Background
What was Simple Finance?
Look at the Wayback Machine archive: https://web.archive.org/web/20200411034613/https://www.simple.com/
Simple (as it was typically referred to) was one of the first neobank / challenger bank / digital banks on the market.
It blazed a trail back when nobody was doing BaaS (Banking as a Service) and ‘online banking / digital banking’–especially via a mobile app–just wasn’t a thing.
It came to life during the 2008/2009 mortgage crisis, and resonated with folks who were burned by the ’too big to fail’ nature of the megabanks.
It was heavily focused on good design and treating account holders like actual human beings as key differentiators.
Simple initially worked with The Bancorp as it underlying banking partner. Eventually Simple was acquired by BBVA Compass (itself later renamed to BBVA USA).
Sadly, PNC acquired BBVA USA for its depository assets and did not wish to continue investing in any of its subsidiaries…including Simple.
Thus, Simple’s customers were told to either A) migrate their accounts to BBVA USA / PNC accounts or B) close out the accounts.
Simple was shut down on May 7, 2021: https://x.com/jpfuentes2/status/1390882988766814211
Features
Simple initially offered a checking account tied to a debit card without any fees (which was very uncommon at the time in banking).
- You know, simple.
This was paired with a nice 1-2 punch of its Goals feature and its Safe-to-Spend® feature.
Goals
The basic idea was to get folks to manage their money by accounting for every expense as part of a category of expenses using the envelope budgeting system.
You have to save up for rent / groceries / gasoline? Create a goal.
You want to save up for vacation / college / buying a car? Create a goal.
https://web.archive.org/web/20200412094402/https://www.simple.com/budgeting/goals
McKay Adam’s video which shows the Goals feature in action: https://www.youtube.com/watch?v=oRtrNwYd0L4
Safe-to-Spend®
The basic idea is that if you accounted for all of your money and budgeted for all of your expenses, then whatever was left over was ‘safe to spend’ however you pleased.
Once your basic needs and goals are met, what should you do with the money that’s left over?
Life your life with enjoyment. Buy that cup of espresso. Pick up flowers for your loved ones. Pay for an experience.
https://web.archive.org/web/20200412084027/https://www.simple.com/budgeting/safe-to-spend
Shared Accounts
When it comes to ‘joint accounts’ no company has hit the nail on the head quite like Simple did with its Shared Accounts feature.
Shared Accounts are conceptually the same thing as a Joint Account…but the key differentiator being how easy it is to keep a pot of your money, separate from my money, separate from our money…yet with easy and quick transfers between them.
Each person in the Shared Account got their own separate debit card as Individuals but there were also debit cards for the Shared Account (with an identifying blue sash so you could tell your Individual debit card from your Shared debit card).
The Shared Account also had access to Goals and Safe-to-Spend® (named Shared Safe-to-Spend®) so the Simple experience was still just as good and just as consistent.
You each have your own share of rent/mortgage? Create a Shared Goal for the amount, and each Individual could contribute their share of the money quickly and easily from their Individual Account.
https://web.archive.org/web/20181020225236/https://www.simple.com/shared-account
McKay Adam’s video which shows (indirectly) the Shared Accounts feature in action (for Shared Safe-to-Spend®): https://www.youtube.com/watch?v=oRtrNwYd0L4
Videos
Here’s the public Vimeo account for Simple: https://vimeo.com/simplify
That contains both marketing videos as well as feature-based “how-to” videos.
Perhaps the easiest way to understand the selling point of the Simple UX is this commercial which shows a couple getting engaged: https://vimeo.com/160291191
History from Cofounder and CEO
The cofounder & CEO of Simple shared an interesting bit of neobank history.
In response to a throw away comment on Jason Mikula’s post regarding Varo’s earnings, I thought I’d share the odd story behind Simple, Varo and Warburg Pincus. It’s been enough time now, so I think its OK to share. Also, this is solely based on my hazy recollection and my own interpretation of events.. Legal disclaimers, etc.
So Simple had finally launched about 3 years later than expected. Building out the first neobank was a long road and we had to invent a lot of technologies, both computer wise and business model wise to patch together what would be the model for neobanking built out of the old rails of prepaid card systems. Throw into the mix Google’s acquisition of our processing partner (story for another day) and it was a long slog to launch, but we got there and were growing quickly.
But we were also running out of cash. Being the first neobank, while our customers were excited, VCs were still largely on the fence (if not actively hostile) towards FinTech. Our cap table was angel investors and early round VC’s. None had the capital nor mandate for the raise we needed to do. Eventually we found Warburg Pincus - a private equity firm that invested in late stage technology and, importantly, invested in a number of smaller regional banks. We got on amazingly well and together built a plan that would see a significant investment into Simple and us moving our balance sheet onto one of their banks, with an eventual route to our own charter via that bank.
A term sheet came through and we stopped all of our other fundraising efforts. I was over the moon. A few days later I was at a VC event in New York and the ever wise Josh Kopelman quietly came up to me and said something to the effect of “be careful with private equity”. I had heard stories about PE firms screwing startups, but figured on the basis of the strength of the deal with Warburg, it wouldn’t happen to us.
After signing the term sheet, diligence began. It went quite smoothly until technical DD. They sent over a tech exec and he grilled our team. I had spent my career to that point in systems engineering, and was very proud of our what our engineering team had built. The technical DD report came back from Warburg and it crapped on everything. As I recall, it had a ton of factual errors, and clearly misunderstood our architecture. Warburg immediately pulled the term sheet. They had no interest in hearing my counter points, and quickly stopped returning any contact.
At that point we had a few weeks of runway and along with other members of the exec team, we used our personal funds to make payroll. I drew down on my mortgage and others called favors. I stank of desperation, and nothing turns off VCs than CEOs who are panicking. Our board agreed that the only course of action was to sell the business. And we did – again, a story for another day.
A few months later I received a call from a finance exec who was looking to start a Simple like bank in the UK. I was always happy to share what I knew. I honestly believe that a rising tide lifts all boats, so I shared everything that I thought would be helpful.
I met that exec again at a small US based fintech meeting and it was clear that he was actually doing it in America, not the UK. And he had a plan to get a charter. And he was funded by Warburg Pincus.
After he announced his round and all the details were public, he reached out to me and asked if I wanted to join his new bank, Varo, as their CEO of consumer business, while he’d run the bank. I politely declined.