They themselves aren't a bank. They partner up with banks that provide FDIC insured products. They just provide the customer service and the user interface.
BankSimple, not being terribly large, can't force the incumbents to play their game (like say, Apple could with AT&T to some degree - and they got lucky getting in with Cingular).
It will be interesting to see how this fares when the "financial service" supplier(s) starts yanking the chain.
What exactly would the chain-yanking look like? "Make your online banking suck!" "Charge random fees in an opaque manner!" "Make your customer service worse!" ?
And if they do have their chains yanked, they can switch their provider. It's not like banks have "coverage" to lock you in, like mobile networks.
