Some banks in the past have revolutionized consumer banking in terms of service or features. For example, during the 1970s, Commerce Bancorp offered immediate ATM card activation after the account opening, no overdraft fees on debit card usage, and branch locations that were open seven days a week for their customers. More recently, several online banking alternatives have promoted customer service and features that differ from most mainstream banks in the United States.
When is an online bank, not a bank, but an online banking alternative? Simple, or formerly known as BankSimple, is such an example. The company provides no monthly account fees, no overdraft charges, no debit-card fees, and no charges for using another bank’s ATMs, as well as providing great customer service. For example, a real person will answer a customer’s phone call, and ideally, the same person will help answer the same customer with their questions every time they call them (When was the last time you talked to the same person on the phone at your bank?). So how does Simple offer all of these services without being a bank? The account acts like a traditional checking account (with great customer service), but Simple outsources the actual banking to their FDIC-insured partners, like CDW Bank and The Bancorp Bank. Simple also designed their mobile application before their desktop browser version, to make the online mobile experience easier to use and navigate for their customers. The app features real-time updates to accounts and allows a geo-location of transactions (or a map of where the customer made a purchase). The customer’s balances also take into account automatic reoccurring payments, so the consumer knows exactly how much free money is available for spending in their account.
Movenbank is a non-traditional online bank that takes the Simple concept one-step further by leveraging customers’ mobile phones, with NFC (near field communication) technology, to make payments without plastic cards. The bank works without paper, and has no checks, no hidden fees, and no plastic cards. Movenbank has the idea that a cardless, checkless, and cashless society will be a reality sooner, rather than later, and is betting this concept will resonate well with consumers. Currently, Movenbank is in beta testing, but it appears a full launch for the bank will likely occur in late 2012.
It will be interesting to watch the development of these new online banking services and see if they succeed and thrive. Online banking alternatives do not have the high costs associated with brick-and-mortar banks and thus can afford to provide a higher level of customer service and no fees associated with their accounts. However, customer savings and customer service do not always guarantee success, as other online banks have failed in the past. NetBank, one of the nation’s first Internet-only banks, closed in 2007. Regardless, I am all-in for any online banking product or service that enhances the overall customer experience and decreases or eliminates fees associated with the account.