Spiffy! (simple.com)

Here's something that'll resonate if you've tried to communicate with your bank lately: “Banks make money by keeping customers confused.” That's how Josh Reich, cofounder of Simple, explained his company to the New York Times. “There’s no incentives to make the experience better,” he added.

Today the Times writes about how Mr. Reich and his cofounder Shamir Karkal want to provide an alternative, in the form of a stripped down, perfectly clear alternative--one completely without sob-inducing hidden fees.

Of course, that's easier said than done.

It's taken the team a long time to get just this far: The Observer first took notice of the service when it was called BankSimple and based out of a Brooklyn basement; in late 2011, invites finally began trickling out a few dozen at a time. One Betabeat reporter only just got her invite--a year and two days after requesting one.

Simple is now off and running, having amassed a customer base of 20,000. The Times says company has processed more than $200 million in transactions. Not too shabby! Plus, a suite of data analysis features offer customers an unusual degree of assistance managing their money. (Imagine a dash of Mint.com in your Bank of America dashboard.)

But Messers. Reich and Karkal still have a very long way to go before they ascend to the ranks of the J.P. Morgans of the world:

“It is extremely difficult to get consumers to change and leave their banks,” said Jacob Jegher, an analyst at Celent, a research and consulting firm. “Plus, although they are not a bank, they still operate like a financial institution, and they will face challenges that big banks have decades of experience with.

The course of startup success never did run smooth.

(simple.com)

Betabeat just received a note from the personal finance startup formerly known as BankSimple. The first signup was in February 2010, the company says, and it's first come, first serve. That means people who signed up recently will have to wait until summer to get their invites. "We have begun sending out invites, currently a few dozen at a time, and then we will escalate from there," Simple says. "If that seems a bit slow, it is deliberate. To get ready for a wider release, we are beginning with the core features of spending and depositing, and looking to our first customers for feedback before releasing the full product."

Simple started up in New York but recently moved to Portland. The company's prelaunch troubles remind us of what held up Jack Dorsey's Square, the mobile payments processing dongle, production of which was delayed due to concerns about security. After the product was release, Square faced accusations over the security of its system from competitor VeriFone, which said the device could easily be used to steal credit card information.

Simple has decided it's better to keep customers waiting and err on the side of caution rather than rush the product out the door--even though the wait time is now approaching two years.

"You’ve been on the list a long time, and we’re thankful that you have stuck with us," Simple says. "Those of you who signed up most recently can expect to receive your invite by summer. Those of you who signed up earlier will receive their invite sooner. We’ve been using the full product internally for a few months, but Simple presents key departures from how banking typically works and we want to make sure that you all love it as much as we do."

The company is careful not to apologize, merely thanking users for their support.

Beachy!

After much anticipation (at least around the Betabeat offices!), BankSimple is finally accepting its first users. And it couldn't come at a more opportune time for the innovative financial startup, which works with chartered banks to offer a better, more transparent experience for customers in managing their money.

In a blog post today, CEO Joshua Reich said the service is still invite-only, but pointed  out that its the first time non-employees get to test drive the system.

On the heels of Occupy Wall Street's criticism of big banks and an email from MoveOn.org urging folks to "Close Your Bank Account," consumers have been fleeing traditional banks for credit unions. ABC News reports that 650,000 people switched to credit unions since Bank of America announced its (since-cancelled) plans to institute a $5 debit card purchase fee. After "Bank Transfer Day" on Nov. 5, 54 percent of credit unions reported an increase in share growth.

It's easy to see consumers looking for an alternative turning to BankSimple instead, although it will be under a different name.

As part of the announcement, Mr. Reich said BankSimple is dropping the "Bank" part and will just be called Simple. Hrmmm, that's either a branding coup or overkill (Think of the trademarks, people!). But it's an unambiguous win for in terms of domain names: the startup owns Simple.com.

Although originally launched in a Brooklyn basement, the company, which has $13.1 million in financing from VC firms including locals like IA Ventures, Lerer Ventures, and Thrive Capital, is now based in Portland. *Sniffles*

Mr. Reich explained what consumers can expect from Simple:

"Using Simple, you can make purchases with a Simple Visa® card, pay bills, earn interest, set up and track savings goals, and much more. Simple replaces your bank, but we are not a bank. You use our mobile and web apps and speak with our customer relations team when you have questions. We partner with chartered banks that hold your deposits in FDIC-insured products. They take care of money, we take care of customers, and together we’re delivering a new type of financial experience that’s easier, faster, and friendlier."

Fast Company got an early look at its iPhone app, which looks less than simple. For a little more detail, take the video tour of the desktop experience. It's from back in September, however, so you'll have to mentally redact the Bank part of the logo:

BankSimple Demo from Simple on Vimeo.

Disclosure.