ING Direct

ING Direct’s “Unmortgage”

By Jim Bruene Posted on
Categories: Advertising & Promotion, ING Direct, Mortgage, Refi & Home Equity

Yup_logoWhen  everyone is swimming upstream, sometimes the best strategy is to head down. In the soft drink world, 7-Up's "uncola" campaign is legendary. The J Walter Thompson campaign launched in 1967 ranked 61st on Advertising Age's Top-100 All-Time Advertising Campaigns (compiled in 1999). In that spirit, ING Direct Canada's "unmortgage" campaign is bound to grab attention <ingdirect.ca>, even without the fizzy water.

Ing_ca_homepage_1How often have you seen "the best mortgage is no mortgage" at a lending site? The direct banking pioneer doesn't even use the word mortgage on its homepage, instead posting an "unmortgage toolkit" along the bottom navigation (click on inset for a closeup). To further reinforce the unmarketing strategy, an unmortgage sweepstakes promises $20,000 to two customers to assist in paying down their mortgage balance (see screenshot below).

Ing_ca_unmortgage_contestAnalysis
Unfortunately, the bank does not make good on its homepage promise. Clicking on the Unmortgage Tool Kit, simply drops users into a relatively standard mortgage page with information on new mortgages, refis, and home equity (see screenshot below). Where's the "help me unmortgage my home" button, or the "five steps to eliminating your mortgage" worksheet, or even a "talk to one of our unmortgage officers today" graphic.

Ing_ca_mtg_homeAfter a great tease, the company leaves users hanging. Hopefully, they'll remodel their mortgage page with ways for prospective customers to follow through on the unmortgage promise. Since ING trademarked it, you may not be able to use that clever name. But anyone can follow the powerful strategy of working to get your customers out of debt and back into the savings habit.

Ing_ca_mortgage_logo_2In the United States, as baby boomers head into retirement often loaded with mortgage debt, "mortgage retirement" is likely to become a major focus in the personal-finance press for decades. Now is a good time to make your mark as the unmortgage expert in your area. While it may not land you on Ad Age's Top-100 list, it could keep your mortgage officers busy for years to come.

—JB

Marketing Database –

If you're in need of inspiration for financial marketing ideas, check out the Interactive Financial Marketing Database from our sister publication, the Online Banking Report.

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Paperless Checking Accounts

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, ING Direct, Strategies

Ing_ball3_1If the statute of limitations on "I told you so" is seven years, then word that ING Direct is contemplating a "checkless" checking account called e-Orange comes in just under the wire. Our Virtual Checking Accounts report, which outlined just such an account, was published six years and eight months ago (OBR 50/51) (see note 1).

We've always enjoyed the ING Direct story because it defies conventional wisdom in so many ways. Here are the "rules" that the Dutch banking giant, thirteenth largest in the world, has broken:

  1. Branchless, Internet-only banks can't build a large deposit base
  2. Large entrenched financial institutions can't create a hip online brand
  3. Mass-market banks must offer checking accounts

Worldwide, the ING Direct unit serves 15.7 million customers, and in 2005 it earned a profit of 617 million euros, about 9% of the parent's earnings. The U.S. version accounts for about 20% of the customer total, approximately three million accounts, and has been portrayed as profitable by company execs.

Why "checkless" checking?
No details are available on what an e-Orange checking account might look like. The company will only say that it's in "testing" in the United States. We've held an account at ING Direct since it opened (Q3 2000), and we haven't been approached. But it's pretty easy to guess what it would include:

1. Simple account-to-account transfers (already part of its savings product)
2. Online bill payment
3. Debit/credit cards
4. A high rate of interest, although checking is a point or so less than savings accounts

The lack of paper checks may be more a publicity stunt than a true cost savings, although if they succeed in keeping the paper out of customers' hands, it might help keep funds on deposit. Consumers facing a fat tuition bill may be more likely to pull out the checkbook connected to their Citibank account rather than arranging an electronic deduction from e-Orange.

The company, which portrays its savings account as a "companion" to the customer's existing branch-based checking account, is likely not looking to displace the typical 30-transactions-per-month checking account. More likely, they are positioning it more as a money market account with a competitive interest rate along with the convenience of paying a few major bills from it on an infrequent basis.

With ING Direct's core savings product under attack from all sides (see previous NB articles), it has to look to other avenues of growth. A unique checking account, one that bags free press and a few billion in deposits, makes a lot of sense for a company with a keen grasp of how to make bold, attention-grabbing launches (see note 2).

—JB

For more info:

End Notes:
(1) The seeds of that report were published a year earlier in Creating the Amazon.com of Financial Services (OBR#38/39)
(2) The company has entered new markets with clever stunts, such as giving all transit riders a free ride (Washington DC, SF-Bay area); a free tank of gas (LA); coffee bars in prime locations (NYC, Philly); and so on.

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ING Direct Personalizes Emails for Security

By Jim Bruene Posted on
Categories: Alerts & Messaging, Deposits, Checking, Savings, CDs, Email Marketing, ING Direct, Security & Privacy

Ingdirect_personalized_emailING Direct <ingdirect.com> is the latest bank to move to greater personalization in order to distinguish its messages from phony phishing attempts. The bank has added the customer’s first name and masked all but the last three digits of the customer’s number (click on inset for a closer look).

The message at left was sent to customers to market ING’s latest deposit promotion: 4.75 percent APR for new money.

Ingdirect_personalized_alertThe same technique is also used for routine account alerts (see inset right).

Note: The high-impact sales pitch for its 4.75 percent deposit promotion.

Analysis
While it doesn’t prevent phishers from attempting to recreate the same look (see footnote), it’s an effective first line of defense. Besides, the personalized greeting is a friendler way to communicate with customers. Citibank has been using a similar approach for more than a year (NetBanker, May 30, 2005).

Citi_phishFootnote: Yesterday, we received a fake email that recreated the Citibank personalized area in the upper-right corner. The crooks just left blank the Email Security Zone in the upper-right corner, figuring many users won’t look that closely at the box (click on inset for a closer look).

—JB

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ING Direct Savings Account Demo

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, ING Direct

Ingdirect_demoING Direct US <ingdirect.com> has added an online demo, perhaps the only pure savings account demo online: a good idea, if you are serious about the high-rate deposit business. Users need reassurances you are trustworthy and competent. A good online demo helps on both counts (click on inset for closeup). To view the demo yourself, click here.

—JB

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ING Direct Adds Virtual PIN Login Pad

By Jim Bruene Posted on
Categories: ING Direct, Security & Privacy

Ingdirect_usa_pinpadING Direct’s <ingdirect.com> three million U.S. customers now must enter passwords into the site with an on-screen PIN pad. Users have the choice of clicking on their numerical PIN or typing the corresponding letter into an on-screen box (see screenshot below). The letters are scrambled each time to defeat many keylogging programs.

Although, the virtual PIN pad technology has been widely deployed elsewhere in the world, it’s new in the United States.

Analysis
Until recent deployments at Bank of America (NetBanker May 26), Citibank (NetBanker May 30), E*Trade (NetBanker March 2), and a handful of others, ING Direct has been the sole U.S. bank making at least a minimal attempt to make login more secure. For the past four years, it’s required a third piece of information at login (partial social security number or year of birth). It’s not really multi-factor authentication, because the third piece isn’t too difficult to figure out, but it at least provided the perception of better security (click on screenshot below to see closeup of login page).

Ingdirect_usa_pinpad_fullThe virtual PIN pad, first used by ABSA Bank in 2003 (see Online Banking Report 96/97), isn’t foolproof, but it does make it tougher for key-loggers and phishers to successfully recreate the login process at the bank. It’s also a relatively inexpensive improvement with very little customer impact. In fact, I’d expect that the customer response is overwhelmingly positive.

If the bank combines these cosmetic security features with robust behind-the-scenes authorization controls, it should have enough to keep the crooks at bay AND satisfy regulators.

—JB

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ING Direct and the Internet-only Banking Redux

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, Direct Banking, ING Direct

Ing_on_bankrate_1During the height of the bubble, there were dozens, perhaps hundreds of banks secretly planning to launch Internet-oriented brands. But the strategy fell out of favor with the very public downfall of WingspanBank, which lost funding during a corporate restructuring at Bank One; followed by the collapse of NextCard, which went belly-up after a ill-advised bet on sub-prime credit.

But despite these public failures, there was never anything wrong with the underlying strategy. Quite the opposite. Direct banking has been a viable business model ever since deposit deregulation in the 1970s. The Internet only makes it easier to reach and serve customers.

Case-in-point: ING Direct, still not five years old in the United States, has amassed 2.5 million accounts holding $29 billion in deposits at year-end 2004, making it the 30th largest financial institution in the United States. If they continue to grow at the same pace, they should be close to cracking the top-20 by this time next year. Their laser sharp focus on savings accounts, trendy branding, and consistent high rates has put them on the map.

This success has not gone unnoticed around the country. They are frequently discussed at industry gatherings and internal planning meetings. However, you aren’t likely to see many of its more traditional competitors jumping on the high-deposit bandwagon. It doesn’t make sense for them to alienate their customers and branch employees by offering higher rates online. And they are not about to reprice their entire deposit base to compete with ING Direct and the other high-rate institutions.

Emigrant_direct_on_bankrateHowever, I think you will see smaller banks look to the Internet for growth using new brands or brand extensions. In perhaps the most aggressive launch since ING Direct in 2000/2001, Emigrant Savings practically owns the deposit real estate at BankRate.com. In a recent visit, the bank’s Emigrant Direct brand not only had the top banner, they also bought the skyscraper on the left-hand side, effectively "framing" the entire content screen (click in the inset for a better look).

Note to ING Direct, check your skyscraper ad at BankRate.com (see above). Emigrant Direct has hung a small ad on the bottom of your banner that looks like part of your ad. I hope you are at least getting a discount from BankRate.com. 

—JB

If you’d like to learn more about the future of online banking include internet-only, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

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ING Direct Fundraising ($320,000) for Tsunami

By Jim Bruene Posted on
Categories: ING Direct, Website Usability & Design

Ing_donations_stmt_click2enlarge_2

ING Direct posted a Tsunami Relief Fund button on its main account view page (see above). So far, customers have kicked in $320,000. It’s less than a buck an account, but it’s still a sizable contribution in total. ING as a company has also pledged more than $1 million.

Lessons

  • The donation function is completely integrated, so it couldn’t be easier.
  • A link is provided to learn more about the organization that will administer the donations.
  • Customers get feedback on results, in this case $320,000 raised, so that customers can take pride in the total amount raised.

Note also: The pitch in the middle of the screen (above) to sign up for electronic statements to be entered into prize drawings including a plasma TV. Refer to our Jan. 18 article for more on that sweeps.

— JB

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Making Online Banking Fun

By Jim Bruene Posted on
Categories: Advertising & Promotion, ING Direct, Rewards Programs

Is banking ever fun? Not really. The best you can hope for is that it’s "pleasant."

How about online banking? It might have been classified as fun the first couple times you tried it, but it’s not fun anymore unless you happen to have lots of money piling up in your account.

Is it possible to keep it fun? Yes, but you’ll have to continuously innovate. As Seth Godin points out in Free Prize Inside: The Next BIG Marketing Idea, "The price of WOW keeps rising." In other words, what impressed your customers today, no longer impresses them tomorrow.

One innovation that we’d like to see more widely used is rewards programs for online delivery. It doesn’t have to be as expensive as frequent flier programs, more like the free Cokes you can win from time-to-time under the bottle cap.

Examples
1. ING Direct has a monthly raffle for its customers who have opted to receive email statements (which automatically shuts off the paper). Every quarter one of its 2 million customers wins a plasma TV, another wins a laptop, and a third wins a digital camera or portable DVD player. The total prize pool is about $5,000 per quarter, which amounts to one cent per customer per year, less than 1/500 of the cost of mailing a monthly statement.

2. PFF Bank & Trust (Pomona, CA) is running a bill payment usage sweeps during the first three months of the year. The promotion is advertised with eye-Pff_sweeps_1 catching graphics on its home page. Every time a customer pays a bill they are entered into the sweepstakes for a cool electronic "toy," January is the iPod (of course), February is a digital camera and printer, and March is a 19" LCD television. The total prize pool is just $2000 for the entire promotion.

— JB

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Branchless Banks now Hold 2% of U.S. Retail Deposits

By Jim Bruene Posted on
Categories: Deposits, Checking, Savings, CDs, Direct Banking, E*Trade, ING Direct, Metrics & Market Research

The Wall Street Journal published a story today that marks the growing importance of branchless online banks, Online Banks are Boosting Yields. Our sister publication, Online Banking Report, was the source for the article’s market statistics on branchless banks, which have developed a small, but significant following around the world.

In the United States, there are several dozen branchless banks, but more than three-quarters of the total branchless bank deposits are held by two banks, ING Direct and E*Trade Bank. Total branchless bank* deposits in Q3 2004 were about $65 billion, or 1% of all U.S. deposits, or about 2% of all deposits under $100,000. See below for more specific details.    

Branchless Bank Deposits
As of Sept 30, 2004, the deposit totals of the major branchless banks are as follows:

ING Direct       $26 billion in 1.9 million accounts ($14,000/acct)
E*Trade Bank  $23 bil in 2.3 million accounts ($10,000/acct)
NetBank          $2.7 bil in 200,000 accounts ($14,000/acct)
Everbank         $2.3 bil in 370,000 accounts ($6,200/acct)
All the rest      $5 to $10 billion total
————————————–
Total               $60 to $65 billion

Total US Deposits
The total amount of deposits held in U.S. commercial banks on 9/30/04 was $6.4 trillion including retail and commercial deposits.

If you look only at deposits of $100,000 or less (a proxy for retail deposits), total deposits were $3.7 trillion.

Branchless Bank Deposit Market Share
Branchless banks hold about 1% of all U.S. deposits ($65/$6400).

Looking at just deposits under $100k, branchless banks hold just under a 2% share ($65/$3700), actually 1.8% if you want to be more precise.

Source: FDIC

What it Means
It’s not as big of a splash as Amazon made in books, but it’s a solid start for an niche about 7 years old (Netbank started in 1997). I expect it will continue to grow 25% to 35% per year for the rest of the decade, eg, doubling the branchless banking deposit base every 2 to 3 years.   

*We define "branchless bank" as a separately branded insured depository institution that derives the majority of its business through direct methods (mail, phone, online) with minimal brick and mortar presence. We are excluding direct banking units operating under lending or insurance brands such as Principal Bank, State Farm Bank, IndyMac, MBNA, and so on.

—JB

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MBNA Might Acquire Egg

By Jim Bruene Posted on
Categories: Credit/Debit Cards, ING Direct, MBNA, Mergers & Acquisitions

MBNA Egg.com?

The Wall Street Journal today reported that MBNA was considering a purchase of Egg, the UK-based Internet bank and credit card issuer. While the primary purpose of the acquisition would be to pick up the bank's 2.8 million card accounts, MBNA would likely consider expanding the Egg.com Internet banking franchise into the United States.

We think the U.S. market is ready for another innovative Internet banking brand. Look at what ING Direct (USA) has accomplished in under four years: built a successful franchise with more than one million accounts and $16 billion in deposits (year-end 2003).

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