ING continue to revolutionise world banking.

Verkoren said that, in the U.S., the online bank is considering offering a new product, which is being tested under the name "e-orange." …… With the online checking account, customers would be able to do everyday banking transactions, without using paper checks, but "it remains to be seen if customers will give up using those checks,"

In Spain, ING Direct set up a pilot project in September in which it offered customers current accounts for free. The offering, which allows customers to do everyday banking transactions through their ING Direct accounts, and has been successful so far ….prompted large traditional banks to react. Santander Central Hispano SA (STD) was first in dropping service fees

ING Direct is also active in Australia, France, Italy and Austria. Austria is still unprofitable, but its figures are consolidated in the German business, Verkoren said.

Verkoren said entry into Sweden, Portugal and Switzerland was being studied. "And in the long term, we will certainly consider emerging markets in Eastern Europe, Asia and South America," Verkoren said.

About 7,000 full-time employees work for ING Direct, with 114,000 employed worldwide by ING.

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By Nicolas Parasie
Of DOW JONES NEWSWIRES

AMSTERDAM (Dow Jones)–ING Direct, which offers high-interest online savings accounts, in 2006 will focus on expanding in the U.S. and introducing more product offerings in the nine countries where it is already active, the unit's chief executive told Dow Jones Newswires.

ING Direct USA is active in Delaware – where its U.S. headquarters are set – New York, New Jersey, Pennsylvania, all six New England states, California and Arizona. The unit has plans to enter Texas, the Chicago area and Florida en route to full urban coverage in the U.S., Verkoren said. In theory, all U.S. inhabitants already have access to ING Direct on line. But when Verkoren speaks of coverage, he said he is looking to spread advertising and marketing to all states.

ING Direct's entry into a state usually entails high-profiled media events, such as re-creating the Boston Tea Party, offering drivers in LA a full tank, or flying an orange-colored dirigible over Phoenix, Arizona. The advertising budget for ING Direct worldwide was EUR450 million in 2005, most of which went to Germany – where the bank is known as DiBa – and the U.S.

ING Direct, a unit of Dutch banking and insurance giant ING Groep (ING), in 2005 posted a 42% increase in pretax profit to EUR617 million. The parent company posted net profit of EUR7.2 billion in 2005.

Since its launch with ING Direct in Canada in 1997, the operation has grown into ING's fastest-growing unit with 15.7 million clients. Some of its main competitors online include First Direct, a unit of HSBC Holdings PLC (HBC); and Intelligent Finance, a division of Halifax PLC, which is part of HBOS (HBOS.LN).

ING Direct's concept is to offer an online savings account in a country where the parent company doesn't have a branch network. Low setup costs allow the online unit to attract customers with high interest rates. For instance, it offers 5.4% on deposit savings in Australia or 3.8% in the U.S.

Verkoren said that, in the U.S., the online bank is considering offering a new product, which is being tested under the name "e-orange." The electronic checking account would be in addition to its savings accounts, mortgages, mutual funds and pension products.

With the online checking account, customers would be able to do everyday banking transaction, without using paper checks, but "it remains to be seen if customers will give up using those checks," Verkoren said.

Some Walk-in Branches Available As Well

Its primary operation is online, but ING Direct does have three "ING Direct Cafes"in Canada and the U.S. where customers can walk in to conduct business.

In Europe, its main countries of operation are Spain, the U.K., France, Italy and Austria. The parent company's main branch networks are in the Netherlands, Belgium and Poland.

In Spain, ING Direct set up a pilot project in September in which it offered customers current accounts for free. The offering, which allows customers to do everyday banking transactions through their ING Direct accounts, and has been successful so far, Verkoren said.

Bertrand Lavayssiere of Capgemini said during the presentation of a recent retail banking report that in Spain, ING Direct's strategy had prompted large traditional banks to react. Santander Central Hispano SA (STD) was first in dropping service fees on current and savings accounts, and since then other large Spanish banks have followed suit in similar fashion.

In addition, Verkoren said ING Direct still refunds to customers 1% of their Internet and utility bills paid automatically through the online bank.

Verkoren said the U.K. business in this quarter will show positive earnings results for the first time, ensuring that all country units are now profitable. The U.K. business, however, will start offering mortgages as well, which will require additional investments and will have an impact on the net result overall, Verkoren added.

ING Direct is also active in Australia, France, Italy and Austria. Austria is still unprofitable, but its figures are consolidated in the German business, Verkoren said.

Verkoren said entry into Sweden, Portugal and Switzerland was being studied. "And in the long term, we will certainly consider emerging markets in Eastern Europe, Asia and South America," Verkoren said.

Dutch cooperative Rabobank (RBK.YY) launched a similar online savings account in Belgium, Ireland and New Zealand but, according to Verkoren, ING Direct so far hasn't contemplated immediate moves there as those countries either lack scale or ING already has branch networks with which it doesn't want to compete.

"We don't want to shoot ourselves in the foot or start cannibalizing," Verkoren said.

ING Direct in 2004 acquired Egg's savings activities in France. Egg is the unsuccessful online bank of British insurer Prudential PLC (PRU.LN), which the Pru has been trying to sell for more than two years. Further such takeovers weren't on the agenda, Verkoren said.

ING Direct said it wasn't considering offshoring its call centers and back offices. "It just wouldn't guarantee our customer satisfaction," Verkoren said. About 7,000 full-time employees work for ING Direct, with 114,000 employed worldwide by ING.

Verkoren, 59 and of Dutch nationality, has spent most of his career at the Amsterdam-based company. He will step down from the executive board later this year and be succeeded by Dick Harryvan, who comes from within the group.