congress. Sadly, the large banks and their lobbyists have succeeded in watering them down to the point where its unclear if they will have much of an impact:

• The Volcker rule was supposed to limit the ability of banks to engage in risky proprietary trading. A forward looking clause that aimed to prevent the next crisis, it was significantly watered down to the point where it has little impact on any of the large banks today.

• The Consumer Finance Protection Agency was created with the promise of simplifying how consumers get credit. The lobbyists managed to drive through an exemption for auto loans, and got it housed within the Federal Reserve. The agency still has some teeth and independence, and its ability to act as a voice for consumers depends largely on the effectiveness of its first director.

• The Resolution mechanism gives regulators the ability to seize and wind-down any large financial institution. Unfortunately, it doesn’t give them any money. If its ever used, the money will come from tax-payers, with nothing more than a vaguely worded promise to recoup the money

What the Dodd-Frank bill doesn’t do

Beyond making it easier for regulators to take over failing financial institutions, the bill doesn’t really attack any of the root causes of the crisis. More than what it does, the bill is noteworthy for what it doesn’t do:

• Fannie Mae and Freddie Mac are completely ignored. Still tax-payer owned and funded, they continue to be huge time-bombs on the government’s balance-sheet.

• The bill does nothing to make banks hold more capital. While the Basel framework is due to introduce new rules later this year, it doesn’t look like they are going to do a much better job

• Except for the OTS, no other regulatory body is being eliminated. In fact, with all the additional burdens imposed by the Dodd-Frank bill, many of them are looking to increase their size and scope. A simpler system with fewer regulators would have helped avoid the turf wars that happened in 2008.

Net Impact

All in all, the bill doesn’t really make any major structural changes to the financial industry. In fact, some of the most game changing provisions are likely to be last minute additions such as the Durbin amendment limiting interchange rates, or the ‘expert’ clause that could put the ratings agencies out of business.

The last time the US went through a financial crisis in the 1930s, it led to the Great Depression and landmark bills such as the Glass-Steagall act. Those bills protected the American public from financial crisis for over 70 years. The full impact of the Dodd-Frank bill will take months and even years to become clear. But its highly unlikely that Dodd-Frank will be as successful as Glass-Steagall was.

We asked to hear your thoughts about current banking and you responded. Oh boy, did you respond.

Case in Point

One day, upon receiving a paycheck, I went to my bank’s local branch to deposit my check in the ATM through their new deposit slip free system. When I was depositing the check, the ATM abruptly shut down. I went into the bank to express my concern, but a banker informed me everything would be fine when the ATM was booted up. I went home still concerned.

The next day, I got an email from my bank that I was charged a $65 overdraft fee. WHAT?

A check of my accounts concluded that both my savings and checking were wiped out somehow. A flurry of customer support emails revealed no details as to how my money seemed to have disappeared. For three days, I grappled with customer support until finally a lady very high up in the food chain told me "my money would be returned pending an overview of my accounts in a week". Two weeks later, I finally got everything back.

They never removed the overdraft fee.– Ben Kaplan

As extreme as this anecdote might sound, instances like Ben's are not as uncommon as you think. Reading countless horror stories of missing money, bad customer service, and fees up the wazoo, you’d think banks would learn. Fortunately for the American banking clientele, we're here and we're listening.

You're sick of bad customer service

When I call, I get passed around and either hung up on or told to try a different department. I resorted to a letter through the post two weeks ago, but still haven't heard anything back. – Andrew

We've heard your complaints and know that you're sick of not getting the attention you deserve. Banks are forgetting their responsibility to serve their customers. Simply holding our money and keeping track of account transactions aren’t enough to keep us satisfied. When something goes wrong with your money, it shouldn't take an inordinate amount of time to resolve the issue.

With real people behind our customer service desk, we can personally tend to your queries. We won’t make you talk to a machine, pass you around from person to person, or make you wait for hours on end. We’ll be available to help you immediately because we know your time is valuable and we've been working on innovative ideas to make your time with us efficient. Our call center will be open beyond regular business hours but you can also email us at anytime or reach us by live in-browser chat. Whether it be phone, chat, or email, we’ll be more than happy to help.

FEES fie fo fum

When you ask what we are looking for in a bank, I can tell you that all we really want is a set of banking processes and fees that seem fair to both the bank and the customer. We have yet to find something where it all feels fair to the customer.– David Beegle

Today's banks no longer make their money off of the net interest margin which is the gap between interest paid and interest received. Banks now make 50% of their revenue from fees. Remember that huge overdraft fee you got just last week? Our previous post, "How banks work" notes “the average household in the US ends up paying over $200 annually in overdraft and bounced check fees alone”.

BankSimple doesn’t have hidden fees. All our services are free except for international wire transfers, expedited bill payments, ATMs used outside of our network, and merchant fees charged abroad. Unlike these other banks, we don’t want to keep you confused. We want to be as upfront as possible about what you are being charged for and why.

Give Me Innovation

What I'm really concerned about is having quick and easy access to all my finances via the web or my iPhone. I want a bank that understands technology and is not years behind.– Josh Holloway

Our mobile app for the iPhone and the Android allows easy access to your accounts as well the convenience of carrying out transactions. With your phone, you can find the nearest ATM in the BankSimple network to withdraw money sans fee. Say you need to deposit a check- simply take a photo of it and send it through our app. There will also be a mobile website for all smartphones to provide the same services.

Our website will be user friendly to help you better manage your finances. With an emphasis on usability, we make it easy for everyone. All your BankSimple records are accessible through the site from the first day you open your account, not just the last couple of years. Our analysis of your finances will give you a better grasp of how your money is spent and what you should do to save. Best of all, we make saving up for those big purchases easy with our goals program. Instead of making a new account for that car, house, or MacBook, we'll allow you to split up your account into partitions. You give us an amount and a date; we'll help you monitor your progress to swiftly reach your goal.

We want your feedback

What I'm really looking for is a bank that knows where I'm coming from, a bank that isn't worried about just profiting but also keeping me, the customer, excited about banking with them. A bank should strive to sell an experience for the customer.– David McPhearson

We really mean it when we say your thoughts are important to us. Anything at all, whether it be personal stories or things you'd like to see, is greatly appreciated. Shoot any of us an e-mail at michelle@banksimple.net, kristi@banksimple.net, or allen@banksimple.net with your thoughts and we would be excited to personally respond. If you're ready to move on to a new service that cares about your feedback, request an invite and we'll be in touch!

When ING Direct entered the market, it offered higher interest rates than brick and mortar banks. This attracted interest rate shoppers, who were using the service for large deposits to accumulate interest. The large balances are very attractive to banks, however rate shoppers are not sticky customers. Most ING customers don't use ING as their primary transactional bank. They just use it as a place to stick large deposits. As such, ING never had to invest in developing an online experience that supports primary banking. In fact, it was only 2 years ago that ING started offering primary banking services, like checking accounts. With out an investment in holistic customer experience, ING is only able to compete with rates. As they lower their rates, they lose customers. And in our current low-rate environment, the fraction of a percent difference between the middle and top of the pack is hardly enough to lure mainstream customers.

We are not targeting the rate shopper market. We may not have the best rates in the market, but we have a full featured, modern online experience which is completely different from the 1990's era interfaces you find with ING and others. We also invest our revenue in offline customer support to make sure that our customers are completely comfortable in using BankSimple to manage their day to day transacting.

The other big difference is that we are not a bank. We like it that way. Banking technology is antiquated and designed primarily to support accounting and regulatory compliance. By de-coupling our customer facing technology from the accounting systems, we can rapidly improve our experience, whereas ING is stuck in the 90s.

And by not being a bank, we don't suffer the pressures of managing a bank balance sheet. ING was very successful in gathering deposits by offering the best rates, but this led to immense pressure to increase their lending rates. As you increase the number of high interest loans made as a depository institution, a larger margin is captured. To boost their margins, ING aggressively invested in sub-prime mortgage backed securities. That did not work out well for them.

By not being a bank, but rather an organization that works with wholesale banks, our customers' interest becomes first priority. We cut out hidden fees and make more money while our customers save more money. We make no revenue by pushing our customers into debt. By aligning with our customer's wants, needs, and values rather than just focusing on profit, we believe that BankSimple's customers will rank high in satisfaction.

I realize that’s it’s been a long time since we’ve written. Our apologies. Be it raising capital, locking down partners, meeting with lawyers, or building a kick-ass product, it’s been an eventful few weeks. We’re ecstatic about the outpouring of e-mails and invitation requests we’ve received and we’ve added three interns to help us keep on top of those.

You might receive an e-mail from Allen, Michelle, or Kristi this week. We hope you’ll take some time to share your input and banking experience with us, especially with our forthcoming launch. The stories you’ve shared with us have been fascinating. And at times frightening. But even so they’ve all been exceedingly helpful.

Apathy

You'd figure with over eight-thousand banks, America would be awash with competing strong brands. It isn't. People aren't passionate about their banks. Nor do they have any reason to be. Why bother switching to Bank of America when you could get the same thing from Citigroup?

To counter this apathy, banks take one of two main marketing approaches. They either try to sway you with rewards or position the bank as a lifestyle brand. We think this is absurd.

Distractions

A recent innovation in American banking is 'cash back rewards.' Capital One's current campaign features vikings earning rewards. Vikings. This is how they try to catch your attention. And what exactly is the bank rewarding you for? Are they doing because they like you? Are they doing it to be your friend? And if so, how come they never know anything about me when I call customer support?

No. Banks aren't giving you rewards because they like you. With one hand they give you small rewards while their other hand is collecting much more through fees and charges.

Chase recently launched their Sapphire card in direct competition with the American Express brand. To establish this as a premier brand, they ran a gracefully crafted television campaign. Ads shot in black and white, with an attractive and financially successful looking middle-aged white couple. The ads talk about the product features (rewards, customer service), but sell the viewer a particular lifestyle. "If you bank with Chase, your life could be like this."

No. Banking with Chase will not make you look good in an open backed dress. I just want a bank that cuts the crap and gets out of the way.

Honesty

We have absolutely no intention of spending your money on high-budget ads. The best way to sell a product is to have a kick-ass product. And for us this means no hidden fees, fantastic online experience, awesome customer service and, a much simpler, personalized financial service.

Reality

While we haven't spoken too much on this blog about the financial product we are launching, the rest of our value proposition is exactly what the other banks say they offer. Plenty of banks offer 'Free'* Checking. They say that their online tools are great. They're not. They say that they're on your side. They're not. What can we do to cut through the crap? Is it enough to say "No, we really mean it" ?

We don't know the answers to these questions. Sure, we have plans. But we won't know for sure until we try. Our best bet is to stick by our motto: "don't suck."

By not sucking, we will win.

(*) Not really free unless you meet the impossible condition in really really small type. Like, so small, you can't possibly read it. But we have to put it here, so here it is. And you're not reading it.

A few weeks ago Josh and I spoke to Mike Konczal (aka Rortybomb), and he quoted us in a piece he wrote about what a customer is worth to a bank. Since then, there has been a lot of back and forth on the topic, with some pretty heated comments on the relatively boring topic of banking economics.

It can be quite difficult to understand banking, since banks are very different from most other businesses. For one thing, they are highly leveraged, with more than $20 in debt for every $1 of equity. Also, it can be hard to understand what banks actually do, since they don't make any real products. And a lot of people seem to think that banking is "free", probably because banks keep advertising free checking accounts, free direct deposit, free bill payment, etc.

The 3-6-3 rule

To fully understand how banks in the US make money, you need to understand a little about the history of banking in the US. Traditionally, banks made money by borrowing from depositors at low interest rates, lending that money at higher interest rates to borrowers, and pocketing the difference. Banking used to be heavily regulated, and the joke was that it was a 3-6-3 business; borrow money at 3%, lend it at 6%, and be at the golf course by 3 pm. Most banks also charged a monthly fee to customers for maintaining a basic account, but most daily transactions were free. But, overall, fees were low, constituting only 30% of total revenues.

The impact of deregulation

The wave of de-regulation, beginning in the late 70s, changed this relationship. Main street companies discovered that they could borrow from the bond markets more cheaply than they could from banks, putting the 6 part of the 3-6-3 model under pressure. And lots of new consumer products such as interest bearing checking, credit cards, money market accounts, home equity loans, student loans, etc became available. Banking became a lot more complicated, so bankers couldn't just head to the golf course at 3 pm; they had to actually work for their money.

Two things ended up happening: banks realized that the bigger they were, the more loans they could make. With deregulation, the big banks grew even bigger by acquiring smaller banks. Banks also realized that the easiest way to make more money was to simply charge consumers more fees. In fact, the best way to make money was to call a product "free" by eliminating any monthly fees, and then charging lots of fees on transactions.

How banks make money

As we explained to Mike, there are three main sources of revenue in retail banking today -

• Net interest margin: this is the difference, or "net", between the interest paid to depositors and the interest received from borrowers. At the moment, the Fed's low interest rate policy means that depositors get almost no money for their savings, and bank margins are huge. Many large banks are making margins over 4% at the moment, which are even higher than the 3% from the good old days of the 3-6-3 rule.
  

• Interchange: Everytime you swipe a card at a store, the merchant pays a small percentage of the money to the bank that issued the card, called an interchange fee. For credit cards this is around 1.7%, while for debit cards it is nearer to 1.1%. Given that Americans spend more then they save, it is a huge revenue stream for banks.

• Fees: These are the fees that your bank charges you, including ATM fees, overdraft fees, late payment fees, penalty fees, etc. The average household in the US ends up paying over $200 annually in overdraft and bounced check fees alone. Along with interchange, these fees add up to more than 50% of revenue for large banks.

Its important to understand that all this revenue is a real cost to the customer. Some of it may be an explicit cost, when its a fee that shows up on your statement. But even the implicit costs of interchange and net interest margin are real; after all, merchants pass the cost of interchange on to consumers in the form of higher prices, and you could be making 3% interest on your money by buying treasury bonds, which are safer than any bank. By leaving it in the bank at a lower interest rate, you are effectively paying the bank to hold your money.

Costs of banking

Of course, there are also a lot of costs associated with banking. Maintaining IT systems, marketing products, running ATM networks, manning call centers, and paying banking CEOs all cost money. However, all of those are dwarfed by the cost of maintaining branches, which can be over 50% of a bank's costs. That is the main reason why banks such as ING and USAA can offer both good products and good customer service; being online only means that they don't incur branch costs and can spend their revenue in more customer friendly ways.

The bottom-line

With the most recent banking crisis, a handful of banks now dominate the market. At their scale, basic retail banking is immensely profitable. Unfortunately for consumers, they don't really have a choice. Yes, customers can move their money to smaller banks. But smaller banks were also hit by the crisis, and typically have not invested in customer service beyond the branch. So while you may be able to find a small local bank to serve you, the cost of banking and experience may not be as convenient as at one of the big banks.

Mike's original calculation in his article showed about $500 in revenue for a household with $60,000 in income. With a 4% margin and $200 in fees, that could easily climb to $850+. And that ignores any additional products, such as CDs, money market accounts, credit cards and other lending. So Mike's original question remains valid - as a retail banking consumer do you feel that you are getting $850 worth of service from your bank every year? If not, may we suggest that you sign up with us.

Yesterday I finally closed all my accounts at Chase. I had primarily banked with them since moving to New York five years ago. Last year, a computer error at Chase resulted in thousands of dollars being withdrawn from my account by mistake. Sure, it was a 'mistake', but it still took them weeks to resolve it. Needless to say, this was a huge hassle. Soon after, I stopped using Chase and tried a range of different banks, settling on USAA. I guess it was laziness, but I never got around to actually closing down my Chase accounts. I just kept them around with zero balance. Woops.

Switching banks is much easier than you think it is. If you are unhappy with your bank, vote with your feet. However, there are a few traps that you need to watch out for. One of those traps caught up with me yesterday, finally prompting me to close down the accounts.

While my wife and I stopped using our cards, we forgot that our Amazon account automatically drew from one of our checking accounts. Having no money, this checking account was automatically overdrawn, piling up fees and drawing cash from our (unused) credit card. We only noticed when we received an automated alert from Yodlee. It costs a tiny tiny fraction of a cent to send an email. Yodlee and others send them out for free. Chase makes it a complete pain to set this up. We set it up for some accounts, but not for others. Its not too hard for a bank to be proactive, but instead they seem bent on improving their images with lavish marketing campaigns instead of taking steps to improve their service.

Banks make it as difficult as possible to switch. Imagine the outrage if a modern web company tried to enforce customer lock-in like banks. Luckily, there are some of us who believe that helping you do what you want is more important than customer lock-in. A few months ago we had the pleasure of meeting the CEO from Find A Better Bank. His service helps customers narrow down the selection of banks that are best suited to them. This includes some cool technology that reports on how long it takes to get to speak to a real person when you call customer service. They recognize that switching banks is hard, and we really look forward to the release of Bank Switcher, which takes care of all the lose ends when moving your money when you decide to do so. This includes importing all of your bill payees and finding recurring direct deposits and withdrawals.

What are your biggest fears when it comes to moving your money?

It is pretty clear to those who currently bank online how messed up banking technology is. The state of the art in American online banking is to take paper forms and reproduce them on the web. Even online banks with excellent product offerings such as ING Direct and USAA lag far behind modern startups in ease of use, features, and overall user experience. If you've used online bill pay or tried to make an transfer you may have wondered why it takes 3-5 days to transfer money between accounts. After all money in a bank is really just zeroes and ones stored in the memory of a computer somewhere. Shouldn't it be possible to move zeroes and ones around faster, especially in a world where Amazon or B&N can frequently get physical goods delivered for free in less than 5 days?

Banking can be simple, outside the US

Outside of America there are plenty of examples of simple, easy & fast banking. You can log in to La Caixa's website or walk up to their ATM in Barcelona and buy movie, opera, sports, and museum tickets. Over 6 million Kenyans transfer money in near real-time using M-PESA's mobile money transfer services. And 10 million Japanese use their cell-phones as credit cards to make retail payments. So why does banking technology in the US suck so bad? After all the ATM, cell phone, and credit card were all pioneered in the US. In fact, one of the first banks to use computers to track accounts was Bank of America, back in the 50s. And the US leads in innovation in most other fields.

Back-end technology is constrained by legacy systems

The technology infrastructure that powers banking in the US was designed a long time ago and is outdated now. Such legacy systems are the bane of banking everywhere, but especially so in the US. Some of the biggest problems:

• Checks: The US banking system started using checks in the 1860s, when they were quite an innovation. Unfortunately, checks are still a common payment mechanism here, while most of the world has moved on to electronic (and in some cases mobile) payments. The US has a lot of infrastructure built to handle paper checks, from magnetic ink readers to laws that limit check fraud. Checks remain the core of the American payment system. And banks are forced to continue processing checks, even though they are the most expensive way of moving money.

• ACH: As a new electronic payment system, ACH seemed like a great idea when it launched in the 1970s. Back then, the only way of moving around electronic money was to ship physical disks between banks, so that is what the Fed did every night. Since then, the internet has made it effortless to move data instantaneously, but the ACH system still relies on batch "posting" of files between the banks and the Fed. So while the file transfer happens over a computer network, the system design ensures that it takes a couple of days to process a transfer.

• Mainframes: These were the state of the art when many large US banks shifted to computerized back-end systems. Most banks continue to use them today, rather than take on the risk of disruption and enormous cost of trying to move millions of users to newer systems. So you may be able to check your balance on the web, but core processing is probably still happening on a nightly batch basis in mainframe somewhere, using code that was written 30 years ago.

Newer back-end systems and the Fedwire system are beginning to gain traction. But given the very large number of existing users, and the network effects inherent in payments systems, its going to be a long time before the majority of banks switch to better technology. And a big motivation for keeping the current system is that while people are used to real-time interactions, the batch banking system causes people to make mistakes - for example paying a bill before a salary check has been posted to the account, but after it was deposited. As long as banks make money by keeping customers confused there will be little motivation for banks to improve their technology.

Our approach is to hasten technology innvoation by decoupling financial operations from customer experience

The technology industry suffers from network effects—that’s partly why companies such as Microsoft, Apple, and Google have such huge market-share and grew so fast. But technology has very low barriers to entry, which means that the big guys have to constantly innovate to prevent startups from putting them out of business. Only the paranoid survive in technology. And the frenetic pace of innovation bring enormous benefits to consumers. That doesn't happen in banking. The huge barriers to entry mean that the big guys can continue to screw you over, secure in the knowledge that no startup can compete for your business. And of course the government will bail them out if they get into trouble. Here at BankSimple, we are hoping to shake things up a little. While we sit atop existing banking systems, we've got some great technology that hides much of the underlying nastiness and lets us bank in a more real-time fashion. We're building an online user interface that's simple, intuitive and easy to use; one that actually helps you understand your finances. We'll blog about some of our other innovative ideas in the next few weeks. Unfortunately, banking technology and regulation being what it is, we are still a few months away from opening our virtual doors to all comers. In the meantime, stay tuned, and we'll let you know when we open our doors. And keep the emails, tweets, and comments coming; we love hearing from you.

Starting a bank is hard

When we first started thinking about starting a bank we looked into the de novo banking process. This is the process by which new banks are formed from scratch. This is both expensive and, more importantly, it takes too long to launch. It is near impossible to innovate with an imposed three year launch delay. The best way to serve your needs is to launch quickly and to adapt our offering to meet your individual needs. Modern technology lets us do that. To achieve this we are planning to launch with a special corporate structure. We are bringing together a group of financial institutions to provide our underlying banking services. Our partner banks hold all deposits in insured accounts. By taking this structure, we get to market faster and get to benefit from some fantastic technology. While you may not have heard of our partners (which we haven't yet announced,) they have been quietly working on ways to bring the speed of technology innovation to the staid world of banking.

Your support keeps us going

Our technology is nearly ready, our partners are lined up and we are now in the process of raising funds to get everything in place for a launch later this year. As part of the fund raising process we ran a small marketing test to validate our belief in the demand for a new type of bank. Many of you first came across banksimple via that campaign. Having partially revealed our plans during the campaign we see no need to hide what we are up to. Transparency is something the banking system could use and we'll continue sharing more of our plans on this blog. You can get in touch with us via hello@banksimple.net or following us on Twitter at @banksimple. We love hearing from you and we try our hardest to personally respond to all of you. If you'd like to show your support, the simplest thing you can do right now is to sign up for an invite. Pledging your support validates our business model and ensures your place to start banking with us at launch.

We got a tremendous response to our St. Patrick's day Twitterview with Finextra. Much as we'd like to, we can't actually launch till we have a few back-end partnerships finalized. In the meantime, a fan suggested that we blog about the bank options that are open to people today. In the course of researching and building the concept behind BankSimple, Josh and I have opened accounts at most of the large banks (and quite a few of the small ones) in the US. We've also used/worked for banks in Europe, Asia, and Australia, so we have a decent perspective on the matter.

USAA is driven to innovate by its large mobile customer base

We feel, the best bank available to customers in the US today is USAA Federal Savings Bank. USAA started as an automobile insurer for servicemen in the 1920s, when they were considered a high risk group and couldn't get policies from traditional insurers. Since then it has expanded to provide both general purpose insurance and banking services. Given the wide distribution of US defence personnel globally, the company has always been a pioneer in using technology to reach and serve users. They were leaders in using the mail, phone, and now internet technology. So what makes USAA so great? With 3.8 million customers and only 3 branches in San Antonio, they are pretty much an online only bank. Their greatness lies in removing a lot of the little pain points which combine to make banking with large banks such a pain. Among other things, they let you

• Use any ATM you like to withdraw cash. USAA will rebate upto $15 in ATM fees fees every month. With the average ATM fee running about $2 right now, that means a once a week withdrawal should be comfortably covered.

• Deposit a check with a computer and scanner. Or if you have an iPhone/Android, deposit a check by taking a photo of it with their app. (Update: This feature is only available to customers who are also eligible for USAA Property & Casualty insurance, which is only available to those either in the armed forces, or family members.)

• Bank online through a web interface that is actually pleasant and easy to use. This is hard to quantify, but everything from signing up to paying bills to searching for stuff feels like it was built by a web developer, not somebody who took paper forms from a branch and copied them on to the web. Josh has a blog post about this.

Not great rates, but great service. And with low fees, you win

Now all of this doesn't come for free of course. USAA currently offers 0.10% APY on a checking account, and between 0.55% and 0,75% on the savings account. These rates are about average right now, but you can definitely get better rates if you shop around. Unlike many other banks, they aren't trying to attract customers with high interest rates and promises of "free" checking, and then charging them overdraft fees, late fees, and other hidden fees and charges. If you had $4000 in a savings account on which you were earning an APY of 1%, that works out to $40 a year. A single $35 overdraft fee can wipe out all your hard-earned interest for the whole year. With Americans averaging 12 overdrafts per household per year, USAA's free overdraft protection more than pays for itself. In the course of researching banks in America, we've spoken to lots of regular folks like yourself and asked them about their banks. Whenever we run into a USAA customer they are always happy with their bank. While they don't pay out the best rates for savings, they excel in customer service. Part of the bank's schtick, if you can call it that, is their quasi-governmental military branding. While they do limit some of their insurance products only to military people, they like to foster the impression that they are an exclusive club. It lets their customers feel like they are in a special club, getting a special deal. Of course, USAA doesn't offer a lot of the features that BankSimple will offer on launch, and despite being better than any other bank out there, USAA's website still doesn't match the usability and interactivity standards of the latest Web 2.0 startups. Being a typical bank at its core, USAA hasn't had the benefit of the ground up design process that drives BankSimple. We'll be revealing more about what we are up to soon. But if you can't wait and you absolutely must have a new bank today, sign-up with USAA. Don't be discouraged by the questions on your non- existent military background - their banking services are available to all. Select no on all the military questions, hit submit, and you will be banking with the best bank in the US (for now).

Two big issues are currently writhing around Washington: the reform of health care and banking. We're not going to touch healthcare, but banking reform is something we seriously care about. Current regulation creates high barriers to entry in retail banking, resulting in higher profits for existing banks. And it also results in less competition, higher costs for customers and an absence of innovation.

The repeal of Glass-Steagall

The Glass-Steagall Act of 1933, enacted in response to the events of the great depression, made sweeping changes to the way banks operated. Along with establishing the FDIC to insure deposits, the Act enforced a separation between commercial and investment banking. Since then, FDIC insurance has performed admirably in its primary function of preventing banking panics by ensuring that ordinary people didn't lose their deposits when banks got into trouble. Even with the losses faced by banks over the past 4 years, not a single retail customer has lost a dollar.

From its inception through to its repeal in 1999, the act prevented banks that held deposits for customers from operating alongside investment banks. This was supposed to shield depositors from the type of risks that investment banks actively engage in. And during this time, we had the savings and loan crisis which reminded us that non-investment banks are liable to risks all of their own.

Will re-enacting Glass-Steagall today fix any of the problems that caused the banking crisis? It's hard to say, especially since banking de-regulation was underway for 20 years before Gramm-Leach-Bliley was enacted in 1999. What is clear is that the avarice displayed by those on the investment banking side of the business has crossed over to the commercial side. Hungry for profits, banks are charging consumers incredible fees simply because they can get away with it.

Barriers to entry protect fee revenue

Banking is an immensely difficult business to get started in. (We'll follow up with a post about how we are approaching it). Barriers to entry include massive legal fees, reserve capital requirements and regulations that prevent anyone who isn't a banker from becoming a banker. To start a bank you need to bring together a large team of experienced bankers to form the management of any new bank. Try convincing a team of bankers to start a bank without fees. It's neither fun, nor likely to get you anywhere.

One particular fee that is being talked about right now is overdraft protection fees. Earning about $40bn in revenue for banks last year, it only represents a small fraction of all banking revenue, yet the recent backlash has been enormous. The intent of overdraft protection is to help out if you accidentally withdraw more money than you have. Instead of facing the shame of having a card swipe rejected at a store, banks will loan you the money (usually up to around $500). And they'll charge a sizeable interest rate on what should be a short maturity debt plus throw on an additional fee averaging $35 per card swipe.

A confused customer is a profitable customer

Overdrafts should be a rare occurrence. It is pretty easy for a bank to clearly communicate your available current balance. But look at the language that banks use to describe available balance, with additional complexity from pending bills that have yet to be posted, checks that have been authorized but not cleared and temporary holds placed on the account. These are not difficult concepts to understand if you take the time, but banks go out of their way to make it as hard as possible to really understand what is going on with your own money. They have no incentive to help you understand, as a confused customer is a profitable customer. We've joked that one of the greatest innovations in banking is ever-decreasing font size.

Overdraft fees earn banks huge sums of money, and the service itself costs very little to provide. Their ability to get away with this is protected by the regulatory burden which prevents fair competition. If this were the 1980's one might imagine how it could possibly cost a bank $35 to process an overdraft. With modern technology, these fees make absolutely no sense. Our entire retail banking system is an anachronism. In Kenya one can instantly transfer money between cities wirelessly using a cell phone, yet in America the most pervasive payment network (ACH) requires days to settle.

Technology has moved beyond where banking is. This can not last. For bankers, charging rates tied to yesterday's costs is wildly profitable. They will fight tooth and nail to maintain the status quo. Under pressure from congress, banks are now no longer automatically enrolling their customers in overdraft protection, but they are trying their hardest to persuade customers to re-enable the service, so that they don't lose that revenue.

Yesterday we received a letter from one of the many retail banks that we have trial accounts with. This letter urges us to voluntarily sign up for continued overdraft 'protection.' The bold text in red reads:

“Soon, we can no longer provide this coverage automatically”

“your everyday debit card transactions will be denied”

“NO FEE”

“NO FEE”

“NO FEE”

When you read the full terms of the letter, what you find is that you could incur up to $540 in fees in one week. Sure, its marginally better than the old rules, but hardly wholesale reform.

This is an uphill battle, but the time for change is now.

There are over 8,000 banks in America. The top four control 41% of deposits, up from 11% in 1995. On the investment banking side, margins are getting thinner and thinner as capital markets get more efficient. When hedge funds lever up, take on risks and explode, they disappear. Creative destruction at work. On the retail and commercial banking side, banks don't die, they consolidate. With a consolidated voice in Washington, banks see financial failures yet lobby the message they know best: That the status quo is fine.

It is a difficult battle for the public to win. We are fighting for change every day. Banking should be simple, boring & cheap. We look forward to launching a new type of bank, fueled by new technology, and shaking up the status quo.

Terms & conditions are a treasure trove of nasties

Old Red Car, by Danilo Prates

How many of us have really read the terms and conditions to our bank accounts? Even simple checking accounts have pages and pages of dense legalese, yet we sign up without reading any of it. At BankSimple, our team has read many of these documents and even we were surprised by the stuff that big banks can get away with once you sign up for their services.

These documents are long, boring and confusing for two interwoven reasons. A good chunk of it is pretty much required by the government in an attempt to protect us. Hidden amongst these disclosures are terms that outline all the games banks play to earn fee revenue. Regulatory boilerplate is the perfect place to hide this from consumers knowing that they'll never read it.

Every day main street America signs up for a sub-par banking experience.

Banks forgot that their job was to take care of your money

I'm the first to admit that I never read my checking account details until my first overdraft fee. And I have a graduate degree in accounting and work in quantitative finance. But I never thought it was worth my while to read all those terms. The way I saw it was that regardless of which bank I chose, in one way or another, competing banks would make up for any differences in fee revenue.

If it were my full-time job to manage my personal finances, I'd pay much more attention. And I'd expect to have a full suite of tools to help me do it. But I've already got a full-time job, and it should be the bank who looks after my money. That's what banks are for. At least, that's what they used to be for.

We're here to fix banking

Somewhere along the line banks in North America found themselves with an oligopoly -- a market dominated by a small number of similar players. Thanks to the apathy and confusion they bred in the market, banks no longer had to do best by their customers. They competed to earn as much as possible in fees knowing that we had no real choice between them.  They did this by ratcheting up fees for things that essentially cost them nothing and burying the details in confusing terms and conditions.

Banks also add features that only exist to make our lives difficult, earning fees whenever you make a 'mistake.' But the 'mistakes' aren't your fault. The complex products banks offer are fine if you want to dedicate your life to becoming a better bank customer, but who has time for that? If I love cars, I'll drive a stick shift, but if driving is just a way of getting around, I'm fine with an automatic transmission. Banks have stuck the American public with a manual transmission, yet technology exists to put your banking experience on automatic.

If you are deeply passionate about the retail banking experience, you should get in touch with us. We're building an awesome engine that helps our customers manage their finances, while respecting the way they should be treated. We innovate by simplifying, and we'll never add complexity to justify higher fees. We make banking simple, safe and designed with our customer's best interest in mind. We don't need to charge fees to pay for bonuses. Simpler banking is better banking and we'll launch soon.