According to BusinessWeek, if you were to ask Josh Reich for his thoughts on the traditional bank, he’d simply tell you that they suck.
Reich, a former equity researcher at a New York investment fund, last year co-founded BankSimple with former McKinsey consultant Shamir Karkal, a fellow graduate of Carnegie Mellon business school. Though the pair have spent almost nothing on marketing and haven’t started providing service, BankSimple has generated enough buzz online that thousands of people have already signed up. This fall, Reich plans to begin serving an initial 10,000 customers.
The Internet-only bank will have no branches. Members will get a single card that functions as a debit card but is also linked to a small credit line. When they have a positive balance, Reich says, they earn interest at “above average” rates. If it’s negative, they pay interest but will face no overdraft fees. Customers can get cash from 50,000 ATMs in small banks, stores, and fast-food outlets across the U.S.
Reich plans to limit membership to smartphone users, though they will also be able to access their account online. The idea is to provide a bank experience more akin to Twitter than to Chase (JPM), with a notification system for debit transactions. After every swipe of a BankSimple card, a message will pop up on the customer’s phone showing the amount charged and the balance—which serves both as a record-keeping tool and an instant fraud alert.
Screenshot from BankSimple