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—>As it prepares to launch its first online checking accounts, fast-growing ING Direct is set for its biggest work force expansion, with plans to add 500 jobs in Delaware in 2007.
The nation's largest Internet bank is also in the market for another Wilmington office building in addition to its offices on the Riverfront and Delaware Avenue, said Arkadi Kuhlmann, ING Direct's chief executive.
"We need another building, and we need another 500 people here," Kuhlmann said. "Next year, we've got a lot to do. The business is there, and the business is growing."
Kuhlmann said the jobs would be in all departments, from customer service to credit risk to information technology to mortgage processing. He didn't specify a location, or say whether the bank wants to rent or buy.
But he did say he'd like the space to be near the current ING Direct offices. The bank's headquarters is split between two brick buildings on the Riverfront. It also has a glass office building on Delaware Avenue, which is home to the bank's Internet café. ING Direct has about 900 Delaware employees, up from 131 when it opened on the Riverfront in September 2000.
The expansion, which Kuhlmann termed "audacious," comes as the bank plans to offer high-yield online checking accounts amid intensifying competition. ING Direct will make the checking accounts, dubbed "Electric Orange," available nationally Feb. 1. It plans a limited introduction next month, making checking available to 400,000 of its most active customers — ones who make frequent deposits and withdrawals in their online savings accounts. Kuhlmann said he hopes that in Electric Orange's first year, half a million customers will sign up.
ING Direct has 4.4 million customers for its savings accounts and home mortgages.
The online checking accounts represent a departure for ING Direct. Until now, ING Direct's focus has been on high-interest savings accounts — the current annual yield is 4.4 percent — and mortgages.
ING Direct, a unit of Dutch financial services firm ING Group, has no retail bank branches, but does business via the Web, phone and mail. It also operates four Internet cafés — in Los Angeles, New York, Philadelphia and Wilmington.
In the past, Kuhlmann has stressed that simplicity — concentrating on savings accounts and mortgages — has been critical to the bank's success. He has downplayed the appeal of offering checking accounts, expressing concern about cost and complexity.
A change in views
Kuhlmann recently said he shifted his views once he became convinced the bank could make checking accounts available in what he described as a pro-consumer way. He said online checking accounts, which will allow customers to make payments electronically, will save people from the "hassle" of keeping checkbooks and writing checks in the traditional way.
In addition, he said, customers will earn about 3 percent interest on money in the accounts, 10 times the national average for interest-bearing checking accounts, according to North Palm Beach, Fla.-based Bankrate.com, which tracks the banking industry.
Kuhlmann acknowledged that competitive pressure contributed to the move into online checking accounts. Internet rivals such as Jacksonville, Fla.-based EverBank Financial Corp. already offer online checking accounts. And increasingly, traditional banking behemoths such as Charlotte, N.C.-based Bank of America and New York-based Citigroup are putting more emphasis on their online banking.
"The checking account is the centerpiece of a banking relationship," said Greg McBride, senior financial analyst with Bankrate.com. "There is a lot of competition, both online and off-line, to bring in new checking customers and expand existing relationships."
And the competition does appear to be putting a squeeze on ING Direct's profit margins. The bank reported earlier this month that its third-quarter profit tumbled to $10.2 million from $52.5 million in the 2005 third quarter.
But Kuhlmann and rank-and-file ING Direct employees said they're confident their bank will succeed with the new product. They said ING Direct has already demonstrated its mastery of Internet banking through its popular savings accounts and mortgages. ING Direct saw its mortgages surge by more than $3 billion, or 25 percent, to $15.3 billion as of the end of the third quarter. Deposits, meanwhile, climbed by $6.9 billion to $47.2 billion, and the number of customers nationwide jumped by more than 1 million to 4.4 million.
"There's always going to be competition," said Antonio Wilson, a 28-year-old Bear man who works in customer service for ING Direct's mortgage business. "What really matters is who does it the best, and I believe that is ING Direct."
'You don't need to be a genius'
Customers who sign up for the online checking accounts won't get checkbooks, but they will get ING Direct debit cards. The bank has worked out an agreement with Bethesda, Md.-based Allpoint, operator of 32,000 automated teller machines nationwide, so that ING Direct customers will be able to make surcharge-free ATM withdrawals at Allpoint machines, said Cathy MacFarlane, an ING Direct spokeswoman.
The Electric Orange accounts are designed for customers who will make most of their payments online, Kuhlmann said. When customers need a check, they can order one online and ING Direct will mail it to the creditor. Alternatively, customers can print out checks on their home computers, Kuhlmann said.
"It's simple, you don't need to be a genius to run this. You don't need to read a manual," Kuhlmann said. "It could be a big thing for us."
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