Josh Reich, CEO and founder of Simple, a Portland, Oregon-based digital banking startup, has a new vision for how banking should work in an era where consumers would rather make transactions on their phones than at a teller’s window.
Built using its partner Bancorp’s banking infrastructure, Simple is an online-only bank that pairs a Visa card with an app and online banking services, which has already done over $1 billion in transactions.
Ahead of the Grow Conference in Vancouver (Aug. 14-16), where Reich is speaking about the future of money, Marketing asked him about banks’ mixed successes in mobile, why he hasn’t sold his company to a big bank and what makes the Starbucks app one of the best mobile payment systems yet.
Simple sets out to deliver a pleasing mobile/web banking experience. What problems have banks had going mobile?
One of the key tenets of mobile is real-time. You can have a mobile application, as all the large banks do, and consumers can see what happened in their bank account three days ago, yet what happened over the last two days hasn’t yet arrived through their processing systems.
They’ve sort of checked the check boxes –”yes, we have a mobile application,” but the average mobile banking app from a large bank is opened maybe once or twice a month. Our customers are opening the Simple app more than two times a day and that’s largely because the information comes in real-time.
Have banks approached you to use your technology under their brand?
It’s a common request. But the thing is, you can take our technology in isolation and you’ll have a great technology experience, but Simple is a lot more than a technology. If you take the Simple technology and add a $30 overdraft fee and a $10 payment fee and add terrible customer service, you’re not getting the same thing. We think of it as a holistic service.
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Your business puts a lot of weight on mobile banking, but what about mobile payments – is that a space you’re watching closely?
We still don’t see a significant amount of mobile payments. In fact, the largest mobile payment system in North America is the Starbucks application. Starbucks is certainly a large retail chain, but it’s not a significant percentage [of all transactions].
Transactions primarily happen by card, cash or check. We’ve seen some mobile payments in the form of app downloads and in-app purchases and that sort of stuff, and that’s new and a growing part of the economy, but it doesn’t really speak to the real economic questions.
Speaking of the Starbucks app, what do you think of it as a mobile payment system?
It’s a fantastic model. It’s solving problems for Starbucks and for the consumers, plus it’s cutting out the payment system. It’s what’s called a closed-loop product – it doesn’t involve the banks. Starbucks essentially gets customers to pre-buy its coffee, and it’s very concerned about making sure people can get through the checkout as quickly as possible. Using the app is actually a relatively quick way to pay for coffee. Plus, customers get loyalty points. It gives you a sense of how many problems you need to solve to have a successful payment solution.
Your customers are mobile first, but they also belong to a niche group of early adopters. What’s holding back the mainstream adoption of mobile payments?
Behavioural change is difficult when it comes to changing how people pay. We haven’t seen significant adoption of mobile payments because no one has nailed the user experience. No one wants to be the person fumbling with their iPhone at the checkout to a cashier who doesn’t know how to use the terminal while trying to check out for groceries.
There’s a lot of psychology and sociology you have to solve before you can even get close to solving the technological problems.
Simple is billed as a digital-first solution to banking. How is it different from a traditional bank?
We recognize customers are heavily mobile, tech savvy and have a set of expectations for their technological experience that most banks don’t provide. What we’re trying to do with Simple is replace people’s banks with a Simple [debit/credit] card and a fantastic online experience, with a great mobile experience and great customer service.
How do you use data to improve the banking experience?
From the ground up, the way we store our data is more modern and enables things like infinite scrolling, better search and an experience in which customers can augment their experience with more data.
As an example, when you log in to Simple, you get an infinite scroll, similar to the way on Twitter loads new tweets when you get to the bottom of the page. If you log into a large bank, you might see 10 days worth of transactions and you could click slowly through multiple pages to get 60 days, then everything else is a downloadable PDF.
