“Banks need to be low-cost producers”
ING Belgium has seen spectacular growth in customer numbers in recent years. Ralph Hamers, CEO of ING Belgium, explains the success and at the same time looks to the future.
You’ve been CEO of ING Belgium for almost two years now. How do you look back at your time at the helm so far?
With a lot of satisfaction. ING Belgium is performing really well, in spite of the difficult financial and economic context in which it operates.
How do you explain the great results?
In 2008, ING Belgium launched a new distribution model on the retail market under the motto: ‘direct if possible, advice when needed’. Specifically, in addition to our branch network, we expanded our online sales channel for simple products, such as current accounts and insurance policies. Thanks in part to this multichannel approach, we have emerged stronger from the financial crisis. We have won market share from our competitors who have been hit hard.
Since the launch of this universal direct model, we have seen continuous growth in terms of customers and deposits. To put a figure on it: since 2008, we’ve welcomed almost 400,000 new customers. Given the current economic climate, this is a considerable achievement.
In his farewell interview, your predecessor, Erik Dralans, said that ING Belgium had developed from a challenger to a trendsetter. Is this still the case?
Absolutely. It’s a role we want to carry on playing. To give you an example, we have recently become the first bank in Belgium to offer mobile sales: customers and non-customers can also open a savings account (ING Lion Premium) or current account (ING Lion Account) using our mobile app MyING.be. This is yet another example of how we as a bank are moving with the times and responding to changing consumer behaviour.
So customers are increasingly looking for direct channels to manage their banking business. What impact is this trend having on the branch network?
Customers prefer to manage their simple, day-to-day banking business on their PC or smartphone. But the advisory side is still important for more complex products such as mortgages or securities transactions and management. You can automate processes for these kinds of products to a certain extent, but ultimately the customer wants to talk to a member of staff. This is how the type of work at a bank branch is changing from transactional to advisory.
That’s why we’re also moving away from the classic bank branch. We’re currently busy renovating all our large branches. Each branch will have a special internet area so that staff can show customers how to use internet banking and mobile banking applications. Customers are familiar with these new channels but often require help. We plan to ensure that at our redesigned branches staff are always on hand to answer questions.
You say that commercial customers are also increasingly choosing the direct model for their banking products and services. How are you responding to this?
Currently, our priorities are: to be able to provide our commercial customers with the same online services as our retail customers. One of the first specific examples in this area is a new service that allows professional customers to download and request certain documents such as tax and other certificates.
Until recently, customers had to contact their relationship manager or branch for this service and it took several days before they received a document. Now, it’s just a mouse click away. In a few months, other documents, such as repayment schedules, will be available via this channel. In the course of next year, other online functionalities will be added.
What challenges do you envisage for ING Belgium?
The environmental factors remain extremely unstable: the recession in Europe is stubborn, as is the debt crisis in the eurozone. Furthermore, European regulators are imposing ever stricter rules on financial institutions. Added to this, it’s clear that our retail and commercial customers are increasingly opting for the direct model for their banking products and services.
This has two consequences for us. First of all, we need to step up our efforts when it comes to introducing the universal direct bank model for retail and commercial banking. Secondly, we also need to move up a gear when it comes to cost efficiency.
What does this mean specifically?
All banks benefit from reducing costs in such a way that the customer notices as little as possible. Banks need to be low-cost producers. The fact that customers increasingly want to manage their own banking business, means that you need to aim to standardise and streamline the product range and simplify the processes. This is how you create a better and faster service, as well as a significant package of savings. The substantial investments in process simplification and product standardisation will therefore lead to better services and cost savings, while expanding our customer base will generate more income.
‘Direct if possible, advice when needed’ will be our motto more than ever. Customers and non-customers currently have direct access to almost 40 products and services via the internet, from current accounts and savings accounts to professional loans. The intention is to significantly increase these over the next few years. We want to further expand our universal direct business model to all segments and to sell 50% of our simple products via the internet in the short term.
This feature was earlier published in the November edition of ing.world