Word: banking
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...fledgling company, ING hired Kuhlmann, whose buttoned-up career in finance--by age 33, he was a vice president of the Royal Bank of Canada with his own private dining room--hid an edgier side, the side that rides a Harley and reads palms, a skill he picked up from his European grandmother. In ING Direct, Kuhlmann saw a revolution, a chance to fix the things he knew people hated about banks. Companies in other industries had succeeded with stripped-down versions of competitors' products--Southwest flew airplanes without assigned seats; Ikea sold design-minded furniture without assembling...
...Suggesting there is a McDonald's approach to banking is heresy," says Kuhlmann. But the no-frills strategy has worked. Since the Canadian trial, ING Direct has launched in eight more countries. In the U.S., where Kuhlmann is now CEO, ING Direct is the largest Internet bank, with more than half of the country's $90 billion in online deposits, according to market tracker SNL Financial. And without a single branch, ING Direct is the 28th largest bank of any kind in the U.S., as ranked by assets (and 24th by deposits), nipping at the heels of regional powerhouses such...
...Because the company sells bare-bones products at a slim margin, it needs low-maintenance customers. At the firm's New York City café, one of five token storefronts, manager Omar Woodard recently let an older woman walk away without an account after she worried aloud that branchless banking might be too newfangled. "Customers who don't fit our business model don't fit our business model, and that's totally O.K.," says Woodard. "The bank just wasn...
...people. ING Direct has more than 5 million account holders, with 100,000 to 150,000 more signing up each month. "Before it was a curiosity, but now banks look at the outflow of accounts to ING Direct, and they're reacting," says Alenka Grealish, managing director of the banking group at consultancy Celent. Citibank, HSBC, Capital One, E-Trade and Emigrant Bank are among those offering no-fee, no-minimum-balance Web-only accounts with well-above-average interest rates. Many even offer rates higher than ING Direct's. Kuhlmann's response: "Knock yourself out." So far, new-account...
...same time, new products add un-ING-like complexity. When it rolled out checking in March, the bank introduced a system for doing nearly all transactions online; handing out checkbooks was deemed too cumbersome. But there was no easy solution for customers who had to have paper checks for the landlord or the babysitter. So ING Direct now prints and mails some 25,000 paper checks a month on customers' behalf--no charge for the stamp. Kuhlmann battled his staff for weeks over the issue, insisting that no matter how transparent, ING Direct wouldn't charge...