The knock on neobanks (and personal financial management apps, for that matter) has long been that they are only useful to a certain kind of customer — young and single, with uncomplicated financial lives.
Simple, the neobank that started it all, is taking on that issue. Owned by BBVA since 2014 (though accounts have only recently started migrating from The Bancorp to BBVA Compass), Simple announced the beta release of shared accounts in a blogpost yesterday. Indeed, this use case was among the reasons Simple was conceived seven years ago, CEO and cofounder Josh Reich told Bank Innovation.
Why did it take so long? The answer is that a lot of work had to be done on the backend, Reich said. That included the move to BBVA Compass’s realtime core, but the Simple team has been working on some version of this account for three years.
Simple’s take on shared accounts is typically idiosyncratic.
Rather than being one account that is simply shared, Simple’s take has two individual accounts with a shared account between them. The shared account has its own debit cards, and the individual accounts remain private. The shared account contains goals and budgets — the things people love about Simple, as Reich put it. The shared account can be used by couples, two people running a business, roommates splitting rent, or even people going on a road trip together — really, any two people.
Any two people who are 18 or older, that is. Parents today know how difficult it is to open accounts for children. “We don’t have that part solved yet,” Reich admitted, but added that it is a solvable problem. It is a KYC (know your customer) challenge at its heart, and parents need to be empowered to pass KYC challenges on behalf of their kids. But more relevent to Simple may be boomerang kids, the adult children who move home after finishing school but lack income and need help setting up accounts.
The shared accounts only work with the newer accounts backed by BBVA Compass. All accounts are in the process of moving over from The Bancorp, but it’s done at the discretion of the customer, and BBVA Compass’s realtime core makes it easier, Reich said. Only one of the people in the shared account needs to be a Simple customer already. Here’s Reich in a blogpost yesterday:
With one account to share and two to use solo, you’ll have the flexibility to find a healthy balance of independence, cooperation, and transparency. Whatever that means for you and your partner, no matter what type of partnership you have. We’ve also extended the same design from individual accounts over to Shared, so you can easily see who spent what, where, and when, even with payments, check deposits, and transfers. We believe your money is yours, and that you should be able to easily answer questions about how it was used, and by whom.
Simple has grown 120% in the past year, and that’s essentially without marketing. The customer case has broadened from techies on the coasts to reflect the American consumer at large, which Reich takes as a strongly positive sign. Simple has been criticized for not releasing a lot of products recently, but it appears to be coming out of a head-down development period and customers will likely see an acceleration in new features in the coming months.
Will one of those be a loan product? Probably not, but it is something Simple is thinking about. Reich expressed admiration for Earnest, which began in student-loan refinancing but has expanded to other products since, and Max Levchin’s point-of-sale financing product Affirm, which also has wider ambitions, as shown by its acquisition of Sweep.
“The Lending Club and Prosper model is struggling,” Reich said. “But they’ve shown new ways to speak to and reach customers, which is relevant to Simple.” The neobank is thinking more along the lines of home loans — as a house down payment is among the most popular goals set by users — and helping helping deliver options to refinance and repay student loans, which many Simple customers have. In addition, small-dollar, nonpredatory lending is of interest to Reich. Of the LendUp fine that shook the fintech world this week, Reich tweeted yesterday:
Just because it’s “FinTech,” doesn’t mean it’s Good. Technology lowers the cost of Good, but doesn’t mandate it. https://t.co/XVGkEjwSHx
— Josh Reich (@i2pi) September 28, 2016
Simple shared accounts begin beta testing today. Users can join the waitlist here.
To learn more about fintech innovation, please join us in Tel Aviv in November for Bank Innovation Israel. Register here.Like This Post