Friday, 15 July 2011

Exclusive Interview with ING DIRECT CEO Peter Aceto: Never pay a bank fee again

I'm a huge advocate of no-fee banking. I firmly believe no one in Canada should ever pay to deposit and withdraw their own money.  I wanted to know  how some banks are able to offer this product to customers and some are not. I spoke to the CEO of ING DIRECT Peter Aceto. His bank is known for its no frills, low cost and no fee banking. After speaking to Peter, I'm convinced no Canadian should ever pay a bank fee again. There are so many easy to use banking options that will help you save and put money bank into your pocket. Click "read more" for the full interview

Rubina: How is it possible for a bank to offer a no fee account and still be profitable?
Peter: That’s a good question, and it is possible and let me tell you why. Firstly our model’s very different, the way we do things. We have almost 1.8 million customers; they are willing to do some things on their own. They open their account online, most of their interactions are online and over the telephone, we don’t have thousands of thousands of branches. I don’t have an office, there is certainly no marble or granite around so we are a very low cost model. We use technology to do things efficient, we have customers that are willing to help themselves to some degree and that business model gives us the unique opportunity that we can create products that are of great value to Canadians, also have the best service in the country, and make money ourselves. I think there is something special about our strategy and our business model that makes us different from a more a traditional banking model.

It is very possible us for us to do that, if you want to open a Thrive Chequing account you have to do it online, if you want to pay bills and you want to email money or those types of things you can do it from your mobile phone, you can do it from our website.
That is a very, very low cost way for us to operate. But we are using technology and making it so easy for people to do these things that they are willed to do it on their own.  80 percent of our customers, they interact with us completely online and 20 percent use the phone primarily.  

Rubina: How is ING's no fee account different than the other no fee accounts?
 Peter: One thing that is unique and special about ING DIRECT for the 14 years that we have been in business, we’re very committed to providing the best level of service, treating our customers wonderfully and making sure that over the long haul that they end up with more money in their pocket if they do business with us. In terms of our rates our fee, and no minimums, transparency honestly, openness, and the end of the day if you are customer with us for 10 years you can build a wonderful trust with our organization. You’re always going to have great value, you’re not going to wake up one day and find out that the interest rate that you were paid on something is all of sudden a quarter percent and it used to be 2%. I think we behave in a very, very consistent way and very, very committed to our customers to make sure that when we surprise them,  the surprise is in a positive way not in a negative way.

I think there’s no one better in the country; of course I am little biased, in terms of meeting and delivering that value with simplicity. Our goal is to demystify banking to simplify things. We don’t talk banking speak we try to make things really simple and easy for all of our customers. I think what is important, is saving for us is also saving time, some parts of banking can be a utility and we use technology to make it very, very easy for people to do 75% of their banking. While they are eating dinner at the kitchen table while they’re on the subway or their mobile phone. I think that is what sets us apart.

Rubina: What are some of the common misconceptions about a no fee account?
Peter: We have gone to Canadians, who have chosen not be a customer with ING DIRECT and asked them what do you think of ING DIRECT? And the general view we think is Canadians think very positively about our brand they really understand what we stand for, but when we ask them why they don’t have an account there is a couple of reasons. One is they feel there is something mystical about us, meaning they get comfort to know that there is a place and people are here and we invest the money here we are not a magical cloud in the sky or we are not running it out of some foreign country. This is the thing that traditional banks in this country have been around for 100 maybe 200 years, they have a branch on every corner and it gives a lot of people some comfort.

I guess what I would like to tell them is we are a Canadian bank we have over 1000 employees and every single one of them is in Canada. We have people in Vancouver, Montreal, Toronto, Calgary; they’re all Canadians working here. Our customer are all Canadians we take their saving and we lend it to other Canadians so they can buy homes and do other things they need in their lives. We don’t outsource anything. It’s all done here. We are regulated in the exact same way everyone else is we follow the same rules have all the same capital requirements that any other bank would have in this country we are here in every sense of the word and we are very very real. Its just that when it comes to banking people feel the need to see something because its what they are used too. And I think ING DIRECT is quite rapidly changing minds to the tune of ¼ million new customers ever year. T

The other one some customers say, I feel like I only want to have one banking relationship,I don’t want to have multiple banking relationships; there are two issues that I would respond to. One is, that’s fine if you are willing to pay for that. For that convenience you are paying up. If you selectively pick one of those products that you are willing to share you can actually end up with a lot of money in your pocket at the end of the day. The other thing is ING direct also does want to provide more of what Canadians really need, and that is why we started with saving, with mortgages and mutual funds and now Thrive Chequing. Which many of our customers are very interested in saving with us and spending with us, in a way that is going to put more money in their pocket at the end of the day. So those I think are the common misconceptions, certainly my retort and response to that. That is what we are trying to do, and we do have some cafes and fixed locations and letting our customers know that if you feel like you need a place to go if something is going wrong we actually do have places for you to go as well. That will give them some comfort.  But they pay awful lot of money for having a branch on every corner in their town.

Rubina: You have owned the social media space (when it comes to banks) how did you do it?
Peter: For us this, the last three years it has been very rewarding for us. There clearly wasn’t an ROI, there wasn’t a business case, that this made sense. Here is what our rational was, we know all the stats of all the Canadians that are online and use social media all the time, and Canadians really are leaders in that way. Our bank is built on the premise of being transparent, the bank for people, we are very proud of our employees and being one of the top employers in this country and social media was a wonderful way for people to look inside our business and share with them. We are so proud of our customer service that we have no trouble having people complain about us online and actually airing out that in social media, because we know our business  is to exceed customer expectations. We drop the ball sometimes, if someone tells us on social media in front of 10-thousand followers we know we are going to solve that that problem, and we are very proud to do that in front of 10-thousand people.   Follow Peter on Twitter

Whether you are there or not, its going on (Social Media). People are talking about you,  they are talking about your brand people are not as interested in your marketing, your advertising as they used to be. They are less likely to use a financial advisor and those types of people. People are going to friends,  people are going to their families to get their advice. What are you doing? What is your experience? To be part of that conversation, to actually have something to listen too, and heard from us is amazingly powerful. You know I will always say here in the office,  if a family is getting together on Sunday night to think about their plan of how they are going to buy their homes they want to buy and they are thinking about getting a mortgage I would love one of my guys to be at the table, just to help them make a smart decision.  Whether they choose us or not. If they make a fully informed decision they are more likely to choose us.

Now in social media that conversation is happening and we can be a part of it. I think for us, its very, very rewarding and you would be surprised by some of the interactions that we are having. We are committing more and more resources to use social media as a channel we are probably two weeks away to having a human resources based twitter feed and Facebook feed, where human resources get to share their thoughts, five or ten times a day. Our view about leadership our view about development, our view of recruiting. We want Canadians to see what we see. And I don’t think many corporations feel comfortable doing that, and think it’s a competitive advantage that we are willing to do that.

Rubina: You don’t think that makes you vulnerable for other big banks to see what you guys are doing, and to see your strategy and see where you are going?
Peter: At the end of the day our competitors are smart and they are watching us and they’re following my twitter feed they are on our Facebook page.  I don’t take for granted how intelligent our competitors are.  I really don’t think there’s anything that I’m divulging that they aren’t going to figure out on their own, the issue is are they more than willing to follow and can they deliver in the same way we deliver and my view and the end of the day the answer will probably be yes. But, it’s going to take them a while and its going to be difficult and while they are figuring it out we hope to be on to the next thing. I think what’s important about being competitor like ING DIRECT in a market place where there’s a lot of giants around, we need to be flexible we need to be entrepreneurial we need to faster, we need to be more nimble I don’t think we can keep secrets for very long. We have to execute better to move faster and to be more focused on the customer than on the competitors. I think. at the end of the day. that we will keep us winning.


  1. Great blog Rubina! Will have to do some homework...

  2. I noticed the same phenomenon as you did.No matter how many times I do it always feels strange.

    Thanks Rubina!

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