November 14, 2012
by Joshua Reich

Simple and CFPB Collaborate to Explore How Goals Encourages Saving

simple guilloche

Shamir, my co-founder, and I are in Mountain View, CA at a public event on entrepreneurship and innovation hosted by the Consumer Financial Protection Bureau (CFPB), a new federal agency created as part of the Dodd-Frank Wall Street Reform Act following our nation’s recent financial crisis.

As CFPB Director Richard Cordray outlined during the event this morning, Simple will be collaborating with and working alongside the Bureau on Project Catalyst, an initiative designed to support consumer-friendly innovation and entrepreneurship in the marketplace. The Bureau views this project as an important means of fulfilling its mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to give all consumers access to fair, transparent, competitive, and innovative markets. Through Project Catalyst, the CFPB will engage more closely with companies and entrepreneurs who are at the front lines of innovation.

The CFPB is the first federal government agency tasked solely with watching out for the interests of the American consumer in the financial marketplace. It is this shared vision of making the financial system work for consumers that we think makes Simple a natural fit for this collaboration.

When Shamir and I began building Simple in my Brooklyn basement, we knew that our idea of straightforward, old-fashioned banking built on modern technology would go against the prevailing banking wisdom, simply by having the consumer at its core. We believed that Simple could make a profit without misleading or confusing our customers. We theorized that by helping our customers understand their financial data, we’d be helping them make better choices about their spending. These are the values that continue to guide us as we build Simple into a robust company with thousands of customers. And our data suggest Simple is indeed benefiting our customers–helping them become smarter spenders and better savers.

For example, our Goals feature addresses a real problem American consumers face: volatile spending habits. We spend more when we have more, and less when we have less: we buy our friends a round of drinks on payday, forgetting that we were living on ramen the day before. In other words, Americans’ spending fluctuates greatly from one payday to the next. This makes it difficult to save and leaves us little buffer in the event of an emergency–it makes us less financially secure. We designed Goals to help our customers budget by setting aside money in spoken-for chunks, or effortlessly save for larger purchases. Our data on this are truly exciting: we see that daily spend variability decreases by 30% for customers who use Goals. Less fluctuation means more savings over time, and therefore more financial security.

We’ve heard from so many customers who have used Goals to save more and faster than ever before–$7,800 on average. When you compare that to the average household credit card balance of $7,100, Simple feels like a huge win: instead of paying interest, our customers are earning interest through our partner bank.

We are proud to collaborate with a federal agency whose mission is aligned with the reasons we started Simple three years ago. I know we say this a lot around here, but today it feels so true: it’s a good day.