ING Direct: The death of an innovator?

Loyal clients wonder if ING Direct’s sale to Scotiabank spells the end for its market-leading products.



From the November 2012 issue of the magazine.


Minutes after the news broke that Scotiabank is buying ING Direct Canada for $3.1 billion, customers of the online bank began to express their dissatisfaction via social media. A number of clients announced their intention to move their money elsewhere on MoneySense’s Facebook page. “Yuck!” wrote Toronto’s Ryan Rocheleau. “I always prided myself on not doing truck or trade with the Big 5.”

Netherlands-based ING Direct shook up the industry when it introduced the first Canadian no-fee high-interest savings account in 1997. The virtual bank later began offering competitive mortgages, but unlike the banks, it posts its real rates online rather than forcing you to haggle at the branch. ING also bested the banks by offering low-fee mutual funds and no-fee chequing accounts that pay interest. In the last 15 years, the virtual bank picked up 1.8 million loyal Canadian customers and prompted the major banks, as well as other players like Ally Bank and CIBC-backed President’s Choice Financial, to offer some similar products.

Does the Scotia deal mean ING’s days as a market leader are over? Rotman School of Management professor Laurence Booth thinks so. “ING will not stay the same. In two years’ time, it will be totally integrated into Scotia.” He expects that over time, the new owners will look for efficiencies and eliminate the separate products offered by ING. If the housing market continues to cool, for instance, they’ll probably do away with duplicate mortgage products first, says Booth.

Scotiabank, however, promises ING clients the only thing that will fall by the wayside after the deal closes in December is the virtual bank’s logo. Anatol von Hahn, Scotia’s group head of Canadian banking, says ING’s management will stay on the job and make independent decisions about their products and rates long after the ink dries on the deal. “Scotiabank isn’t coming in to tell them what rates to pay or not pay,” he says.

Rocheleau isn’t convinced, but at the moment doesn’t know where else to park his money. “When credit unions go national and I can find one with no-fee chequing, I am gone.”

5 comments on “ING Direct: The death of an innovator?

  1. I've been with ING for years. I truly doubt Scotiabank will preserve ING's philosophy and in 2 years I predict a creep of fees and decreased interest paid. The loss of a few old ING customers will be well offset by the hoards of lazy GIC investors they will gain. Too bad, it was a good run while it lasted..


  2. Less competition means a higher cost to the consumer!!!!


  3. Some credit unions offer fee-free chequing accounts if your whole pay is electronically deposited to your account. It's worth checking (chequing?!) out.


  4. I agree with "KeepYourMoney" – ING is going down hill in two years. Scotiabank is not that good anyways, they have the most confusing system when it comes to accessing online banking for your Visa – they make you get a debit card even though you dont have to open a chequing account….why do I need more cards??? Also, their quality of customer service is terrible – so many untrained tellers at all their locations…therefore what I am trying to say is Scotiabank only invests in culture, entertainment which is fine but they dont focus on the quality of their service or invest in training ….


  5. The other day I went to a scotiabank branch to transfer funds to a european bank. For an amount of 190 euros they wanted to charge me 40 $. At BMO ended up being 25. Oh brother, and scotiabank teller didn't seem to have a clue how to do that. No way, I'll invest in BNS but now way I'm gonna be BNS customer. So I'll think what to do with my ING accounts…


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