From a regulatory perspective, we're a lot like a prepaid card. It's a well-known model that banking authorities, legal experts, and the government is comfortable with. You probably already use financial products that work similarly to the way we do.
That said, we hold ourselves to the same security standards that "real" banks do. I'd like to think we're going above and beyond when it comes to security.
"a lot like a prepaid card" doesn't answer the question. In what ways is it like a prepaid card? In what ways is it not? As the OP asked, where does the money actually go? It's a concern that you couldn't really answer the question.
I think that you are wrong that this is a concern. HN is not a financial forum, and you are asking for technical details that are irrelevant to the discussion. Simple's statement is that your money is in a third party bank, and Simple promises to be a prudent intermediary.
If I am to be giving my money to anyone for safekeeping, I better be damned sure I understand the financial and legal details. Are the FDIC-insured accounts in (Bank)Simple's name? What happens if they go under? Can the creditors of Simple use those deposits to recoup their investment?
Relevant, always. But demanded? We don't always demand to know important details regarding open source NoSQL databases, and that's our area of expertise. Just suggesting that outrage isn't appropriate in this situation.
It's not outrage, people just don't understand how this business works. I think people want to know how it works both because they like understanding the inner workings of things, and they won't use it until they're convinced it will work.
Maybe you could provide more detail? Simple appears to be very transparent in what service they provide and where they make their money. I said that HN is not a financial forum not because we aren't curious, but because we aren't informed. It's rather like customers fervently demanding to know which web framework you built your photo sharing website on, because "there was that thing that went bad that time before and like lots of people lost some data". Would it comfort this customer to know that you are using django? Or rails? It's foolish to provide any answer, because at such a high level there are no wrong answers. It's important to be concerned about your money, but let's be reasonable in the technical questions that we demand answers to. As Simple handles money, they are already heavily regulated and bonded, and if anyone doesn't get their money back, it won't be depositors.
Like others have echoed, I just want to know how this really works. Part of the problem of "disruption" is that it creates confusion and breaks the usual pattern of doing things. Noone will sign up for your service if it's just 1 huge black box that is completely foreign and new to them. You will need to educate how it all works... I mean, I still don't know what you guys do, or are.. You're not really a bank, Ok.. that's a start.
Firstly, I have no affiliation with Simple. But here's my problem with this line of reasoning: even if Simple wrote a detailed description of what they are and how they work, it wouldn't actually help anyone here. Maybe a couple of us have dabbled in something financial, but that doesn't make us qualified to judge whether banking with Simple is a sound financial decision. I don't fix my own medical problems, I don't practice my own law, and I certainly am not going to be my own banker. The best bankers in the world thought that CDO's would be a good (if risky) investment. It's arrogant to think that you can evaluate the financial stability of a financial company by asking a couple of shallow questions on an Internet forum. A couple of people have asked whether their money would be FDIC insured in their name - that's an implementation independent question that actually deserves an answer. Even so, how are any of us understand whether FDIC protection has exploitable loopholes? Let's drop the technical posturing and ask deeper questions that have meaningful answers. Yes, you might have to think before you type.
How can people evaluate if they're comfortable using this service without asking these questions? I don't see any technical posturing. And I do see, deep, pointed questions from people interested in the service, but still skeptical about it.
From a regulatory perspective, we're a lot like a prepaid card. It's a well-known model that banking authorities, legal experts, and the government is comfortable with. You probably already use financial products that work similarly to the way we do.
That said, we hold ourselves to the same security standards that "real" banks do. I'd like to think we're going above and beyond when it comes to security.