Imagine waking up to an email from your bank saying that all your accounts will be shut down in a month, through no fault of your own. Seems unlikely, doesn’t it? How about getting that same email from a digital-only startup bank? Somehow — despite the increased popularity of fintechs — this seems more likely (or acceptable), and Simple has just proved that.
Last week, Simple sent a note to a portion of its customers, notifying them of account closures due to “logistical issues” the company faced when transferring current customer accounts to BBVA, its new partner bank. Customers are welcome to reapply for accounts, the bank said.
In other words (or in the words of the bank’s CEO, Josh Reich), Simple did not meet an internal deadline, so it’s firing 0.7% of its customers, but no exact numbers have been disclosed, company spokeswoman told Bank Innovation.
The issue first came to light through a tweet by Aaron Frank, CEO of the credit card startup Final:
— Josh Reich (@i2pi) April 14, 2017
Here’s the background: Simple, which until recently held all of its accounts with the Bancorp Bank, was acquired by BBVA in 2014 for a reported $117 million. Since then, the bank has been hard at work transitioning customer accounts to the new partner bank — a process, which, as previously described by Simple’s own spokeswoman, is a “terrible experience” for customers, and is very much like “opening a new bank account” entirely (which is exactly what’s happening.)
In February, the company reportedly had already transitioned 87% of its total customer accounts to BBVA, and now, about two months later, the accounts that have not yet been transferred for whatever reason will be automatically shut down. Simple reportedly began with more complex (valuable?) accounts first. For the affected customers that wish to keep banking with Simple, the bank suggests applying for a new account (again).
“All impacted customers were sent notice (and followed up with via personal calls from our customer relations team) at least a month in advance of the transition,” the spokeswoman told Bank Innovation, though Frank’s own account contradicts this. “We’re offering 1:1 support to help them make the switch—either to another bank or into a Simple account backed by BBVA Compass.” With past glitches from the neobank fresh in our collective memory, the bank’s promise of a seamless banking experience — meant to compete with traditional players — is becoming less and less trustworthy, and that’s a problem not just for Simple.
In fact, according to a recent study by Capgemini and LinkedIn, only about a quarter of customers say they trust their fintech provider. That’s from a survey of 8,000 customers in 15 countries. From the report: “Many fintechs lack the transparency required to earn the trust of their consumer audiences to capitalize on these opportunities.”
So maybe more transparency (and a better heads-up) could help avoid this Simple mess altogether?
@AndyOdom7 We're so sorry to hear you're impacted. Each case varied, and we're looping folks in as best we can. Here to talk if you need us ^DH
— Simple (@simple) April 15, 2017
Switching processors is hard (just ask Revolut), and planning for “unknowns” isn’t always possible. “Simple wasn’t the first banking or payment company to undergo a processor migration, so we knew that historically these were challenging moves with a lot of technical and logistical ‘unknowns,'” according to the spokeswoman. “We planned for what we knew, and what we didn’t know, and while some of these exceptional scenarios weren’t anticipated we have the team and talent in place to support and help. We’re now in the final stages of the migration and our top priority is helping our customers.”
But all a distrustful millennial can think now is: This wouldn’t happen at Chase.5 - Readers Like This Post