Simple Tries a New Banking Approach

by Mercator Advisory Group 0

From Business Insider:

Tristan O’Tierney is lucky, and not just because he’s the cofounder of Square, a hot payments startup that could already be worth billions. As of today, O’Tierney is one of the few people holding a new debit card from Simple, another hot financial-services startup.

Simple is ramping up on mailing out cards to the more than 100,000 people on its waiting list, CTO Alex Payne told Business Insider. Simple’s been in invite-only mode since last November, but from reports on Twitter, people who put themselves on a waiting list in early 2011 (presumably like O’Tierney, who says he signed up “quite awhile ago”) are now finally receiving the debit cards that will let them use Simple.

In May, Simple launched an iPhone app—but only people with accounts could use it.

“We’ve been sending out more invites, but we still have many more on the list to go through,” Payne told us via Twitter, who notes that the company’s “never really been ‘in beta.'” as some have described it.

It’s not a public launch. People who sign up today are being told to expect a six-month wait. That exclusivity should continue to feed the buzz around Simple.

As excited as people are about Simple, we as longtime observers of online banking don’t find it that novel. First, Simple makes a lot of the fact that it’s a technology company, not a bank. Instead, its service accesses bank accounts actually held by a partner, the Bancorp Bank. That’s identical to the structure that Elon Musk’s, a predecessor company to PayPal, used with First Western National Bank in 1999. (Finance nerd alert: We still have our original debit card. Simple’s is a lot prettier.)

It will be interesting to see how such products fare in the near future. As noted, many of the features are an amalgam of products and features introduced before in a repackaged format.

There are also several potential concerns that potential customers will want to consider, most notable privacy and fraud issues. While there are potential issues with all service providers, banks and other financial institutions are generally considered trustworthy and vigilant in these areas, much more so than most pure-play technology companies.

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