"Reaction to market developments": ING is considering penalty interest for new customers

The direct bank ING has already abolished the free current account without preconditions. But now she is planning the next step: new customers may have to pay soon when they park money there. At the same time, the investors are made an offer.

The direct bank ING is considering penalty interest for new customers. "We currently have no concrete plans to introduce a custody fee for our existing accounts," said CFO Norman Tambach of the German Press Agency. "We are monitoring the market development very closely and are seeing that more and more banks are introducing a custody fee for new accounts. We are accordingly preparing to react to these market developments."

Commercial banks currently have to pay 0.5 percent interest when they park excess funds at the European Central Bank (ECB). Even if there are now tax exemptions for certain sums, this remains a billion dollar burden for the industry. More and more financial institutions are passing the costs on and charging customers negative interest – sometimes from the first euro.

In order to offer customers an alternative to overnight money and savings accounts with low interest rates, ING Germany is making a new offer for investing in stocks and funds. "We want to make it as easy as possible for our customers to get started with securities savings and are therefore abolishing the minimum amount for all securities savings plans," announced CEO Nick Jue. "From November 1st, we will be offering all of our securities savings plans from a monthly rate of one euro. It is up to our customers to decide what amount they want to invest regularly in securities."

Rely on house bank customers

For years, the direct bank called ING-Diba attracted customers with comparatively high interest rates. But in the current low interest rates, deposits cost money. That is why the institute, which has only operated under the name of the Dutch parent company ING since November 2018, is trying to do more business with its customers. "It is about a closer connection with our customers. We need profitable growth, which is why we are now relying fully on our house bank customers", Jue affirmed.

According to the CEO, the number of house bank customers increased by 200,000 to more than two million in the first half of the year. These are customers who not only park money with the institute, but also generate commission income – for example through construction financing, consumer loans or securities savings. For this course, Jue is again cutting back on an ambitious goal: According to management estimates, the institute, which is active in Germany and Austria, will not break the ten million private customers mark this year, he said.

After years of expansion, customer growth stagnates. In the first six months of the current year, the bottom line was 33,000 additional private customers. In the first half of 2019 there were 150,000, last year a total of 215,000. The number of ING private customers is currently just over 9.6 million.

One possible reason for the reluctance: the direct bank abolished the free current account without any preconditions. Since May, the institute has been charging 4.90 euros per month from customers who only use an ING current account for cash parking. A monthly payment of at least 700 euros is required. "We lost some inactive customers who deleted their account details. It wasn't the big wave," said Jue.