Prepaid Show Dispatch: ING's Kuhlmann Explains How the Bank Opens 100,000 Accounts Per Month

By Steve Kietz, managing partner, Woodbury Advisors LLCI just got back from IIR's Prepaid Expo at the Rio Hotel in Las Vegas. The attendance was 1,700; that is up from last year. The show is getting more popular as this is a rapidly growing segment of the payment space due to technology changes, the overall economic environment and the Credit Card Act, which rolled back many pricing practices of bank card issuers.

The first keynote speaker, Arkadi Kuhlmann, CEO of ING Direct, talked about innovation. He said ING Direct was launched in 1997 with an innovation focus. He compared the company to Southwest Airlines, Google, Apple, McDonalds and Ford. Kuhlmann said the goal was to be a retailer, not a bank. Start with a clean sheet. In his view, innovators must have a long-term focus: exploit technological opportunities and use the power of branding to differentiate. Deliver simple products.

Despite a lower liability rate environment, ING Direct USA opens 100,000 accounts per month and closes 5,000. An impressive ratio. Kuhlmann takes particular joy at closing accounts that just "don't get it." He wants customers who deeply buy into the value proposition, and then the "love" can be shared.

He suggests that innovators are willing to reengineer the customer. He claims 40% of his new accounts are acquired through word of mouth.

Kuhlmann spent five years developing the ING Direct Orange checking account. It is a 100% virtual demand deposit account. They have opened more than 800,000 accounts, most likely the most successful internet checking account customer acquisition program ever.