Another direct hit?

As ING Direct expands its product portfolio, the challenge for the ‘no hassle’ bank is building a rounded brand consumers will trust. By Catherine Turner

Internet and phone bank ING Direct is gearing up to launch its second UK product – a mortgage – later this year (MW last week). The direct bank, owned by Amsterdam-based financial giant ING, prides itself on its simple, honest, “no hassle” and “no strings” approach and says future launches will personify these qualities.

The savings product has attracted more than 1 million customers in three years in the UK, but whether ING Direct can translate the successful premise of its savings account to other products remains to be seen.

Marcus Mitchell, a strategist at brand consultancy Corporate Edge, says the ING Direct brand has evolved quickly and coherently because it focuses on one clear product. He believes the brand can stretch to other areas but says it won’t be easy. Launching a mortgage will test it, he says.

Mitchell says ING Direct must look to its corporate brand/ “Now that it’s looking at a move from one product to two products or more, it needs to start looking at how it develops the corporate brand.

“That is not a criticism: ING has done a good job in terms of a clear product proposition, and I imagine it will continue [to do so], but going forward it will need to build a strong umbrella brand to overarch product messages and marketing.”

When ING Direct first opened its doors in the UK, having launched in eight other countries, there was a sense among management that they were preaching to the unbelieving.

The savings product seemed too good to be true – high rates of interest, with no withdrawal penalties – which resulted in, says marketing director Gina Fusco, potential customers being sceptical.

Fusco, who is adamant that “people don’t trust banks”, cites one man who in research ahead of the May 2003 launch rejected materials detailing the account with a disbelieving “yeah, right”. ING Direct pays the same premium interest rate to all customers irrespective of the size of deposit. There are no tiers to the account, a &£1 minimum deposit, no withdrawal notice period, no fees and no penalties to be paid by customers.

Fusco, a former Barclays and Abbey marketer, says she and chief executive Lindsay Sinclair were given “almost a blank sheet of paper” in September 2002.

“We built the bank fairly quickly, she says. “From a marketing point of view it was a huge challenge, because there was already a very mature market in terms of financial services in general and direct banking.” Fusco says after being approached for the job she had doubts that another brand could launch in the UK.”But I met them and they told me they wanted it to be marketing-led,” she adds. “I asked if that meant they were going to be customer-led. They said that provided I could deliver results, I could do it my way.”

Research also revealed that less that 1% of the population were aware of ING Direct. Ensuing advertising by Vallance Carruthers Coleman Priest (VCCP) changed that. Steve O’Connor, who has worked on the account since September 2002, says: “The management believes passionately in making things as simple and straightforward as possible. The mortgage product will be very simple and customer-oriented.”

He agrees with Mitchell that the challenge ahead lies with establishing ING Direct as a rounded brand. “As the savings brand moves into different product areas and becomes a ‘bank’ in people’s eyes, we face a number of challenges,” he says. “We want ING to become a trusted financial services brand. We must ensure that we capture that sense of simplicity across the board.”

As one industry observer comments: “ING Direct is the ‘Ronseal’ of the financial services world.” He says other banks offer better headline rates but there are often “underlying conditions and caveats”. “ING, though perhaps a little staid and boring, does appear to ‘do what it says on the tin’.”

Fusco has no doubt that the formula can be applied successfully to mortgages and beyond. The brand launched with an initial budget of &£15m, but Fusco says the company is “frugal” with its marketing.

“We concentrate on three things: customers, making it a fantastic company to work for and being a sustainable, profitable business. We know what we get for every penny we spend on marketing. We are very frugal because we know the more frugal we can be, the more we can pass on to customers. We don’t have deep pockets,” she says.

Mitchell adds that ING Direct must prepare staff for a “more complicated” mortgage product or be prepared to lose brand equity through word of mouth. “It is a direct brand and early adopters will be key brand advocates. Word of mouth will be very strong and therefore customer experience will have to be very important.”

Fusco acknowledges this. Soon after its UK launch, ING Direct was beset by a media backlash because of poor service and standards. Advertising was halted while more staff were recruited and trained. “When we launched we were overwhelmed with the response from consumers in the UK. We couldn’t cope with the first two months.”

ING Direct proved then that it could get its house in order. Now it needs to build on the solid foundations it has put down to prove that simple financial products will attract high customer numbers and, ultimately, easy money.