ING Direct's Man on a Mission

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At the same time, new products add un-ING-like complexity. When it rolled out checking in March, the bank introduced a system for doing nearly all transactions online; handing out checkbooks was deemed too cumbersome. But there was no easy solution for customers who had to have paper checks for the landlord or the babysitter. So ING Direct now prints and mails some 25,000 paper checks a month on customers' behalf--no charge for the stamp. Kuhlmann battled his staff for weeks over the issue, insisting that no matter how transparent, ING Direct wouldn't charge a fee.

Yet with each new product, Kuhlmann tests the limits of the firm's founding ideals. Take mortgages. ING Direct offers just two: a five-year mortgage currently at 6.60% APR and a seven-year one at 6.67%. Why no 30 year? Kuhlmann reasons that since most people move or refinance within seven years, they just don't need it. "It seems to me they're paying a lot more than they need to," he says. That's a fine principle. But the reality is that most people still want a 30-year mortgage. So this spring, ING Direct started referring people who insist on one to an outside mortgage lender. "We're probably 90% pure," says Kuhlmann. "Not as pure as I'd like to be." But much better, he supposes, than the alternative. [This article contains charts. Please see hardcopy or pdf.] VIRTUAL BANK, REAL MONEY

ING Direct ranks 24th among U.S. banks when measured by total deposits, but it has a commanding share of the Internet banking market

Citigroup Inc. $712 billion

Bank of America $694 billion

JPMorgan Chase $649 billion

Wachovia $409 billion

Wells Fargo $312 billion

Washington Mutual

HSBC Holdings

U.S. Bancorp

SunTrust Banks

Regions Financial

Royal Bank of Scotland

National City

Capital One Financial

BB&T

Fifth Third Bancorp

PNC Financial Services

State Street

Merrill Lynch

Bank of New York

ABN Amro Amsterdam

KeyCorp

Countrywide Financial

Sovereign Bancorp

ING Direct $47 billion

Market share, all deposits* Bank of America 10% Chase 7% ING Direct 0.7% All others 82.3%

Market share, Internet deposits*

ING Direct 52% E-Trade 24% All others 24%

*As of June 30, 2006. Sources: American Banker; SNL Financial LC