After Simple Bank: 7 startups changing the way you bank


Adam Cecil

Adam Cecil

Former Staff Writer

Adam Cecil is a former staff writer for Policygenius, a digital insurance brokerage trying to make sense of insurance for consumers. He is a podcast producer, writer, and video maker based in Brooklyn, NY.

Published August 13, 2015|13 min read

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Simple Bank was heralded as "Banking 2.0" by LifeHacker way back in 2013. Traditional banks have gotten a bit smarter since then – they’ve at least embraced mobile banking, spending millions to develop iPhone and Android apps. But traditional banks have still failed to capture what made Simple Bank so exciting back in 2013; they’ve yet to create consumer focused experiences that not only make banking easier, but also make it easier to bank smarter.

Is Simple Bank as simple as they claim?

Luckily, both Simple Bank’s product (and their acquisition by BBVA in February 2014) and the failure of traditional banks to innovate have inspired a multitude of startups to tackle the problems they see in traditional financial products.

1. Cheddar

Update, August 2016 Startups don't always make it, and it would appear that Cheddar is officially dead. Their URL is up for grabs, though, if you want to make a go at it. In the meantime, check out this other company called Cheddar — this one is a business news show for #millennials instead of a bank.

If you wanted to be mean, you could call Cheddar a Simple Bank clone. That would be missing the point, however – Cheddar takes the premise of Simple Bank and expands on it in a few key ways that make it a more complete product.

What is Cheddar? First and foremost, it’s a checking account. Like Simple Bank, Cheddar offers a basic checking account with a debit card (that works with Apple Pay, by the way). You can use your Cheddar account for anything you would use a traditional checking account for – direct deposit, paying bills, grabbing cash from an ATM, and check deposit from the app. Like Simple, it’s free – no in-network ATM fee, no monthly fee, and no overdraft fee. And, like Simple, it offers some basic budgeting tools that show you how and where you’re spending your money.

So what does Cheddar have to offer that’s so different from Simple? First, a small thing: Cheddar has joint bank accounts. If you and your partner have combined your finances, most of these banking startups are a non-starter because they don’t offer joint accounts. While this might not affect your typical #millennial consumer, it makes a big difference when trying to reach beyond that demographic.

And, unlike Simple Bank, Cheddar brings its budgeting features to your other bank accounts. You can let Cheddar sign in to your other checking and savings accounts, your credit cards, and brokerage accounts. It’s kind of like, but you’re not limited to just viewing your activity. You can move money between accounts and pay bills without ever leaving the Cheddar app. Plus, you can set up Cheddar to automatically move money around based on rules that you create. For example, you can create a rule to move money into an outside savings account every time you get paid.

Another big difference from Simple Bank (and traditional banks): Cheddar will give you cash back on your debit card purchases. While this feature is pretty standard for credit cards, it’s a lot more rare to see this on a debit card (and a free checking account).

Here’s the big drawback to Cheddar: it hasn’t actually launched yet. While you can request early access, the app and service haven’t officially launched. That means there’s the potential that the whole thing will crash and burn, or at least not work exactly as expected. Either way, we’ll be keeping an eye on Cheddar to see if they encounter any growing pains.

2. BankMobile

BankMobile is a traditional bank in a start-up’s clothing. Launched in early January 2015 by Jay Sidhu, CEO of Customers Bancorp, and his daughter, Luvleen Sidhu, BankMobile is technically a division of Customers Bank. Unlike its parent bank, BankMobile is aggressively chasing #millennials (despite the fact that most of the leadership team is old white guys).

BankMobile looks the most like a traditional bank. Instead of trying to wow users with extraneous features like budgeting tools, BankMobile just wants to be a free-er and mobile-er version of a traditional bank. That means a free checking account and a free high-yield savings account, both backed by the strength of Customers Bank.

If that’s all BankMobile had, however, I wouldn’t be writing about it. (Ally and Charles Schwab offer both types of accounts all without needing a branch.) BankMobile surprises by offering a line of credit, something that other banking startups have yet to incorporate into their product. For people looking for some extra cash flow to help with unexpected costs, like a relocation, BankMobile’s line of credit could be a good alternative to getting a personal loan from a more traditional bank.

Besides that, I’m not sure I can recommend BankMobile. It seems like little more than a re-skin of a Customers Bank account, with some added cringe-worthy ad copy to boot (In reference to taking a pic of your driver's license: "Bam! Who knew you could take a selfie to open up a bank account?" I don’t think that passes the New York Times’ definition of a selfie.) When I attempted to sign up for an account this past spring, it was an arduous process, filled with full screens of tiny text that I needed to agree to before I could open an account.

Why include it on the list, then? Because I think you should expect to see more mobile banking products like this coming from traditional banks in the future, and I needed to warn you.

3. Digit

We all know that saving money is important, but not enough people actually do it. If you’re one of those people who doesn’t save enough, Digit wants to be your savior. Instead of changing your habits through education, Digit uses math to automatically take money from your checking account and put it into one of their free savings accounts.

After connecting to your checking account, Digit will analyze how much money you make and how much you spend. Then, every two to three days, Digit will take somewhere between $5 and $50 from your checking account and put it into your Digit savings account. Since they can see how much is in your checking account, they won’t overdraft your account and they’ll slow down their transfers if you’ve been spending more than average.

A big upside to Digit is that there isn’t an app. After you sign up on their website, you never have to go back. Instead, you just text Digit. Digit will text you to let you know when they’ve moved money into your savings and how much is left in your checking account. You can text Digit back with certain commands, like "pause," "withdraw," and "save."

Essentially, Digit is Simple Bank’s "Goals" feature – automatic savings that you don’t have to worry about – but with a lot more math that makes it a smarter robot. If you’re bad at saving, I would strongly suggest giving Digit a try. One major downside? Their savings account currently doesn’t offer any interest. Instead, Digit offers rewards when you don’t make any withdrawals from your Digit account. If you don’t touch your account for three months, Digit will give you five cents for every $100 you’ve saved. If you’d prefer to earn interest, it’s easy to withdraw your money from Digit and put it into a more traditional high-yield savings account at your chosen bank.

4. Qapital

While we’re on the subject of saving, let’s look at Qapital. Qapital, more so than Digit, is pretty much a rip off of Simple Bank’s "Goals" feature, but it has a few tricks up its sleeve that make it a stronger product.

For starters, Qapital is completely separate from your bank account. Qapital accounts even earn a small amount of interest – 0.10%, higher than most traditional chain bank’s rates (Bank of America offers a measly 0.01% APY), but lower than a high-yield saving account from an online-only competitor like Ally. Unlike Simple Bank’s "Goals," Qapital’s goals are funded using specific rules. For example, you can have Qapital put money aside every time you buy coffee, or round up all of your purchases and save the change. (You can also schedule daily, weekly, and monthly transfers.)

If you’re a huge nerd, you can even use IFTTT to set rules using outside forces. An example from Qapital’s website: "Whenever the forecast calls for rain and misery, save for a sunny vacation." IFTTT integration seems gimmicky to me, but I’ve always found IFTTT to be gimmicky and can’t imagine relying on the weather to fund my savings account.

Qapital’s most unique feature is their joint savings goals. It’s not a joint savings account because all of your money remains completely separate. Instead, it’s a way for you and your friends (or family members or your partner) to have a shared saving commitment. Want to go on vacation with six of your friends? Shared goals makes it easy to put money aside and compete with your friends to see who can save the fastest.

I’m bullish on Qapital. They have great design and offer an easy and convenient service with few compromises (I would love a higher interest rate, but even their marginal rate is better than nothing). Later this year, they’re releasing a debit card to help you spend your savings once you reach your goal (no word on fees associated with the card). It’ll be interesting to see if it catches on, and I’m excited to see how they expand.

5. Monk

Here’s how Monk works: you create a private group with your family or friends. You save money into this group. Then, you can either lend your money to friends in need (and make 3% interest on that loan) or borrow money from your group (and pay back 3% interest to your group).

I’ll be honest: I don’t get it. I don’t think I could convince any of my friends to sign up for this, let alone let me borrow their money to use on… what, exactly?

Reading the comments on Product Hunt, however, made me realize that my perception is more of a cultural block than anything else. Danny Bin, co-founder of Monk, has previously participated in informal social lending groups in both the "Chinese and Nigerian communities." This app merely formalizes previously established behaviors in those communities.

It’ll be interesting to see if Monk can reach communities where this behavior is not already well established – such as my urban white #millennial friends. At the moment, I’m not convinced, though a potential 3% interest rate on my savings does sound tempting.

6. Final

I’ve been waiting for Final to launch for months. I really, really, really want to try out Final. What’s got me so excited? Basically, Final is a credit card for people who hate credit cards.

Here’s a good reason to use a credit card: it provides one layer of security between the outside world and your bank account. Even though you can directly pay for everything out of your bank account using a debit card, it’s usually a better idea to use a credit card. Credit cards have much better fraud protection, and if your card is stolen, you don’t have to worry about your bank account being drained while you fight to have charges removed.

While credit cards are much better with dealing with fraud and theft, dealing with fraud or theft still sucks. You have to deal with a canceled card, which can mess up any of your recurring transactions, like subscriptions, and connections to e-commerce sites, like Amazon.

Final eliminates this hassle by giving you a unique credit card number for every merchant. Let’s say you’re using Final and your Amazon account is hacked, releasing credit card data into the wild. You can cancel the number you gave to Amazon, eliminating your risk of fraud while keeping your other Final numbers running. You can also come up with one-time use numbers for less trustworthy merchants.

That also means you can deactivate credit cards when you’re tired of certain subscriptions, or if a site makes it difficult to delete your account. If you’ve ever signed up for an online subscription, you’ve probably run into a company that made you jump through hoops to cancel your account.

Final also has budgeting features – you can see where you’re spending your money and get receipts sent to your phone the second you make a purchase.

Final is set to launch later this year. Expect to see a longer review of it once I get access.

7. Earnest

There are a few things we still want from banks. Free lollipops at the teller, mortgages – those sorts of thing. For a while, though, startups have tried to tackle personal loans. Just some of the startups in this space: Lending Club, Prosper, Upstart. Earnest does personal loans, too, but it’s going after #millennials by promising student loan refinancing at incredibly low rates – Earnest loans start at 1.90% variable APR.

Earnest, like Upstart, claims to have a more in-depth underwriting process that looks at more than just your credit score. What does that mean? Let’s say you’re making $60,000 right now as a software engineer and struggling to make student loan payments. You know you’ll probably make a lot more than $60,000 soon, but lenders don’t see that. Earnest, however, can take your career and income potential into account when it comes to assessing risk. They also look to see how much savings you have.

You have a lot of flexibility when it comes to picking your monthly payment and loan term. With federal student loans, you basically have two options: ten year terms or thirty year terms. Earnest, however, let’s you pick your monthly payment, and then comes up with a term based on that. Your monthly payment means you pay off your loan in 7 years and 3 months? You’ll pay off your loan in 7 years and 3 months, with an interest rate that matches that exact term.

Earnest also does a lot to help borrowers who may need to skip payments. You’re allowed to skip one payment every year – the payment is then split into eleven parts and tacked on to the rest of the annual payments. If you become unemployed, you can skip up to three months of payments.

The only downside to Earnest is that if you’re financially unstable in any way, you’re probably not going to get the great rate that Earnest advertises (if you even qualify). It’s the other side of the double-edged sword that is Earnest’s in-depth underwriting process. There’s a reason two out of the three testimonials on Earnest’s homepage are from Harvard MBAs – the people most likely to benefit from Earnest have high income potential and enough financial literacy to already have savings put aside. These aren’t people who are struggling to pay student loans. Instead, they want to take advantage of their already-good financial standing to save money on student loans. In other words: Earnest is not the populist answer to the student loan crisis.

These are just a few of the startups changing the way we bank. More are being founded every day, and it won’t be long until they’re the new establishment. Let us know if there are any we missed that should be brought to our attention (unless you work in PR at one of those companies) or if you have any first-hand experience with using one of these products!