ING Direct’s services are outlined on its Web site,

The invasion of the orange-wigged promotion people started just a couple of weeks ago, and yet it has garnered major attention for ING Direct’s Orange Savings account.

The company offered free rides on the MBTA and free copies of The Boston Globe to drive home the point that its savings account not only will cost consumers nothing, they’ll earn more money on their account than at other financial institutions, said a spokeswoman.

“Basically, we are a direct bank. We don’t have any physical branches, so we’re offering our products over the Internet or the phone. We’re able to have low overhead since we’re not maintaining these branches,” said Ashlee Stokes of ING Direct.

The company passes the savings on to the customer, she said. The concept is easy once grasped. A person opens a savings account by sending ING a personal check. Then the ING account is linked directly to the person’s checking account at their original bank. The person can then electronically transfer funds from the checking account into the savings account – earning as much as a 3.25 percent return – and transfer the money back when it is needed in the checking account. Any outside check, however, such as a tax refund check, must be deposited into the checking account until it clears and then the funds may be moved to the savings account.

The Delaware-based ING Direct, whose Web site can be found at, was launched in September 2000. “We had established a footprint between New York and Philadelphia and it started by word of mouth, [which is] really good for us. About 30 percent of our accounts are through word of mouth,” she said.

Enough interest was shown in the Boston market to encourage the company in launching a media blitz. The familiar orange logo and ball can be seen on television, in print and online as a banner headline.

Although the bank has no branches and customers conduct business mainly through the Internet, with mail and call-center service available, Stokes said people mistakenly pigeonhole the company as an online bank. She added that it’s not fair, because the bank does offer multiple points of contact. According to Gomez, ING is not included on the Gomez Scorecard of online banking because it has been less than the required two years of operation, it has no Bauer Financial rating and because it offers only a savings account without the traditional checking account.

“We’re just trying to offer an alternative,” said Stokes. “If you’re not happy making 1 percent on a savings account with your current bank … we’re just saying, ‘Here, you can put your money with us.’ We’re not trying to compete with any of the traditional banks. We’re not a traditional bank,” she said.

But in advertisements designed to increase its 500,000-member customer base, it graphically compares the rates offered by FleetBoston Financial, Sovereign Bank and Citizens Bank.

“There’s something like 22,000 banks in America. That seems like a lot of alternatives, but if you look at them, they’re all the same. This is a choice; you don’t have to get a low rate and pay fees,” said Stokes.

‘Tight Ship’

Ironically, some analysts and Sovereign Bank refused to comment on ING’s push into the region.

But Fleet said while it was aware of the push, it wasn’t threatened.

“We pay very close attention to all competition,” said Fleet spokesman James W. Schepker. But while ING offers an online service, as Fleet does, it has drawbacks, he added.

“For example, with Internet banks [there is] clearly their lack of infrastructure, branches, ATMs, those components that round out what a full-service player offers,” said Schepker.

“Fleet, for example, doesn’t take a second place to anyone for online banking. We’re signing up 70,000 to 80,000 new HomeLink customers every month,” he said.

Additionally, Fleet can offer online customers the choice of going into a local branch and dealing with local people, he said, which is very important. Unless customers are completely dedicated to online transactions and only wish to “park” money in the account, they’re going to need a branch sooner or later.

While the model ING practices may make Fleet prick up its ears, the banking superstar is not likely to change its own model to chase after potential ING customers. Instead, said Schepker, ING is most likely to eventually gravitate over to Fleet’s model because it works.

Fleet expects to remain competitive but will rely on its plethora of services rather than going head-to-head in a savings account rate war, he said.

ING operates as a thrift bank, said Stokes, and makes its money by investing like a thrift instead of charging fees to customers. While she admits ING does engage in cross selling, she said the real way it makes money is by running a “tight ship.”

Another advantage to the high rate of return is attracting customers that ran away – with their money – from the Russian-roulette stock market last year. “With the stock market, with 9/11, I think we’re starting to see consumers wanting to have that emergency fund – not wanting to lock up their money. They’re just unsure and this offers a good, low risk, high return with liquidity and I think that is important,” said Stokes.

But becoming New England’s banking choice may not be the real goal of the blitzkrieg, said Matthew Pieniazek, president of Newburyport-based Darling Consulting.

It would be difficult for people not to notice their ads. “Is it something banks need to worry about? ‘Worry’ is probably too strong a word. I think they’ll get deposits but I doubt very much they will gain New England market share,” he said.

For a community-sized bank, Pieniazek said they should worry less about competing with ING for savings accounts and more about their own bank’s role in the future as the financial services world starts to consolidate.

People who know financial services know the ING name, he added. “It’s a good name. They have been very aggressive in acquisitions and their strategy is clearly not to be a bank. It is undoubtedly to be a total financial-services provider,” he said.

When asked about their goals for market penetration in the Boston area, ING provided a statement that reads, in part: “We weren’t really looking at specific numbers. Our corporate vision is to lead Americans back to saving to that end; we are providing the people in Boston interested in preparing for a sound financial future with a safe and secure savings account that provides good return.”

But Pieniazek said it isn’t about ING raising money by accessing the last bastion of low-cost products for banks because ING Group, the parent company, is a $600 billion-asset world player and can easily raise money much more efficiently through its access to world markets.

“This is about gaining access to customer names and addresses. That’s what I think this is all about – the opening salvo of cross-sell opportunities,” he said.

ING Ad Campaign Touts Bank As an Alternative to Tradition

by Banker & Tradesman time to read: 5 min