When ING Direct entered the market, it offered higher interest rates than brick and mortar banks. This attracted interest rate shoppers, who were using the service for large deposits to accumulate interest. The large balances are very attractive to banks, however rate shoppers are not sticky customers. Most ING customers don’t use ING as their primary transactional bank. They just use it as a place to stick large deposits. As such, ING never had to invest in developing an online experience that supports primary banking. In fact, it was only 2 years ago that ING started offering primary banking services, like checking accounts. With out an investment in holistic customer experience, ING is only able to compete with rates. As they lower their rates, they lose customers. And in our current low-rate environment, the fraction of a percent difference between the middle and top of the pack is hardly enough to lure mainstream customers.
We are not targeting the rate shopper market. We may not have the best rates in the market, but we have a full featured, modern online experience which is completely different from the 1990’s era interfaces you find with ING and others. We also invest our revenue in offline customer support to make sure that our customers are completely comfortable in using BankSimple to manage their day to day transacting.
The other big difference is that we are not a bank. We like it that way. Banking technology is antiquated and designed primarily to support accounting and regulatory compliance. By de-coupling our customer facing technology from the accounting systems, we can rapidly improve our experience, whereas ING is stuck in the 90s.
And by not being a bank, we don’t suffer the pressures of managing a bank balance sheet. ING was very successful in gathering deposits by offering the best rates, but this led to immense pressure to increase their lending rates. As you increase the number of high interest loans made as a depository institution, a larger margin is captured. To boost their margins, ING aggressively invested in sub-prime mortgage backed securities. That did not work out well for them.
By not being a bank, but rather an organization that works with wholesale banks, our customers’ interest becomes first priority. We cut out hidden fees and make more money while our customers save more money. We make no revenue by pushing our customers into debt. By aligning with our customer’s wants, needs, and values rather than just focusing on profit, we believe that BankSimple’s customers will rank high in satisfaction.