Dutch bank ING has launched its phone and Web banking operation, ING Direct, in the UK with a competitive savings account offering interest rates of 4.3%.
Announcing the launch - the eighth country for the direct banking arm of the Dutch financial services firm - Ewald Kist, CEO of ING Group, says: "This launch is set to continue the global success of ING Direct, which has already attracted over 6 million customers worldwide and has funds entrusted of well over EUR70 billion."
He says the business worldwide is currently recruiting 300,000 new customers each month.
The group intends to replicate the successful formula that has won it business in other territories, beginning with a no-frills savings account as an entry product. At 4.3% AER, the ING Direct rate add three basis points to those of its nearest rivals Halifax and Northern Rock which each sport 4% headline rates for Internet-only accounts.
After reaching a minimum customer base, ING Direct business units complement the savings account by cross-selling a focused range of other financial products concerned with wealth accumulation: mortgages, mutual funds, e-brokerage, pension and life insurance. The trigger for cross-sales is unilikely to be breached until early next year in the UK.
ING Direct was first launched in Canada in May 1997 and is now also active in Australia, Spain, the United States, France, Italy and Germany (under the name of DiBa and the recently acquired Entrium). As the business grows, the Web and phone-based operation is typically supplemented by a network of ING Direct cafes, providing a light-touch physical presence on the high street.
The combined operations of ING Direct in seven countries reached profitability in the fourth quarter of 2002, a year earlier than expected. Five of the seven countries (Canada, Australia, Spain, the USA and Germany) contribute to ING Group's profit. As in other installation, the UK operation uses Sanchez' Profile banking system, providing a single consolidated view of customer accounts across the bank.
ING Direct UK is based in Reading and should provide formidable competition to Egg, an equivalent direct banking operation majority-owned by insurance group Prudential.