ING Direct has been on sale for the past few years, and I’ve speculated on the rumors of possible buyers like Ally Bank and GE Capital Bank. The winning bidder has been announced. Capital One has purchased ING Direct for $9 billion.
Capital One is a financial institution that is historically known as a credit card company, but in the past few years, a series of banking acquisitions, like that of North Fork Bank, has allowed Capital One to expand its horizons a bit. With ING’s deposits, the bank will be the sixth largest bank in the United States by deposits.
Banking Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
Traditionally, ING Direct has been a hit with a new generation of savers. It was one of the most popular banks offering high-yield savings accounts, with interest rates that far exceeded what brick-and-mortar banks offer. In recent years, however, ING Direct had gained momentum and market position that allowed them to relax competitively against other online-only banks. While their rates are still far better than one can earn in branch-based savings accounts, many online banks offer better terms with little else for differentiation.
Nevertheless, many customers have stayed with ING Direct due to inertia as well as a genuine affinity for the bank. There is an impression that ING Direct treats its customers well for the most part, and the bank has a capable and friendly support system.
Customers are rightly concerned about this acquisition. Capital One has not always been an organization that offers the friendliest terms. The company is not as universally loved as ING Direct, but any negative publicity is usually geared towards credit cards. Now that Capital One is aggressively moving into banking, their reputation might shift for the better.
ING Direct customers will likely gain access to Capital One branches and ATMs, and that could be a benefit for those living in an area where Capital One is present. The big question is whether Capital One will maintain the customer-friendly approach to banking — no fees, no minimums, high interest rates, an easy website to navigate — that has made ING Direct a favorite among younger customers.
The biggest portion of my cash is held at ING Direct. I will be watching closely to see whether Capital One implements any changes. For those eager to leave ING Direct, consider these reviews of other high-yield savings accounts or find a local credit union that offers the service you need.
Updated. As the story continues, it gets more intriguing. My efforts to reach out to Capital One for some comments have been unsuccessful, but the New York Times was able to reprint some of Capital One’s prepared remarks about the acquisition. Here’s how the bank answered the question, “Are you planning any new fees or minimum balance requirements?”
ING Direct has built a large and valuable franchise of engaged customers by focusing on a few simple proconsumer products. We deeply understand the value of the loyalty and advocacy ING Direct has been able to build with its customers. Everything we do as we integrate our businesses will be thoughtful and surefooted with a focus on sustaining and building that customer loyalty. We will focus on the customers, channels, products, and pricing strategies that build the best long-term customer relationships and deliver the best cost of funds.
Meanwhile, on the other side of corporate marketingspeak, ING Direct’s Twitter representative broadcast: “We hear you, Savers. The plan is ING DIRECT + the best of Capital One = more ways to help you save.”
I’ll continue working on getting some answers from Capital One.
February 14, 2012 update: The Federal Reserve has approved Capital One’s plans to acquire ING Direct USA. Capital One continues to reject my requests for comments through an appearance on the Consumerism Commentary Podcast, but we might have a representative from the National Community Reinvestment Coalition, whose stance seems to be that the acquisition will not have good results for consumers.
February 8, 2013 update: Capital One has rebranded ING Direct as Capital One 360. Here is a review of the new account.