Sep 26 , 2010
ING Direct launches no-fee chequing account
By Robin Arnfield, News Editor
ING Direct Canada, the Internet- and telephone-only bank owned by ING of the Netherlands, has announced THRiVE, a no-fee chequing account. The bank has sent out emails to 10,000 of its existing customers inviting them to try out the new account.
“Because we are not a bricks-and-mortar bank, we’re able to offer a no-fee transactional bank account,” Peter Aceto, President and CEO of ING Direct Canada, tells Payments Business. “But our costs are lower than traditional banks not just because we don’t have branches. Our customers are very adept at using online methods for communicating with us, such as email and the Internet. This helps us to keep costs down.”
Aceto admits that the new account is not for everyone. “The reason we ask customers to apply online, is because to use THRiVE, you need to be accustomed to online banking,” he says.
The account comes with an Interac- and Cirrus-branded debit card as well as a chequebook. “Our debit card is a first for Canada,” Aceto says. “This is because all the information is displayed vertically instead of horizontally, as it is on traditional payment cards.”
With the move to EMV chip-and-PIN, swiping a card along its magnetic-stripe will be a thing of the past in Canada, Aceto says. “Instead, you will enter a card vertically into a chip card reader.”
The debit card can be used at ATMs owned by The Exchange network as well as ATMs and point-of-sale terminals in the US owned by Accel.
Aceto says that ING Direct tells customers applying for a THRiVE account that there are other ways to pay people than writing cheques. “We say to customers, you don’t really need a chequebook any more, you can use an email-based person-to-person payment service such as the one ING Direct offers on its website,” he says.
The new account pays 0.25 percent interest on the first C$49,999 deposited. An interesting feature is something called Whoops! Protection, designed to save account-holders from financial embarrassment if they go overdrawn up to C$250. Provided they repay this money within 30 days, there is no charge or fee. If after 30 days, the customer has not repaid the C$250, then there is a C$2.50 charge per 30 days. “With a traditional bank account, the fee for NSF (non-sufficient funds) can be as high as C$40,” Aceto says.
“ING Direct is taking direct aim at the segment of the Canadian market now being served mainly by PC Financial,” says Rob Burbach, senior analyst at IDC Financial Insights Canada. “This segment is very comfortable with banking relationships not being conducted through a face-to-face relationship, and generally has lower expectations for the levels of customer service that banks should provide, making it easier for ING Direct to exceed these expectations. The approach of doing a "market test" with existing ING Direct savings customers is a smart approach, and the messaging when this rolls out to a wide audience has a clear and compelling value-proposition.”
IDC Financial Insights has been warning for years about new banking competitors executing a branchless model that would gain strong traction in the Canadian market, Burbach says. “ING Direct appears to be delivering the goods,” he notes.