ING Direct bank rebrands itself as Tangerine

ING Direct Canada will be rebranded as Tangerine, effective spring 2014, as part of the terms of its sale to the Bank of Nova Scotia (Scotiabank) in September last year.

As of spring 2014 Canada’s first branchless lender will be known as “Tangerine,” though as the moniker suggests, it’s hanging onto the distinctive trademark orange colour it’s had since it was launched 16 years ago by Netherlands-based ING Groep.

“We have continued to have ING Direct operate on its own and there’s no plan to integrate it [with Scotiabank],” said Peter Aceto, who is continuing in his role as chief executive.

Despite the re-branding, it will remain “a separate, stand-alone bank, the same way it’s been [since it was launched],” Mr. Aceto said in an interview.

When the $3.1-billion deal was announced in August 2012, skeptics warned that despite Scotia’s statements to the contrary, the Toronto-based bank would ultimately get rolled into its acquirer, morphing into one more deposit product. They also suggested that loyal ING Direct customers accustomed to the bank’s “Save your money” philosophy would rush for the exits.

But neither prediction seems to have come true. Today the bank has 1.9-million customers, including about 80,000 who became account holders since the start of the year, according to Mr. Aceto, who estimates that only about 2,000 customers left the bank in the weeks after the transaction was announced.

“We see [the departures] as a very small number and we are very excited about the growth trajectory,” he said.

ING Direct started out in 1997 hoping to disrupt Canada’s cozy retail banking sector by doing business online and over the Internet and offering superior savings rates. The business grew well but more recently it has faced rising competition from other online lenders, including PC Financial and ICICI Bank Canada, a subsidiary of India-based ICICI.

The impetus for the sale of ING Direct came with the European debt crisis, as a result of which many European lenders, ING Groep among them, have had to shore up capital and sell off sometimes prized assets.

In connection with deal with ING Groep, Scotia had the right to hang onto the ING Direct brand until May 2014, which will be about when the name change takes place.

The new Tangerine brand “is the result of the culmination of a 12-month process whereby ING Direct consulted with more than 10,000 Canadians, employees and clients, through qualitative and quantitative research,” the bank said in a statement. “The process was focused on a fundamental need to stay true to ING Direct’s simple, progressive and transparent approach to banking, while also reinforcing to clients and employees a continued focus on innovation.”

There have been other changes as well though mostly having little affect on customers. The bank recently exited the mortgage brokerage business where it was a significant player.

“We’re still offering all the same products we were before the acquisition,” said Mr. Aceto. “As we go forward we are still going to offer our customers mortgages, if that’s what they want. We’re also working on credit card.”

There’s also a growing wealth management business with $1-billion of assets under administration.

The bank focuses on customers who are comfortable doing business with a bank that doesn’t have branches, transacting either by phone or online. According to Mr. Aceto, about 20% of its customers opt for the telephone banking channel with the remainder connecting over the Internet, especially mobile devices.

The advent of Internet banking back in the 1990s prompted predictions of the demise of bricks-and-mortar branch networks as consumers flocked to the more efficient and cheaper alternative. Despite the advantages of Internet lenders — especially higher interest on deposits — the transition has proved to be gradual.

“I think it’s happened slower than expected but we are in a great position to capitalize,” Mr. Aceto said.