A Design Strategy for Simple Bank

How a Strategic Decision can lead to sustainable growth

About Simple

Simple is an online bank, founded in 2009 in Brooklyn under the name BankSimple. The three business partners — CTO Alex Payne, CEO Joshua Reich and CFO Shamir Karkal — moved the headquarters of their company in Portland, Oregon in 2011 after raising $10 Million from several investors. Their decision to move their headquarters in Portland gives them the opportunity to be more relaxed, as the company they are building, according to the CEO.

“Joining with BBVA gives Simple the resources and global footprint we need to see our vision writ large,” said Reich. “BBVA believes in our vision and the course we have set to transform the industry.”

While Simple customers are currently located throughout the U.S., BBVA, with its global network of 30 countries, will help the company expand beyond the 50 states. So eventually every customer account will be migrated over to BBVA so that Simple can have total control over the entire banking experience.


Consumers want a simpler, more transparent banking industry.


With Simple, you get a stylish Simple Visa® Card, no fees, and powerful budgeting and savings tools built right into your account — all accessible via web, iPhone, and Android.

Value Proposition

Simple’s about making managing your personal finances effortless. We adamantly believe that making smart spending and saving choices should be easy, and often even fun. All the tools you need to manage your money are built right into your account, where they’re most effective.

Simple is reinventing online banking with modern web and mobile experiences, no surprise fees, and great customer service. Simplify your finances.

Simple delivers a new type of financial experience that’s easier, faster, and friendlier.

“People who know what they should be doing with their money, but they’re not doing it because they’ve soured on the financial system” Reich says.

Simple’s strong points are its value proposition and its customer relationships. Adopting the branchless online business model, allows them to offer ZERO FEES to their customers a significantly attractive attribute for younger generations. The downside of this is the extremely low interest rates on the deposits. This makes Simple a platform for small account holder as well as people who are interested in managing their finances. They focus on the daily activity of their users, not on savings account. Taking advantage of the interchange fees, Simple targets active users who create small saving goals.

The other strong point is their personal customer care service that makes the customers feel like they are part of a community. This increases the loyalty of the customers for Simple. The personal customer care service adds to the sense of care in combination to the fast, responsive way they have chosen to operate. By email or phone customers can solve every difficulty they might have without waiting or transferring processes.

Finally, the blog that Simple has contributes a lot to the transparency of the company. Every client can find there the news of the company and get informed from the revenue streams of the company or Simple’s business success stories. For anything that it might be missing the user can ask questions and in a short time period will get a personal answer. This sense of openness and transparency that offer to their clients helps also to a higher CLV. Users tend to appreciate this open communication between the company and them. Value Proposition and Customer Relationships are the two factors that turn the users into brand advocates. With almost zero marketing expenses, Simple has reached more than 100,000 users almost only through WOM, something that differentiates them from the competition.



The debit account that tracks your money for you, instantly.


Every few days, Digit checks your spending habits and removes a few dollars from your checking account if you can afford it. Easily withdraw your money any time, quickly and with no fees.


Your bills paid on time, every time. Whether you’re at home or on the go, you won’t lose track of when bills are due, or whether you have enough in your accounts to pay them.

Current Problem

The direct competitors are other online applications or platforms that offer more or less the same services. They might offer a debit card to their clients like Simple or just support them save money or manage their expenses and bills. However, Simple offers an all-in-one platform. This in combination with the personal customer care service makes Simple the leader in the online banking industry. None of the competitors offer this effortless communication with the company whenever it is needed. In this automated, online world that we live in, having this opportunities whenever you need it, contributes dramatically to a better experience. This is where Simple targets the most. Offering an easy and friendly experience to its users.

A gap that all these platforms have, including Simple, is that even if they help the users to be more financially aware and save money, they do not support them making more. What if Simple could introduce a new service that would help users increase their deposits in the same effortless way? Having financially stronger clients, means more disposable income. This leads to either more deposits or more transactions. In both cases, Simple would grow as these are its revenue streams.

Another common characteristic of these platforms is that they focus on the individuals. They miss the opportunity of supporting communities or even bigger groups of people. There is a new world around sharing economy and none of them seem to take advantage of it. Operating online without physical resources or products rather than office space, offers them a tremendous advantage of getting involved easily and without a significant cost in the sharing economy. This could bring more revenue as well as increasing the impact to the company to the world.


Simple has stated previously that their top customers were interacting with Simple 3–5 times per day via Mobile. To put that in perspective, most US banks would be happy with 3–5 times a month right now.

According to a document obtained by Quartz, the company doesn’t break out an overall customer number, focusing instead on the active customer count of 33,387. Given that the internal document notes a 29.2% active rate among consumers, that should put the total customer count around 114,000. A dotted line, presumably indicating growth projections for active customers, suggests the company aims to increase its active customers to roughly 80,000 by the end of 2014.

In an interview Reich explained if someone needs to withdraw $10,000 for a down payment on a house — the largest thing users are saving for — Simple has already made more than enough on that account to cover customer acquisition costs.

“While the banking industry spends about $150 to acquire a new customer, we spend a very small fraction of that because we’ve built a product that our customers actually want. When we consider the future, perhaps more important than our core financial metrics are our measures of product engagement. Simple was designed as more than a drop-in replacement for your existing bank.” CEO Joshua Reich

New Opportunities

As I mention above, Simple focuses more on user engagement than any other metric which is probably the best choice for a SaaS business model like them. In order to increase users stickiness, they need to invest in engagement and fight churn. Regarding revenue, upselling, CLV and CAC are the key metrics and finally for scaling their model they need to focus on new markets.

So what if they would make a strategic decision that could combine all of the above? Take a strategic decision than support the sustainable growth of the company together with new revenue streams and more engaged happy users. Provide a new service to their clients through a peer-to-peer lending platform. The financial aware user can have one more reason to stay engaged. This time instead of creating goals for saving money, can create goals for making money.

Peer-to-Peer Lending

A new service is introduced on Simple’s online interface. Users can now invest on Peer-to-Peer Lending listed from other users. More in depth, by providing the opportunity to users to get funded for small loans, Simple can create a double effect. Firstly, attract more new customers, who are initially interested only in getting funded. In order to get approved, they will have to go through the strict approval process of BanCorp. The approved borrowers become automatically members of the Simple community, having access to every service. This is a strong step in acquiring new clients. As active users they can also invest in other users’ loan listings. Regarding the existing clients, they now have two options. Either to become borrowers, or investors. In the case of becoming borrowers they have some benefits comparing to new users. According to their financial history and the data that Simple has regarding their spending habits and financial behavior, they can obtain really attractive rates comparing to the ones of some new users. If they want to invest, they can choose one or more listings taking into consideration the loan description, time of paying back and of course the interest rate which defines if the investment is high risk or not.

Users come back to the platform to see the return on their investment and maybe invest in more listings. The monthly expectation of ROI makes them more engaged. From the first moment of the investment the user has a new “Goal Bar” in the interface showing the amount of the investment as well as the gained amount. Now instead of having “Goals” only for saving users have new ones for making money. Simple benefits from the interest of the deposits as long as they stay there. According to Digit.co, a saving online platform, only one third of the users tend to withdraw their money from accounts like this. So even if some of the users prefer to withdraw their deposit, still Simple has already collected enough interest.

Unfair Advantage

Simple as an online banking platform can adopt two roles of the existing Peer-to-Peer Lending system. It can be the Lending Club and the WebBank at the same time. There are small banks that offer this already but none of them has the number of users, scalability or financial strength that Simple has. By adopting two roles, Simple can skip the fees that Lending Clubs keep, making their service more attractive to customers. Traditional banks have not incorporated the concept of sharing economy in their business model. So Simple has a strong opportunity to be one the leaders in this industry as it did some years ago with online banking.

Another important advantage is the fact that Simple can offer significantly more attractive interest rates for the borrowers. Knowing the spending habits and the financial history of its existing users can predict who of the them would be a lower credit risk. On the other hand, Simple can keep the interest rates at the level of the industry for new users, providing the opportunity of lowering them for future loans according to their financial behavior.

All these allow Lender Members to gain the 1,00% service fee that Lending Clubs charge, maintaining the NO FEES policy. By being loyal to this policy, Simple keeps its integrity to the users and helps build even higher levels of trust from them.


The biggest accomplishment through this new service is the increase of users’ engagement. Until now the customer was using the application or the website for setting saving goals, entering expense details or setting automated payments. Peer-to-Peer Lending turn every customer into a potential investor, providing the opportunity of increasing its capital investment. This describes a new need for the Simple’s existing customer segment. People who are financially aware can with small or medium size bank accounts can now be investors and increase their capital. Having more reasons to come back to the platform besides the increase of engagement, augment Simple’s revenue too. This can happen in two ways. Firstly, by keeping more money deposited Simple has more revenue through the interest on the deposits. Secondly, through engagement and increase of users’ money, more transactions might happen, which means more interchange fees for the company. Engagement and satisfied clients also strengthens the relationship with the company, turning users into life-long clients.

Another important parameter is the fact that probably the majority of the borrowers are young people. This means that Simple has the opportunity of attracting younger people and keeping them as clients for many years, increasing the CLV of the company. Finally, having clients who are borrowers or investors means that there is a high switching cost. How can someone switch platforms while he expects payments for the following months, or while he needs to pay off a loan.


This new service works in many different levels, offering Simple a strong sustainable model. As I have already mentioned, the Lending Service can increase the number of new users as well as the active ones. This enriches the sustainable growth of the company as more active clients will bring more revenue and essentially even more clients. The benefits of this service don’t stop there. By offering a Peer-to-Peer platform, Simple contributes to the sharing economy. For years, almost every financial activity was going through big banking corporations. For the first time, people can support other people and appreciate the benefits of their investments without third parties. The sharing economy is growing rapidly and creating new opportunities across the globe. Like all major disruptions, it is putting pressure on existing business models and regulatory frameworks and triggering other significant changes. Participants have an opportunity to play a role in developing long-term solutions that encourage innovation while protecting consumers and society more generally.


Simple has spent almost no money for marketing since it launched. So the paid media sector almost doesn’t exist. Regarding the owned media sector, after a short research I realised that it totally under performs. Besides the blog that is responsive, active and gets renewed pretty ofter, the social media pages of the company are barely active. Taking this into consideration with the strong word of mouth exposure of the company, focusing on earned media seems the ideal approach. What if every investor could post on twitter or facebook the details of the loan that supported or every borrower would post the achieved goals?

By integrating tools for investing in earned media along with clients who are satisfied and loyal, Simple could promote this new service exponentially. Every user (borrower or investor) could become an advocate of the brand.

In this way Simple could create original content that could spread out in several channels. Focusing on the needs of people, Simple could be part of a bigger conversation around the issues of younger people. By supporting loans for specific reasons, it could focus on different points, leveraging the interest around several activities.

Now people have the power of promoting or not the activities of the company, showing their interest in other community members. As we know referrals are the strongest way of engagement. In this way, Simple could achieve an effective way of promoting the new service, acquiring new customers but mostly inform more people about the benefits of sharing economy and inspire people by talking for the goals that all the users have achieved through its services.