For any bank expanding internationally without branches, ING is a reference point, and it is still something of an aberration in its use of the main bank’s brand for online-only retail growth outside its domestic market.
Today ING is in the middle of an aggressive cost-focused digitalization strategy in its increasingly competitive Benelux home markets. But much of its appeal for investors largely remains its unusual ability to find growth without branches, including in its so-called challenger markets elsewhere in western Europe, where it now counts more customers than in the Benelux region.
Most spectacularly, following the acquisition around the turn of the millennium of DiBa (which then had about 500,000 clients), ING has gained around eight million customers in Germany. Nowadays it is growing more rapidly in what it calls its growth markets, particularly Poland and Turkey, where it uses a mix of branches and digital channels.
However, it has also become more of a digital universal bank in its challenger markets, making them potentially more profitable. It has moved away from its previous model of gathering and reinvesting online and telephone-banking savings in those countries, instead targeting current accounts, consumer finance and small and medium-sized enterprise lending, with an increased emphasis on smartphone banking.
We have to have an attitude that if we don’t disrupt ourselves, then someone else will do it- Aris Bogdaneris, ING
ING’s success in challenging incumbents in markets such as Germany and more recently Spain has not been without problems, however. In particular, branchless banking – with low fees used to attract consumers – has accentuated a reliance on net interest income. This has been particularly unattractive in western Europe, as ultra-low rates have persisted, undermining its ability to make money from deposits.
In June, in a bid to boost fees, it announced a new partnership with French insurance firm Axa to distribute white-labelled non-life insurance products to its challenger market customers. Its strategy is to make it easier for customers to pick and choose elements of cover they need by using its app than wading through traditional insurance offerings. Late last year it also announced the launch in France and Italy of its Spanish partnership with Atlanta-based SME lender Kabbage.
ING is readying itself for a future as an e-commerce portal, with an ecosystem of propriety and third-party products, to a greater extent than most of its competitors.
“It is better to be involved in more aspects of our customers’ financial lives than to distribute a limited number of products that we own,” says Bogdaneris.
He gives the example of Yolt, its personal finance management tool, which makes use of new open banking rules to aggregate bank accounts. Yolt already has around 350,000 registered users in the UK. Although Yolt does not yet make money, ING is already looking to launch it in France and Italy.
Bogdaneris rejects the idea that this will only help lay the groundwork for others – perhaps the big US tech firms – to do it better.
“We have to have an attitude that if we don’t disrupt ourselves, then someone else will do it,” he says.