| By Jim Bruene on February 5, 2007 11:03 AM | Comments (1) |
According to an American Banker story last week (here), as of Feb. 1, ING Direct had cross-sold 42,000 (see note 1) checking accounts to its 4.3 million savings customers, a penetration of 1%. Keep in mind, the new checking account has been slowly rolling out over the past 60 days to current customers only (see note 2), and is not yet mentioned on the bank's website. It is expected to be launched to the general public within the next 30 days.
You can view these initial results in two ways:
Glass is half full -- Even with just 42,000 accounts, ING Direct may have the largest "Internet only" checking account base, at least when measured by the number of active accounts
Glass half empty -- Because ING Direct's checking account pays 50 to 80 basis points (0.50% to 0.80%) more than savings on $50,000+ balances, many (most??) of the new checking account customers simply moved large balances into the checking option, providing few incremental deposits.
Notes:
- Make that 42,001 accounts. I just opened one this morning. It took all of about 30 seconds to do it. Existing customers simply choose an account nickname, enter the dollar amount they want transferred into the account (from the pre-existing link from an outside account), and agree to the disclosures. See below for the confirmation screen.
- I received my invitation to open an Electronic Orange account last week (screenshot here). I've had an account there since 2001.
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Thanks for that post. My humble opinion: Glass is overflowing. I'm amazed they've got ANYBODY opening up checking accounts. Even among younger (i.e., Gen Y), online banking consumers, the #1 criteria for selecting their primary bank ( i.e., checking account provider) is location. Even 1% penetration of their savings account base of customers is gravy for ING.
I'm not sure why you're assuming that many of these accounts shifted balances (unless you know for sure). Given the average account size, do you really think people are putting excess balances in checking accounts? I wouldn't have thought so. I think these are the minority of consumers who are willing to forego a bank w/ a physical presence, and have had a good experience w/ ING Direct.
And as you pointed out, since they haven't begun to advertise, the acquisition cost per account is probably pretty low.