Technical problems at Simple show the tricky position of the digital-only neobanks: They depend on systems (sometimes antiquated ones) run by others, yet they're the faceless names bearing responsibility for problems.
Customers of Simple, a unit of BBVA, have complained in recent weeks about delays and failures in scheduled payments and sporadic problems with the Simple app's "Safe to Spend" feature. Although Simple and BBVA executives did not respond to requests for interviews, a section of Simple's website visible to customers acknowledges several "known bugs."
Simple's difficulties illustrate the challenges all financial services companies encounter when they attempt to provide real-time payment and account information while relying on legacy systems and payment networks that run at a far slower pace.
"What Simple is realizing is that even though they started as a 'nonbank,' they face the same challenges as a bank in terms of processing and customer service," said Jacob Jegher, research director at Celent.
Most financial services companies experience outages and glitches on their websites and mobile apps from time to time. Most famously, in September 2012, almost a dozen banks suffered hours of downtime on their sites due to distributed denial of service attacks. Last February, Bank of America and Citi had significant outages in their digital channels.
But digital banking outages are also a symptom of a broader problem in the financial services industry: legacy systems and antiquated payment networks that fail to deliver the kinds of real-time updates mobile app users expect.
"Online and mobile account management are a window onto the dirty laundry of the bank," said Chris Musto, a managing director at the research and consulting firm Novantas. "Banks and brokerages used to be able to manage customers through outages, glitches and other issues simply by not revealing it all to them."
When online and mobile banking services promise real-time updates on balances and payments, for instance, challenges in the bank's core processing system and other parts of the plumbing can suddenly be exposed.
"Consumers could become aware of it before the bank is aware of it," Musto said. "This is often chalked up to problems with internet and mobile banking not being ready for prime time when in fact they're doing their job and showing you what the bank knew about you."
The "known bugs" listed on Simple's website include one that affects the way payments are displayed.
"Payments may disappear from the 'Scheduled Activities' section of the app during processing," reads the customer disclosure. "This display issue does not affect their processing, and the payments will reappear in the 'Activities' list when they are fully processed, which may be several hours later. Also, some Payments may have been dissociated with their respective Goals and deducted from your Safe-to-Spend twice. To correct your Safe-to-Spend, delete and re-schedule the payment or transfer the funds from the goal back to your Safe-to-Spend."
And at times the sum displayed is greater than the available balance, the Simple website acknowledges. "This occurs when a settled charge is not deducted from the displayed balance." Another problem the website reveals is that check holds may remain visible after a check has cleared.
A Simple customer whose payment did not go through after several email exchanges with customer services was eventually advised by a rep to find another way to make the payment. Other users have shared complaints about these glitches on Twitter.
The state of @simple systems are atrocious. Double entries, lost bill payments, deleted scheduled payments, and 48 hour customer service.
Coryndon luxmoore (@cluxmoore) September 14, 2014
@simple 39 days after maintenance how can I still be missing 2 transactions in activities???
John Martin (@jsmuga) September 14, 2014
Simple has fallen victim to technical difficulties before. In early August, CEO Josh Reich issued an apology on Simple's blog in which he said a small number of customers had experienced serious issues with their Simple accounts. Simple had recently replaced its partner processor with a new transaction processing system Simple spent 18 months building in-house, Reich said, to improve Simple's ability to innovate by giving it more control over its technology and to improve system stability. The problems customers experienced, he said, were mostly due to scheduled downtime during the switchover to the new system.
Musto gives neobanks like Moven and Simple credit for creating value-added products that take advantage of real-time customer information.
"The challenge is that it raises the stakes for having that information correct in real time," he said. "Sometimes the reason it's not correct in real time is in your control, but sometimes it could be issues with a payment network or the inadequacy of the underlying information."
And any company that relies on a vendor for its processing is at the mercy of that third party for any changes or fixes - and that vendor might have 3,000 other clients with very different priorities.
"No one is immune to technical challenges or difficulties. The question is, how quickly can they be fixed" Jegher said. "If you're relying on third party providers, your hands are tied. That's not a fun place to be whether you're a Simple or a large bank."
Such situations can bring about some soul-searching.
"You're faced with, what do you build in house, what do you go to vendors for, how do you work with payment networks and other systems that not moving as quickly in self-service as fast as you would like them to?" Musto said.