ING Direct… A crash, a burn, a sell-out all in one!
You have to hand it to ING Direct; first it sold out its customers by continually allowing its rates to drop, now it’s put the rate up, and left its old “no tricks” branding out in the cold.
ING Direct launched with a fanfare five years ago; to paraphrase its sell, “people want high rate savings with no tricks”. It was actually due to ING Direct that I started to use the term “clean savings” in my top savings account article, as a way to describe a simple account where you put the money in and get the rate no nonsense. Then things started to change:
First selling out its customers
Having been a consistent high-rate player, the rot set in when ING failed to pass a rise in UK base rates on to its customers, effectively meaning a 0.25% rate cut. This started to continue. I remember meeting the head of UK operations at the time and telling him I thought this was a ludicrous strategy, and if he dropped the rate more than 1% below the best buys it’d haemorrhage customers and I’d be shouting from the rooftops trying to help that happen.
He denied it and said ING had great stickiness – in other words people would stay. For me this was flaccid logic; after all, ING direct’s customer base was built on the back of rate tarts transferring money to a high-paying internet account. You can’t compare this with the high street banks’ customer bases – they can and sadly do drop savings rates with alacrity, and apathetic or ill-educated consumers stay put. Yet ING built its base by attracting people willing to move from the old style.
He went ahead and did it though, and the result? Let me quote from an article on FT.com in January:
“In the UK… ING Direct failed to follow the Bank of England base rate increases on three out of five occasions and watched £3.5bn in deposits leave in the third quarter. The withdrawals pushed the UK unit to a loss. Lindsay Sinclair, head of ING’s UK operations, left the company in early December.”
Now it’s selling out its business proposition
You may’ve seen ING Direct’s more recent TV ads, still with the old familiar red ring enclosing the latest rate. This rate looks attractive too; a nice 6%, which while not table-topping, isn’t too bad. Yet spot the difference; now this includes a ‘bonus’, which is bank speak for a short term rate hike to entice in new customers before they can fleece them again by letting the rate plummet. Existing customer don’t get it.
In fact if you read its terms it says:
“New ING Direct Savings Account customers will get 6.0% AER* variable (gross p.a. 5.84%, this includes a 0.95% bonus fixed for 12 months from account opening). After this period the variable rate will be paid, currently 5.0% AER*. This is a limited offer.”
Staggeringly, it still has the chutzpah to keep its tagline “ING Direct: keeping things simple”. Yeah, about as simple as the European Constitution!