NOT SO SIMPLE

Simple’s outage is a lesson in customer service, but also a warning sign for online-only banks

August 14, 2014
August 14, 2014

When a service outage planned for Aug. 6 lasted a day longer than expected, thousands of customers of the BBVA-owned online bank Simple lost account access and had transactions rejected.

Around 10% of Simple’s 120,000 users were affected. To compensate for the inconvenience, Portland, Oregon-based Simple credited the accounts of the affected customers $50 each, a $600,000 hit in total, according to The Oregonian.

As online-only banks become more prevalent, the question of how to handle such outages, seemingly inevitable for every web-based company, is key.

“You can’t have a Fail Whale in online banking,” says Brett King, founder and CEO of online bank Moven. “People want certainty when they swipe their card. When that doesn’t work it can be extremely distressing.”

In some cases, Simple handled the backlash with extreme customer service—like ordering a pizza for a user who complained on Twitter. It also responded with forthrightness. Yesterday, CEO and founder Joshua Reich published a blog post titled “My Apology to You,” explaining that the cause of the issue was a migration to a new systems platform and pledging to regain user trust. Customer reactions gleaned from Twitter seem to be largely positive.

Simple benefits from a relatively small customer base primarily consisting of early adopters. “We’ve had no trouble with transparency as we’ve scaled so far,” company spokeswoman Krista Berlincourt says. An outage handled less gracefully and affecting more people would be more difficult for a bank to emerge from with its reputation relatively unscathed. This perhaps suggests a ceiling on the potential growth of online-only banks, at least while there are still alternatives that don’t require consumers to put all their faith in a purely digital bank.

Foot traffic at physical bank branches has been waning for several years; still, a March poll by Bankrate.com reported that half of Americans, including 42% of those under 30 years old, had visited a bricks-and-mortar branch in the past 30 days.

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