The transaction fee-driven autumn of discontent among big banks' customers would seem to be tailor made for BankSimple, whose founders have spent lots of time over the past year or so writing blogs and selling the idea of frustration with large banks as a consumer-acquisition play.
"The timing of the [big bank debit-fee issue] is unfortunate for America but fortunate for us," says Josh Reich, BankSimple CEO and founder.
But as the startup relocates from Brooklyn to Portland, Ore., and launches with an initial set of consumers, BankSimple is not going out of its way to use the controversy over new debit fees from Bank of America Corp. and Wells Fargo & Co. as a hammer in marketing pitches. Beyond the website, which makes no mention of specific banks but does say "no surprise fees ever" on the landing page, BankSimple instead is counting on awareness of its model to draw the distinction with larger banks.
"We're not going to market that we don't have debit fees; we are marketing our services," Reich says.
The difference is subtle, given that BankSimple was founded partly in response to the anger that accompanied the financial crisis and uses a strategy designed to allow the firm to exist in a low fee environment.
BankSimple offers a venue to access mobile and Web-heavy financial services with few fees via debit card relationships. It is not a bank; it has entered into partnerships with The Bancorp of Wilmington, Del., and CBW Bank of Weir, Kansas, that will hold BankSimple's deposits. BankSimple has also entered into partnerships with Allpoint for free access to a national network of 43,000 ATMs, and Andera, which provides an online account opening and funding engine. The debit cards will carry the Visa brand.
BankSimple has signed up about 70,000 customers and is in the process of issuing its first cards.
While BankSimple is not making big bank debit fees a big part of its public posture, the tech glitches that have recently affected Bank of America, which suffered periodic Web outages earlier in the year, are just as important a lure for BankSimple as the debit issue.
"They're really not two separate issues; it's the same issue," Reich says, adding experience is part of the problem for the larger banks. "…$50 [about 10 months of a $5 debit fee] doesn't make a huge difference in a year to me. What kills me is if I try to do something online at my bank, and it takes up more of my time because I can't do it and have to go to a branch."
Another Web-centric financial-services provider, Bank of Internet, also is not naming names in the debit-fee controversy, but it is pushing its status as a largely branchless, low-fee provider of financial services.
The $2 billion-asset Bank of Internet recently launched a new rewards checking account with no monthly fees, unlimited ATM reimbursements, free bill pay and purchase rewards, as well as free access to FinanceWorks money-management software.
During a recent weekend, the bank got about 200 applications for a new account, up from the normal weekend level of about 30, he says. "We've taken an attacker mentality, to 'liberate' customers," says Garrabrants, who says Bank of Internet markets actively on Facebook and other online venues.
Bank of America says the changing economics and regulations have led it to charge a $5 monthly fee for the usage of debit cards for purchases (
A Wells Fargo spokesperson issued a statement saying it notified its customers of pending debit card fees via monthly checking statements in August. The bank, which has also faced heat recently
