Electric Orange - Covering the bases?
Recently I received ING's e-mail announcement about their new e-checking account service - "Electric Orange." The market has been waiting for this for some time now so it doesn't come as any particular surprise. It is worth noting that this represents a slight departure from their prior strategy focus on low-volume transaction product offerings -- the [debated] idea being that low-volume electronic transaction accounts reduce relative service needs and result in further reduced operational costs.
However, to me, it is most interesting to look at how ING designed Electric Orange to meet the basic checking account service needs of online banking consumers -- a group that is already approximately a third of all U.S. households and growing steadily.
If I read the announcement correctly this account offers:
1) a debit/ATM card (free ATM withdrawals)
2) Peer-to-Peer (P2P) payments over the web billed as "electric checks" (like Paypal)
3) Free Online Bill Pay
4) A very high rate (3%/5%/5.3%)
5) No paper checks
This is fascinating because it raises a key question: If you were starting a credit union today from scratch, how might you design (or re-design) a core traditional product service offering like the checking account? ING seems to think because the physical check processing days are numbered (at least in the long-run) that a significant base of consumers are finally ready to forgo the paper check entirely in exchange for purely electronic transactions and a higher rate of return. Is the market ready for this or is ING a bit too far ahead of the curve on this one (remember Wingspan Bank)? We'll see.
For me this wouldn't quite foot the bill. It is true that I turn to the checkbook much less often than I did five or ten years ago. However, I still use paper checks and their flexibility in lieu of cash-on-hand in many circumstances where electronic payment is not ideal. For example, Electric Orange seems to fall short when I need to pay someone immediately who is not a web transaction adopter (eg. paying the nanny, home repair service calls, attending charity donation events, etc). I could use online bill pay to pay in these circumstances but the lag in issuance and time it takes to receive the paper check from the bill payment vendor is not ideal for many situations. Perhaps I'm behind the curve on this one…or perhaps ING's success goals with this service aren't what I think they are.
Still, it is interesting how they put this account together and I'm especially interested in seeing the P2P details of this model.
* note: ING still does not reference the product on their website. This e-mail appears to have been sent just to existing ING customers for now.
Comments
Scott, are you sure this wasn't a phishing email? I have been an ING customer for a while, as have many internal to the credit union here, and no one received this offer - I think it's a great product idea if it is true - it certainly resonates with a large group of consumers, those who write few checks, and those that are denied a checking account for other reasons. Has anyone actually applied for this offer? Is it posted anywhere?
Posted by: Bradley Leimer | December 12, 2006 04:18 PM
OK, so this is legit then I now see - http://obr.typepad.com/financial_innovations/2006/11/ing_direct_to_l.html - offered to 10% of its US base initially - very interesting move on ING's part - will we now have a direct move to match, like HSBC and Citibank launched to match this account as well?
Posted by: Bradley Leimer | December 12, 2006 04:50 PM
Yeah, they're somehow selecting people to invite to the new product. If you ask me this is likely done as a marketing strategy -- promote excitement & anticipation about the product among ING's customer base. Remember how Google launched Gmail and the coveted invites....smart move if you ask me.
Posted by: Scott Patterson | December 19, 2006 04:25 PM
Does anyone know how well this has been received? I also got the invitation about 45 days ago, but I haven't signed up. Our CU is trying to design an account for the Gen Y customer and this looks like it could be a winning formula.
Posted by: Gary Austin | January 30, 2007 04:18 PM