Payday Loans-Thinking Outside The Box – BankSimple

By | Jul 10, 2011

Innovation and cutting edge technology are the keys to success in financial services. Micro-lending products like payday loans must evolve in order to meet the demands of our customers and survive the regulatory challenges ahead.

Take a look at BankSimple to juice your creative thinking!

As we often point out, the payday loan space employs EXTREMELY smart and creative people. The idea behind this Post is to simply fire up your imagination.

We’re looking for smart guys in the payday loan space with giant ideas! There is plenty of money available if you’ve got a killer solution READY that needs funding. Email Jer@PaydayLoanIndustryBlog.com

Meanwhile, read on and let your imagination play!

BankSimple.com is a “New York startup poised to begin a limited beta soon, as it looks to launch a next-generation online banking service that combines real-time data, predictive money management and smartphones without the fees and penalties associated with many banks.”

Josh Reich of BankSimple says, “BankSimple is taking a big data approach to small personal finance data, applying statistical analysis and machine learning to help create a system that responds to a user’s needs.”

Reich goes on to say, “Smart phones are an essential aspect of BankSimple’s business plan. Customers are able to monitor their funds in real time from their phones. BankSimple will update its transactions instantly to let people understand how their transactions are affecting their goals. The phones are also used to help combat fraud by providing instant alerts on purchases. BankSimple can also see if a user’s location matches the location of a transaction to monitor for fraud.”

BankSimple won’t have local branches. The company is investing heavily in call centers to provide responsive customer service.

What banking features will you provide?

As a BankSimple customer, you receive a BankSimple debit card and access to our website and free mobile applications. With BankSimple, you can make purchases in stores and online, deposit checks using your smartphone, set up direct deposit, earn interest, pay bills, transfer money, withdraw cash from ATMs, and more. In addition, BankSimple Goals help you save for anything and manage your finances. And if that’s not enough, our Safe-to-Spend™ feature offers a uniquely clear picture of your available balance.

BankSimple makes money in two ways, interest margin and interchange:

  • Interest margin is revenue a bank earns from loans, less the interest the bank pays its customers on deposits. For example, if a bank earns 12% interest on its loans and pays 5% interest on its customers’ deposits, the interest margin would be 7%. Our partner banks split this interest margin with us.
  • Iterchange is revenue earned by a card-issuing bank when customers make purchases using that bank’s card. Our bank partners split this interchange revenue with us.

“Since BankSimple is exclusively online, we don’t have any expensive physical branches to build or maintain. That keeps our costs down and allows our business to be supported by interest margin and interchange alone. We don’t profit from fees because we don’t need them.”

So… what do you think? How can the payday loan industry embrace smart phones, access to account status, savings plans, online and mobile experiences, VIP programs, loyalty strategies, customer retention… THINK ABOUT IT!

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7 Comments so far
  1. Jeffrey July 10, 2011 1:27 am

    Jer, your topic, “Thinking Outside the Box” is right on. In order to survive, the payday loan industry must rethink their offerings. Technology including smart phones, mobile apps, etc. have got to be part of the equation. Thanks for reminding me that I can’t simply keep doing business as usual.

    Jeff

  2. Manual July 10, 2011 10:45 pm

    This is a very interesting topic. I was throwing around the idea of an apple app. However I figured there might be problems with funding across state lines. So I will watch what happens here and wait. Thanks for the information.
    Manual

  3. Bill Chewkarski July 11, 2011 3:14 am

    Jer, one company, approvaltree.com already offers iphone and android apps for payday loans.Check it out if you like

  4. admin July 13, 2011 5:08 pm

    Bill,

    Thanks, Man! I’m headed over there now!!

    What are YOU up to? I’ll check out PaydayBlogger as well :o)

    Jer

  5. admin July 13, 2011 5:12 pm

    Manual, yes there certainly are some challenges! But if it were easy, EVERYONE would do it. Perhaps a tribally owned ( Sovereign Nation ) bank? Perhaps simply a payday loan company using the state licensing model? Why not develop the app and sell it to Ace? Or QCC? Or? Maybe earn $1.00 each time an ACE customer uses the app? Maybe…

    Dream and do, Manual! And let me know when you’re ready to get serious!

    Jer

  6. Payday Loans Ottawa July 14, 2011 5:54 pm

    Payday Loans have really taken over the market within the past 5-10 years and the competition has really grown tremendously … everyone is looking for a way to promote there business. Your article was very helpful !!

  7. Richard Garland December 31, 2011 4:17 am

    If and or when you find a “Sovereign Nation bank” I would be interested!
    You can never have to many banks.

    Happy New Year,

    RG

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