America, says Reich, "suffers from having been the first to adopt computerized banking. A lot of systems date back to the 1950s, when data storage and processing were expensive." That's no longer true, of course. BankSimple's credit card statements offer data that others throw away. By providing the time of day for a restaurant purchase, for example, the statement lets a customer easily see what was a dinner bill and what was lunch. With a few keystrokes, a bank customer can see, for example, total lunch expenditures by city for a given business trip.
Both BankSimple and already-established Ally Bank have no brick-and-mortar branches. They exist entirely online. The upside of that is that by having lower costs (no real estate expenses, for example), they can afford to offer depositors higher interest rates. The downside, for Ally, is that customers, to make deposits, must mail in their checks. BankSimple makes use of smartphone technology to get around that problem: A customer takes a smartphone photo of a check, then emails it to a brick and mortar bank partnered with Bank Simple.
"We've partnered with small community banks and regional banks," explains Reich. "They take care of handling the money. We take care of our customers. We maintain the customer relationship. With us there's no phone tree that tells callers to 'press 7'; You get a real customer service person right away." And software tries to match a caller with the same customer service representative they spoke to the last time they called, to strengthen the customer's tie to the bank.
Stessa Cohen, a research director with the Gartner Group in Philadelphia, says big, conventional banks have been slow to appreciate an important truth about their customers: "Consumers have lives to live outside banking," she says. "Everybody's life today is faster, more complicated, more stressed. The bank that makes it easier for customers to live their lives will be an attractive place to do business."
Among banks and financial service providers she considers to be innovators she cites Standard Chartered Bank of Singapore, which offers its customers a new tool, "Breeze," that lets them make appointments with their local branch online.
"How come you can make an appointment online for car repair," she asks, "but you can't do it at your local bank?" She also likes a new online service called BillGuard that warns credit card customers when it detects what it deems to be suspicious card transactions. "You register your credit cards," she says, "and they proactively detect abuse."
Do big, conventional banks have the capability to offer the same kind of service? "Yes, but they're not doing it."