/retail banking

News and resources on retail banking, consumer finance and reinventing customer experience in finance.
Simple shuts down

Simple shuts down

Simple, the original neobank, is being shut down ahead of parent BBVA USA's acquisition by PNC.

In a message to customers, Simple says BBVA has made the "strategic decision" to close the digital bank, with accounts moved to the parent firm.

In November, PNC agreed to buy the US unit of Spanish giant BBVA in an $11.6 billion deal.

Simple was founded after Josh Reich pitched the idea to co-founder Shamir Karkal more than a decade ago, spotting an opportunity in the widespread public disillusionment with traditional banks in the wake of the 2008 economic crisis.

With a strong background in technology, the Simple founders believed that they could do better, and in the words of one-time CTO Alex Payne, build "a bank that doesn't suck".

After several years during which the idealistic team discovered the complexities of the banking market, Simple opened its virtual doors to much fanfare in 2012.

But, having pitched itself as an outsider, the startup quickly became subsumed into the big banking world, acquired by BBVA in 2014 for $117 million, albeit continuing to operate as a standalone business.

Reich and Karkal have both since left the firm. On Twitter, the former says he has no insight into the decision, but "I suspect PNC is prioritizing their existing online banking tech".

The Portland-based firm, which at one stage employed more than 300 people, has not provided details on potential layoffs.

Comments: (4)

A Finextra member
A Finextra member 07 January, 2021, 19:31Be the first to give this comment the thumbs up 0 likes

To much focus and to high expectations that technology would make a diferance,wrong! People make or breaks a organazation. Great concept, wrong people in charge.

David Gyori
David Gyori - BANKING REPORTS, LONDON - London 07 January, 2021, 19:50Be the first to give this comment the thumbs up 0 likes

Yes, this is important. Many "captive" neobanks are shut down. There is a difficulty in finding the winning business model.

Melvin Haskins
Melvin Haskins - Haston International Limited - 07 January, 2021, 23:431 like 1 like

There are just too many neobanks, with very little to differentiate one from another. A significant number of established banks have established successful digital presence to make it difficult for so many neobanks to survive.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 January, 2021, 13:20Be the first to give this comment the thumbs up 0 likes

"deposits held at seven of the leading neobanks total $1.68 billion, about 0.014% of all deposits held in US banks." (Source). This stat shows that neobanks have had negligible impact on the banking industry despite being around for a decade.

That said, just as pioneering neobanks like Simple are shutting down, latecomer neobanks like Ally, Chime, et al seem to be doing well. I find that mysterious!