Simple's shutdown is good news for US neobanks

Summary List Placement

The Spanish bank notified the challenger bank’s users that their accounts will be moved to BBVA USA, and eventually become accessible primarily through the BBVA USA app, TechCrunch reports.

The parent bank cited its pending merger with PNC as the impetus for the closure, as it seeks to streamline its business. While it’s uncertain how many users Simple currently has, it is relatively old for a challenger bank—it launched in 2009—and had approximately 100,000 users when BBVA acquired it in 2014.

The decision undercuts a key feature that likely drew many customers to Simple in the first place. Simple has enjoyed a great deal of independence from its parent company, as part of BBVA’s strategy to add more modern services that could bring in younger clients, per TechCrunch.

For Simple’s users, who likely adopted the challenger bank for a more digital-centric experience from a nonincumbent bank, being moved over to BBVA USA—and to PNC when the merger closes—will probably be a disappointment, and could open the floodgates to customer dissatisfaction.

Simple’s exit is likely to be a boon for other neobanks active in the US by creating a pool of consumers who are explicitly seeking a digital bank experience. Some Simple customers are likely to stick with BBVA USA after the transition out of convenience, and they may find its digital prowess satisfactory: BBVA USA’s mobile banking capabilities came in fifth among the 25 largest US banks in Insider Intelligence’s US Mobile Banking Competitive Edge Study 2020.

However, those who decide to leave will be prime prospective customers for other neobanks in the US. Simple’s domestic digital competitors could fuel their current momentum with a new crop of customers: In September alone, Chime closed a $485 million funding round, while Varo attained a full banking license.

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And it’s not just US neobanks that stand to benefit: European neobanks—including Revolut, Monzo, and N26—are building a presence in the US market and could benefit from a fresh pool of consumers who are already onboard with neobanks’ value proposition.

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Source:: Business Insider

      

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