Separating Customer Relationships from Banking and Investing
Aug 8th, 2011 by David Svet
Bankers and advisors will almost always tell whomever asks that their business is founded on solid customer relations. They’ll tell you emphatically that financial services is a customer relationship business. It’s founded on trust and the only way to truly trust someone is to know them personally. But the reality of the matter is that the relationship between consumers and their bank is somewhat prickly. Banks speak banker. Advisors speak broker. Statements aren’t very simple or people friendly. Fees are confusing and hard to anticipate. The need for security and commitments for repaying loans make the environments a bit cold. The need for selling make the relationship tense. All of these things add to strained relationships. So much so that Ally Bank is able to spoof it to their advantage with their, “I love my bank,” ad campaigns.
If so much of the operational side of financial services gnaws at the customer relationship side of the business, why do we continue like this? A startup called BankSimple has set out to answer that question. Their mission is to separate customer relationships from banking.
BankSimple is a customer service business that provides access to your money and financial records from an app. They aren’t a bank. They aren’t a processor. They are a brand name that provides customer service. They partner with banks and processors to manage transactions and provide FDIC insured products splitting revenues with their partners. Their partners provide transactions, nothing more, nothing less. They give up the entire customer relationship in what has always been hailed as a customer relationship business. BankSimple’s customers will be promised an extraordinary customer experience, free of harsh penalties and fees, ripe with warm human relationships via social media channels and an elegant, easy to use banking app that is supposed to change how we manage our money for the better.
Will it work? Maybe. It lets banks and processors do what they have mastered and outsource what they’ve never really done well - regardless of their claims otherwise. It also lets BankSimple focus on one aspect of a very complex business. Maybe it’s time for a new customer relationship model in financial services. It might work for everyone. If it works in banking for BankSimple it may spread to the investment side of financial services where others are exploring alternative options such as Smart401k and the Mutual Fund Store.
Is BankSimple the first to try this? Not really. Mint, SmartyPig, and a handful of other startups have taken a swipe at alternative financial services models with mixed success. But now we have a convergence of technological change in the form of mobile computing intersecting with volatility in the financial sector. The opportunity is there. It will be interesting to see if the financial services sector will be willing to surrender something it holds so dear and if not, how they will respond.
