Simple

What did it do?

Simple (originally BankSimple) was a digital bank with no physical branches that delivered its banking services through a website and mobile apps. Accounts were held with a partner bank; customers used a Visa debit card, could tag their spending and set savings goals. The company earned its revenue from interest on deposits and card interchange fees.

Why did it shut down?

In 2014 Simple was bought by the Spanish bank BBVA for USD 117 million and folded into BBVA's US structure. Founding CEO Joshua Reich stepped down in 2018. In November 2020 PNC Bank agreed to buy BBVA's US operations. Saying it had reassessed its goals during that sale process, BBVA announced in January 2021 that it would close Simple. The service ended on 8 May 2021 and accounts were transferred to BBVA.

The story

For its loyal users, Simple's last day was far more painful than an app simply shutting down. When accounts were transferred to parent company BBVA on 8 May 2021, many customers could not log in to their own bank accounts; error messages and apologetic red warning banners appeared on the BBVA website. The Verge reported in detail how the migration went wrong.

The story began in Brooklyn in 2009. Joshua Reich and Shamir Karkal founded BankSimple together with Alex Payne. The aim was to create a banking experience with no branches, plain fees and spending that was easy to understand. Jerry Neumann provided the seed capital; in August 2011 USD 10 million was raised in a round led by IA Ventures, Shasta Ventures and 500 Startups. That same month the company moved to Portland, where five of its 17 employees already lived. Shortening its name to Simple, the company began accepting customers through a limited beta in 2012. In January 2013 it reached 20,000 customers and more than USD 200 million in transaction volume, and in July 2013 40,000 customers and more than USD 1 billion in volume. At the end of 2013 customers' combined balances stood at USD 64 million.

On 20 February 2014 the Spanish bank BBVA announced that it had bought Simple for USD 117 million through its US subsidiary, BBVA Compass. Simple carried on for a while as an independent brand and added new features such as automatic saving. After the acquisition, however, non-US citizens were required to open accounts at a BBVA branch rather than online, which became the subject of a federal lawsuit in 2018. Founder Joshua Reich announced in May 2018 that he was stepping down as CEO.

The end came with a major decision by the parent company. In November 2020 PNC Bank agreed to buy BBVA's US operations. In January 2021 BBVA announced it would close Simple, saying it had reassessed its goals during the sale process. On 8 May 2021 Simple officially closed and the remaining accounts were moved into BBVA's current and savings accounts.

Simple became known as one of the first neobanks; but it built a model that relied on partner banks without a banking licence of its own, and in the end it became part of a bank. Its story shows that the future of an innovative product sold to a large institution remains tied to the parent company's priorities.

Lessons for founders

• A fintech sold to a big bank can be one of the first units to be shut down when the parent's strategy changes; pin down the future of the brand and the team in the sale agreement.
• Digital banks without their own licence depend on a partner bank; plan customer migration from the start in case the partnership ends.
• Run capacity tests before moving customer accounts to another system; a botched migration defines a brand's final memory.

Sources

1. Simple (bank) (Wikipedia)
2. Simple bank shutdown goes awry leaving customers without account access (The Verge, 2021-05-09)
3. BBVA Buys Banking Start-Up Simple for $117 Million (The New York Times, 2014-02-20)

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