ING bakes up a retail storm

As the decline of cash continues, ING's cash-and-café system might provide a model for banks looking to maintain personal engagement with their customers.

If the major banks want to look anywhere for inspiration about what the modern branch might look like one day, perhaps they should turn to ING Direct.

Strange, coming from a bank that’s known for being branchless.

ING actually has a sprinkling of banking sites across North America, the first one opened up in 1997. As yet, there aren’t any in Australia.

This correspondent visited the flagship store in downtown Toronto on Yonge St (pronounced young, ironically, because it’s one of Canada’s oldest streets). It’s just celebrating its first birthday.

With ING now in the ATM and credit card business there are a couple of ATMs out the front, but that’s where the similarities between the standard bank branch and ING’s version end.

Brenda Rideout, chief marketing and technology officer for ING Direct Canada, says there’s a good reason for that. It isn’t a branch; it’s a caf.

"We want Canadians when they visit our cafs to get a sense of our culture, our values and how we’re different from regular banks,” Rideout tells Business Spectator.

That might sound like corporate-speak, but there’s a crucial difference between the branches we’re used to Down Under and ING’s coffee and muffin dispensing sites.

"Unlike traditional banks,” says Rideout, "our banks are not a selling destination.”

And Business Spectator can vouch for that. Many columns from this week were filed from the Toronto store – they have the best free Wifi in the city – and not once did one of the staff try to sell me something, except that famous Canadian friendly chat.

What’s the point, a traditional banker might ask, of setting up a shop that doesn’t sell anything?

Rideout says it was always envisaged as an extension of ING’s brand. Again, that sounds a little like corporate speak, but it makes a lot of sense when shifting banking behaviour is taken into account.

Financial services consultant Brett King, author of the book Branch Today, Gone Tomorrow says the collapse of cheques and cash as the blood of our financial systems is forcing banks to face the question that some many traditional models are facing

"Is the value-add of a human interaction enough to differentiate against a rich, optimised, digital interaction when and where you need your banking?” asks King.

"Everything about retail financial services that relies on outmoded physical artifacts, proprietary and outdated networks, and processes that are complex and unwieldy – all lend themselves to disruption,” says King. "If you can think of a better way to do your banking, then you already realise that the current status quo is not sustainable. In today’s environment, if you can imagine it, then someone is probably building it.

King wrote separately in a piece that appeared in Technology Spectator last month (Banking on an Apple Store mentality, March 14) that Citigroup’s attempts to reinvigorate the branch at its site next to New York’s Union Square with some flashy tech, shows how financial services is missing the point.

"If you read some of the reports and commentary on Citi’s branch it was clear that many bankers believed that if you just got the branch format right, made the space more attractive for customers, they would storm the branch and all would be made right with the world,” writes King.

It didn’t happen. Why?

Where once we visited the local branch twice a week, we’re now heading there about twice a year. We’re making fewer (zero, nada, zilch) transactions at the branch and making more inquiries. No matter how high-tech the banks make their branches, our annual visits aren’t likely to rebound in any meaningful way.

Which brings us back to ING Direct. The Toronto store has a steady stream of Canadian faces coming through the door, but it isn’t overflowing with customers like Citigroup would like its Union Square site to be.

"Our philosophy isn’t so much to drive people in there, it’s for people to come in if they want to,” says Rideout.

Because the ING cafs aren’t selling points for the company, customers feel comfortable enough to use the space in the knowledge that they can discuss financial problems rather than products.

Because of this, the design is so much more relaxed and inviting. There’s an abundance of natural light, in a stark contrast to fluros of the typical bank branch. There are iPads for visitors to use at their leisure, along with local papers and a series of couches.

The staff there are just as likely to be able to have a chilled conversation about how to manage your handful of accounts as they are to let you know that the afternoon sun is much better on the Yonge St side.

As long as banks have to carry a big pile of cash out the back, this model will never be replicable for them.

But with generational change the decline of cash will only increase and it mightn’t be long before the banks have to split their branch strategy into a cash-and-caf model.

Alexander Liddington-Cox is Business Spectator's North America correspondent.

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