by Shamir Karkal

The Best Bank in the US

We got a tremendous response to our Saint Patrick’s Day Twitterview with Finextra. Much as we’d like to, we can’t actually launch till we have a few back-end partnerships finalized. In the meantime, a fan suggested that we blog about the bank options that are open to people today. In the course of researching and building the concept behind BankSimple, Josh and I have opened accounts at most of the large banks (and quite a few of the small ones) in the US. We’ve also used/worked for banks in Europe, Asia, and Australia, so we have a decent perspective on the matter.

USAA is driven to innovate by its large mobile customer base

We feel, the best bank available to customers in the US today is USAA Federal Savings Bank. USAA started as an automobile insurer for servicemen in the 1920s, when they were considered a high risk group and couldn’t get policies from traditional insurers. Since then it has expanded to provide both general purpose insurance and banking services. Given the wide distribution of US defense personnel globally, the company has always been a pioneer in using technology to reach and serve users. They were leaders in using the mail, phone, and now internet technology. So what makes USAA so great? With 3.8 million customers and only 3 branches in San Antonio, they are pretty much an online only bank. Their greatness lies in removing a lot of the little pain points which combine to make banking with large banks such a pain. Among other things, they let you

  • Use any ATM you like to withdraw cash. USAA will rebate up to $15 in ATM fees fees every month. With the average ATM fee running about $2 right now, that means a once a week withdrawal should be comfortably covered.
  • Deposit a check with a computer and scanner. Or if you have an iPhone/Android, deposit a check by taking a photo of it with their app. (Update: This feature is only available to customers who are also eligible for USAA Property & Casualty insurance, which is only available to those either in the armed forces, or family members.)
  • Bank online through a web interface that is actually pleasant and easy to use. This is hard to quantify, but everything from signing up to paying bills to searching for stuff feels like it was built by a web developer, not somebody who took paper forms from a branch and copied them on to the web. Josh has a blog post about this.

Not great rates, but great service. And with low fees, you win

Now all of this doesn’t come for free of course. USAA currently offers 0.10% APY on a checking account, and between 0.55% and 0,75% on the savings account. These rates are about average right now, but you can definitely get better rates if you shop around. Unlike many other banks, they aren’t trying to attract customers with high interest rates and promises of “free” checking, and then charging them overdraft fees, late fees, and other hidden fees and charges. If you had $4000 in a savings account on which you were earning an APY of 1%, that works out to $40 a year. A single $35 overdraft fee can wipe out all your hard-earned interest for the whole year. With Americans averaging 12 overdrafts per household per year, USAA’s free overdraft protection more than pays for itself. In the course of researching banks in America, we’ve spoken to lots of regular folks like yourself and asked them about their banks. Whenever we run into a USAA customer they are always happy with their bank. While they don’t pay out the best rates for savings, they excel in customer service. Part of the bank’s schtick, if you can call it that, is their quasi-governmental military branding. While they do limit some of their insurance products only to military people, they like to foster the impression that they are an exclusive club. It lets their customers feel like they are in a special club, getting a special deal. Of course, USAA doesn’t offer a lot of the features that BankSimple will offer on launch, and despite being better than any other bank out there, USAA’s website still doesn’t match the usability and interactivity standards of the latest Web 2.0 startups. Being a typical bank at its core, USAA hasn’t had the benefit of the ground up design process that drives BankSimple. We’ll be revealing more about what we are up to soon. But if you can’t wait and you absolutely must have a new bank today, sign-up with USAA. Don’t be discouraged by the questions on your non- existent military background - their banking services are available to all. Select no on all the military questions, hit submit, and you will be banking with the best bank in the US (for now).