Academic journal article ABA Banking Journal

"Tough-Love" Bank Thrives

Academic journal article ABA Banking Journal

"Tough-Love" Bank Thrives

Article excerpt

"If you want a relationship, you gotta have it I with a spouse," growled the architect of ING Direct to a bankers conference back in 1998, introducing the concept of North America's "first discount bank."

Today Arkadi Kuhlmann is still its chief executive, but ING Direct is an $80-billion asset operation in seven countries--and, by the way, the subsidiary of $700-billion asset financial services firm, ING Group, Netherlands.

ING Direct just passed it's third anniversary in the U.S., with more than $16 billion in assets and 1.5 million customers. Better, 1.2 million of them bank mostly online, which brought ING Direct into the top ten online banks in the U.S., about a year ago, per NielsenNet Ratings. The only real option is the phone. ING Direct has no branches, just three "cafes" in the U.S., the latest having opened in Los Angeles last summer.

The basic ING Direct formula still holds, explained David Lewis, executive vice-president, in a recent interview. That formula was and is: no checking accounts; limited products; limited customer contact; revenue derived only from spread, not fees; service by phone alone; low overhead. And, of course, as Kuhlman envisioned, "Tough love: 'We think you're calling too often, so we're closing your account ...'"

Lewis says ING Direct "breaks up" with about 50 clingy customers a month, one of whom recently "flamed" it online. Interestingly, he adds, "everyone else" writing in sided with ING. …

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