Banking convenience is becoming an increasingly important consideration as new financial services providers look for ways to simplify the customer experience. BankSimple is approaching the market with the premise that banking should be easier, using technology and mobile services to create a more streamlined relationship between consumers and their financial accounts.
However, making banking simpler can also raise questions about how much consumers understand about the institutions and technology supporting their accounts. When a financial service operates as an interface while an established bank handles the underlying banking functions, customers may need to understand where their money is actually held and what happens if the technology provider experiences problems.
For quite a while now, I’ve been readingabout BankSimple and their value proposition -“Banking Shouldn’t beHard.” Each time I read an article or see an interview from one oftheir executives I have to wonder what is interesting about this?Is banking difficult? But, I think this question of simplicity isactually a red herring – the real question is – how convenientshould banking really be?
Just as a reminder, a few years ago getting a mortgage was verysimple. Some people didn’t even need an income. How’d that workout? At the same time, lots of responsible lenders continuedprocessing mortgage applications with all those annoying andinconvenient paperwork requirements. I’m not criticizing BankSimplesince I don’t know what they propose to offer consumers to makebanking simple, (surprise! mobile appears to be a big part of theirstrategy). However, as far as I understand it, BankSimple isn’t abank; it’s a service provider front with an actual bank operatingbehind the scenes.
So, here’s where it all starts to become a little foggy if I’m aconsumer. For example, if BankSimple “fails” what happens to myaccount? Is this something that modern consumers really think aboutor are we becoming so tolerant of being in the cloud that we simplyassume that we’re safe?
I’m interested in seeing how BankSimple deals with this question,but I suspect they probably won’t because that would be difficultand contrary to their message. I hope they prove me wrong – I’llfollow up when the launch takes place.
The emergence of companies like BankSimple highlights a broader question about the relationship between banking convenience and consumer confidence. Customers naturally want financial services that eliminate unnecessary complexity, but simplicity should not make important information about their accounts more difficult to understand.
That distinction becomes particularly relevant when the company providing the customer experience is not itself the bank holding the deposits. Consumers interacting primarily with a technology provider may perceive that company as their bank even though another financial institution is responsible for the underlying account. That arrangement can create questions about responsibilities, protections, and what happens if the service provider encounters operational or financial difficulties.
Mobile technology could make everyday banking substantially more convenient by giving customers easier access to account information and financial tools. At the same time, financial services involve decisions and safeguards that cannot always be reduced to the simplest possible interaction. Transparency about how an account works and which institution ultimately holds customer funds remains important.
BankSimple’s approach therefore represents more than an effort to improve a banking interface. It provides an early example of how technology companies can separate the customer experience from the underlying financial institution. As these models develop, banking convenience will need to be balanced with transparency and the trust consumers expect when managing their money.