The New York City-based company, founded by CEO Josh Reich, announced it will be partnering with Visa for its banking cards and will holding its customer deposits at The Bancorp Bank and CBW Bank, which are both FDIC-insured.

BankSimple, which I profiled earlier this year, is actually not a bank but will leverage partnerships with BanCorp and CBW to offer a very modern banking service that allows users  to combine all their credit, savings, checking and termed accounts into one banking card. BankSimple will use machine learning and statistical analysis to manage users’ money, help them reach their stated savings goals, and stay within their spending limits.

The service, which tries to add more transparency to the banking process and eliminate surprise fees, also leans heavily on smartphones, with which BankSimple users can deposit checks or monitor their funds. The phone’s location will also be used to help combat fraud. For now, BankSimple said it will widening its trials and is expanding to friends and family.

Take a look at a video interview I did with Reich.

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Basically, BankSimple is trying to birth a new financial service devoid of the old patterns, branches, fee structures and slow embrace of technology that mark today’s financial institutions. The company has some serious smarts and respected backers. Led by CEO Josh Reich, a former marketing and quantitative finance analyst, BankSimple also includes CTO Alex Payne, one of the first Twitter employees. The startup has raised $3.1 million dollars to date from First Round Capital, IA Ventures, Village Ventures and investors Ron Conway, Nauiokas Park and Jerry Neumann.

BankSimple, to be sure, is not a bank. It will partner with smaller banks who will hold the federally insured accounts. What BankSimple will do is provide an online interface that allows users to combine all their credit, savings, checking and termed accounts into one banking card. Customers can set their spending limits and savings goals with BankSimple and the service will dynamically manage their money between accounts to ensure they stay on their targets.

It takes a bit of faith to entrust one’s money to an online service like this, but Reich believes customers will learn to trust BankSimple because it provides real-time updates on spending via the web and through Android or iOS apps. The system is designed to help users manage their money, as opposed to traditional banks that have increasingly relied on revenue from fees and penalties when customers make mistakes, Reich said. In fact, BankSimple does away with most fees and penalties because it doesn’t have to support costly branches. The service makes its money off interest and interchange fees.

“We don’t make money off the customers mistakes, which is the way it should be,” Reich said. “If our incentives are in line with our customers and we have the right set of data, we can put your money on cruise control.”

Reich said BankSimple is taking a big data approach to small personal finance data, applying statistical analysis and machine learning to help create a system that responds to a user’s needs. You can hear more about how financial institutions are using big data at our Structure Big Data Conference on March 23 in New York.

Smart phones are an essential aspect of BankSimple’s business plan. Users can take pictures of checks to deposit them without sending them in. But more importantly, customers are able to monitor their funds in real time from their phones. BankSimple will update its transactions instantly to let people understand how their transactions are affecting their goals. The phones are also used to help combat fraud by providing instant alerts on purchases. BankSimple can also see if a user’s location matches the location of a transaction to monitor for fraud.

The service has been testing with friends and family and will soon open up to a private beta. Reich said 30,000 people have signed up to be part of the beta, though the initial group of beta users will be limited at the start. The company is waiting right now on banking cards to launch the service. When the cards arrive, customers will be able to use them at 35,000 Allpoint ATMs for free at 7-11 branches and other drug and convenience stores. While BankSimple won’t have local branches, the company is investing heavily in call centers to provide responsive customer service.

Can BankSimple convince users that they should ditch their old banks in favor of a start-up? Though many consumers have little love for their banks, it’s an institution that may be hard to part with. But I like how BankSimple is trying to leverage data and mobile to give us something new in banking. Even if it flames out, those same tools need to be better utilized in the banking experience.

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