Wow: Banking with no branches, no fees, handwritten thank-yous

PORTLAND, Ore. — Simple may technically be a banking service, but CEO and co-founder Josh Reich doesn't want you to see it that way.

Simple has shunned many of the features of traditional banking, including bank branches — it has none — and fees, which it got rid of in September. The company functions online and through its mobile app, plus a network of more than 55,000 ATMs nationwide. Reich positions Simple as a technology start-up that's hyper-focused on customer service and user experience, more in line with the Ubers and Instagrams of the world than the giants on Wall Street.

"We’re very much designed to build banking for how people think rather than how banks work," Reich says.

Simple's approach spells the future of banking, where tellers and physical locations are unnecessary and companies are judged based on how enjoyable of an experience they create. Essentially, Simple is doing everything it can to distance itself from the reputation of traditional financial institutions, an industry not typically lauded for its customer service or consumer-friendly policies.

Because it doesn't rely on fees for revenue — it profits off interest margin and interchange fees —  Simple doesn't necessarily care if a potential customer has a history of overdrafts or bounced checks, which means it can acquire customers traditional banks may have declined. Its user experience mimics the same things people are used to doing on other apps, including taking photos and associating them with transactions, adding memos talking about who you were with or what you were doing and adding hashtags to expenses to automatically categorize them.

Simple also tries to cut down on any friction involved in money management — instead of showing users their account balance after logging in, it shows a "safe to spend" number, which subtracts any upcoming bills to give customers a more realistic figure.

Simple tries to be user-friendly the old-fashioned way, too: Its employees send handwritten thank-you notes and original drawings to customers, stuffing the notes into envelopes along with colorful stickers and temporary tattoos. A recent one reads, "Hey Jonathan, I just wanted to send you a lil' 'Welcome to Simple' swag ... we're so excited to have you as a customer!"

In the three years since it launched, Simple has acquired hundreds of thousands of customers — the company won't give an exact figure — and customer growth continues to climb about 10% a month, says Krista Berlincourt, a company spokeswoman. That's the equivalent of a bank with about 850 branches, according to Simple.

Its business model has gained attention from larger financial institutions. Last year Simple, which has 285 employees, was acquired by BBVA for $117 million. It continues to operate as a separate business and has grown so rapidly that it has had to move office buildings in Portland four times, with plans already underway for a fifth move next year. In a recent ranking of best online banks by MyBankTracker.com, Simple came in third, behind Discover and Ally.

Simple's rise comes at a time when consumers are underwhelmed by banks. Recent data from IBM show that banks and their customers are particularly disconnected when it comes to their views on customer service, mobile experiences and personalization. IBM found that 62% of banking executives around the world say they deliver excellent customer service, but only 35% of customers agree. Just 30% of customers believe their bank provides personalized service, compared with 45% of bankers who believe they do this.

Bankers may also be underestimating the power of mobile, where 41% of customers expect to be able to do most of their banking in the next three years. Just 10% of banking executives said they thought the majority of transactions would be on a mobile device in the near future. The data show why financial technology companies are gaining so much traction, says Anthony Marshall, research director at IBM's Institute for Business Value.

"These companies sort of born in contemporary technologies just have a better agility," he says. "They’re able to offer better services, faster."

A company that endears itself to its customers by sending them handwritten snail mail certainly stands out from the constant stream of junk mail and credit card offers one typically receives from consumer finance behemoths.

Simple's atypical status as a bank is evident in its office culture, too, which screams tech start-up. There's cold-brew coffee on tap, a communal kitchen with an endless supply of snacks and even a bike technician the company brings in occasionally to work on employees' bikes, which are hanging on racks throughout the office. Toward the end of the day, employees can be found hitting balls at the pingpong table and gathered in the board game room. The office embodies the company's culture of creating enjoyable experiences, for both employees and customers.

"If it's not (fun), you're not going to use your bank," Berlincourt says.