Simple: Is the future of banking your smartphone?

A screen shot from the website Simple

In today's world, the banking experience is completely rebuilt. Long gone are the days of driving up to a window and getting a real live teller to help you cash your check.

Some big banks are replacing tellers with ATMs, while some people are avoiding banks completely, instead going to payday lenders and check cashiers.

But another route? Technology.

Simple is a tech company started by Josh Reich and Shamir Karkal that hopes to eliminate the hassle associated with traditional banks. "We think of ourselves really as a branchless banking service," says Reich. Customers get a card and access to ATMs, he explains, but "what we really do is provide customers with an informative web and mobile experience."

All customers of Simple must have a smartphone, Reich says. "We knew from day one that people's wallets were right next to their phones, and we wanted to close the information loop," he says. If you don't own an iOS or Android device, you can't access Simple. 

What about the dangers of getting hacked?

"We take security very seriously, and the mobile phone allows us to be even more secure," he says. A mobile phone allows the company to provide services that traditional banks only give to their high-end clients, like multi-factoral authentication.

He says that they are able to reduce costs because of their technology.

"If you look at banking technology in 1990, it used to cost a bank around $250 a year in technology costs just to keep an account around. In 2010, that cost was still $250. Banks have invested so little in technology that they haven't been able to reap any of the cost savings." 

Cost savings that, hopefully, could be passed on to the consumer.

About the author

Carmen Wong Ulrich is the former host of Marketplace Money, APM’s weekend personal finance program.
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In the interview: Josh Reich: "We bring features that banks only offer to high-end customers and give them to EVERYONE"
Not true at all--I don't own a smartphone so I can't get these features. Not EVERYONE can afford a monthly smartphone fee--and not everyone who can afford one wants one.

If that's the trend in banking, I find it dismaying. It's one further step towards dehumanizing our contacts with the people and institutions we depend on. I have banked in many communities and have always felt most comfortable when I have been able to put faces on the people who are watching my money. I know the tellers I deal with on a first name basis, I greet the loan officer who handled my mortgage as I walk in the door, and I know that I can stop and have a friendly 2 minute conversation with the bank president -- whose door is always open. I also know that the bank depends on its conversations with people in the community, to stay in touch with local issues and concerns. Personal interactions are therefore vital to building my trust with the bank and to the bank's long-term fit with the community. If my interactions are going to be handed off to some faceless computer program on the other end of a smart phone, I'll take my banking somewhere else.

I understand all the marketplace broadcasts are 'shows' but I'm disappointed there is not much investigative reporting on things people need to be weary of. I live with a young computer geek who believes robots are the best thing for the future because it will free up people to do different types of work. He couldn't answer when I asked him, "What kinds of work would all of those unemployed people now do?" Several years ago, one local bank tried to charge its customers for coming inside the bank to bank with a teller. I left that bank and won't put all of my money into a bank that does not employ flesh and bone humans. Honestly, robots could do these radio shows too. But something essential--human expression and emotion and the ability to adjust to the moment--would be missing.

What is happening is quite simple. Banks want to move the majority of their customers to technology because it reduces their costs. Meanwhile they are increasing the amount of personal service they give their high networth customers -- who represent real profit opportunites for the banks. So, if the banks can get the proletariat to like tech they will be laughing all the way to the bank.

Great insight Mark. Feed us business propaganda long enough for it to become a staple and we won't realize we are poisoning ourselves.

I bank with USAA, it's virtual for me and I love it, they have no fees, credit my account for ATM fees and I can deposit checks either thru UPS store or via my smartphone. I went in to a bank last weekend and was held hostage waiting for the teller. virtual banking is way better, just as Simple said, you can bank when you're ready, not when the bank is ready.

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