RETAIL BANKING | Contributed Content, Singapore
Dick Harryvan

ING Direct: The vision, the strategy, the success


The Key to the Successful Launch of ING Direct

What really helped us get this off the ground was that within the group, both on the insurance side and on the banking side there was a long tradition of setting up new greenfield operations in new markets. In general, if you look at retail banks, they tend to operate in their home market or in a couple of markets; they don’t tend to start something new somewhere else. Traditionally, banks were bought in a new country if they wanted to expand. I think the reason for the success of ING Direct is we actually developed this concept outside our core home markets – markets where we could really develop it to the fullest of its potential. If you would develop this in your home market, cannibalisation issues would be a big problem and would have to be dealt with and the venture would be much less than optimum, not really reaching its full potential. The entrepreneurial vision of opening up new ventures in new places in the group was the differentiating factor compared to most retail banks you see in the world.

The Contrast with Citibank

I think Citibank’s global retail franchise was generally speaking more orientated towards traditional branch-based retail banking. They had some discussion about launching eCiti but it never really got off the ground.

Long-term Thinking

I think trying to set up something like this inside the old banking structure is extremely difficult so the fact that it was placed separately into a unit that had much more freedom and was not hampered by having to use old IT systems or the culture of the traditional way of doing banking was a great decision. I would say along with that, another major factor - where banks tend to fall short - is we had a long-term vision of three, four, or five years. Typically in banking people want to see profits very quickly, but in the retail division you really need to develop a bank, develop systems and infrastructure that can deal with hundreds of thousands, millions of clients and transactions. This requires an investment up front, in our case it was typically three years per country before you really invested sufficiently to get scale that covers all of your costs. That is not something you see in banking. If you want to be a really big innovator and do something really new, you need to have more than a one-year planning horizon. You need to have a vision of what it will be like five, six, or seven years from now. If you want to be big, you need to act big from the beginning.

Culture and Principles

Well, I would say from my own experience that paying attention to culture and principles, values and the behaviour that you want in a retail business is extremely important. Generally these businesses have thousands of employees. Leaders and managers for all these people cannot be babysitters. The values and behaviours that you want as an organisation differentiate you from other competitors. They must be instilled throughout the organisation so people can also hold each other accountable. So if you say you are client-focused and someone doesn’t act that way, people can correct each other without management even being there. I think this is very powerful because if employees believe in the approach you’re espousing towards clients, they can feel themselves proud of that attitude but also reassured in the way they are dealing with clients. You empower them and in the end the client experience depends on interaction with employees. If they are well aligned with the way the leadership wants the bank to be run, the experience of customers when dealing with the bank should be better and more consistent if these values and behaviours are well defined.

The Negative Effect of Investment Banking Culture

The short-term focus, the deal focus on the short-term result is something that doesn’t fit with retail. Retail is about setting up service centres and systems that allow clients to deal as effortlessly as possible with the company and to receive consistent high-quality services. This is something that takes a perspective, not of closing a deal today or this week, but of having a planned vision of how to develop the infrastructure of such an organisation. That takes a horizon that is more in terms of years than a short-term approach. The bonus culture – when profit is so dependent on a couple of deals – the way people conduct themselves in those situations can be very much more to their own interest than their clients. In a retail organisation where you are dealing with thousands of people, millions of clients, people are more about being part of this organisation that is doing a good job for all clients. Therefore, typically they are in a better position to look after all clients’ interests in all their interactions rather than their own interests on a particular deal.


Retail banking is the conduit in society for gathering savings and being able to provide loans to people that either want to buy a house or start a small business. It is all about providing a service to society and it must have high ethics and an open, transparent approach.

Commission-based Selling

Well, I think a lot of today’s problems came about through commission structures and the sometimes horrendously high rewards to distributors of these products where again I think the danger is that it gets salesmen acting more in their own interest than the client’s interest. The more complex the product, the less the clients understand what they are paying. So a lot of things get blended in. As my old boss used to say, financial services companies are great at making products so complex that you need an intermediary to decomplexify it for the client. Of course in the meantime, they get potentially high remuneration which is not to the client’s benefit in terms of returns or value for money.

Institutionalised Mis-selling

One of the reasons clients came to us was they were so tired of going to their bank branch where they were going to be sold the next product which they didn’t need. Dealing in a more anonymous way but through a direct provider of banking products was a relief to many of these people. I think there is a lot of talk about being client-focused but banks have to get back to really understanding their clients, their needs and providing solutions that are really needed. In certain areas like products, it is back to basics: keeping the major needs of clients central – and these are things like payment services, mortgages, consumer loans, savings and investments – but not proliferating the product portfolio to the point where it creates a tremendous amount of complexity and poor service due to poor understanding of those products, also by the bank staff themselves. So getting back to basics in terms of focus, a transparent and simple type of product portfolio offering to clients is really key.

The Values and the Culture of Employees

If you don’t watch out in retail banking – we tend to have a total focus on numbers, how are things growing, how many products are sold – you can lose focus. We also got a little bit blindsided at ING Direct because of our success as the numbers were fantastic. In the end we realised that going back to a focus on the values and the culture of the employees was vital to make sure they were really engaged. The critical thing is what the client experiences but it is also a fantastic differentiating element because the products can be copied in a day - but the culture, the proper service-type attitude is much more difficult to copy by other competitors. You can actually build in a much more sustainable competitive advantage if you focus on this and it is absolutely key because in the end the employees are the ones who deal with the customers so you have to treat them well, give them the right ethics and the right values and keep them really involved and engaged in the business.

Retail Is Detail

People coming from a technology background or more scientific backgrounds may well be suited to a retail banking operation. Retail banking is very much about execution. Retail is detail – people who really are on top of things to make sure things are as easy as possible for clients. If individuals coming from that background show the interest in excellent execution I think they can gain credibility though I think they have to be open to getting input and soliciting input and engaging people. They have to learn – that is clear. I am much more worried frankly by people coming from a trading environment who are very short-term and only planning to be the boss for a year or two years and then going off to the next thing. They will have much less regard for the key success factors in retail banking that I have mentioned – retail is detail and execution. They are much more short-term orientated and more deal-orientated and they don’t have this mentality for setting up something that is sustainable in the long run.

Recruiting Fast-Moving Consumer Goods Executives

Another important aspect of leadership in retail banking is branding, creating a brand so that you are recognised in the consumer market for what you stand for. This is where people like Procter and Gamble marketers and the Unilever marketers can bring in a refreshing expertise that allows bringing some emotion to a brand. That is not really something that is normal in banking. Those brands are going to be increasingly important in the internet age. What your brand is and what it stands for will drive traffic to your site and to your bank. I think those kinds of skills are very useful to get in and I can say to my own experience at ING Direct, one thing we didn’t want to do was just hire bankers from old-fashioned banks to copy what they did there. Of course in the technical areas you need the risk managers and credit officers but in general having people from other industries is a positive thing to rejuvenate, to innovate within the company.

Retailing v Retail Banking

That is where you see some people struggle because they are used to a typical product and sometimes one that is more tangible or sexy and then you have in financial services where you are dealing with promises which are much more virtual. That can be a struggle. Nevertheless, any of the principles associated with marketing and branding in the retail world can also be applied in the banking world.

Dealing with Silos

It is one of the big challenges, especially in retail banks because we are big organisations and you get these silos and people don’t see the end-to-end experience that a customer sees because they are only responsible for one small part. I agree with rotating people through different departments so they get a better idea of how it all works together and affects the customer experience. Another way of approaching it that benefited me a lot was to ask people from various departments to get together to really look at a process or a product or any issue from end to end. What you do is take people out of their normal day-to-day work situation and give them a challenge to think of how we can address this in a better way. That is intellectually challenging and inspiring for them. At the same time they get to network and to know people from other departments so if there is an issue they can quickly interact and solve these issues. Increasing interaction and creating better understanding for employees – how all the different departments work together and making sure what you are measuring is indeed what is important for the client and not just an internal measure – are all things that are really key. Breaking down the silos is a challenge but something that really needs to be worked on.

Retail Banking, a Profession

I think there is a very strong case to make for retail banking becoming a profession. I think that retail banking requires a special set of skills – how you get an organisation of so many people to work in an expert way that excites clients. This is a whole different skill than concluding a deal and making a whole bunch of money. Because it is more of a long-term orientated profession, it is underrated as a profession. Giving it – as the International Academy of Retail Banking is doing – a professional status is something that will inspire people to attain and will help to give retail bankers more credibility and status within the organisation. It will help ensure that retail banking is run in a professional way and continues to contribute in a very positive way to the bank as a whole.
International Academy of Retail Banking

The IARB and Lafferty Group strongly believe that retail banking should be a profession, like accounting and the law, with structured retail banking education. The next IARB Executive Programme in London (24-27 Sept) provides access to the latest international best practices relating to retail banking leadership and the opportunity to network with some of the world’s most respected retail banking experts.

Dick Harryvan, former CEO of ING Direct, discusses the key elements in building a successful retail bank and the importance of retail banking as a profession. Dick Harryvan, is Co-Chairman of the International Academy of Retail Banking (IARB).

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.

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Dick Harryvan

Dick Harryvan

Dick Harryvan is the former CEO of ING Direct and Co-Chairman of the International Academy of Retail Banking (IARB).

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