ING Direct offers no-fee chequing

The discount bank that introduced high interest rate savings accounts to Canada 14 years ago is now offering Canadians no-fee, interest-paying chequing accounts.

ING Direct Canada is to announce Wednesday that customers will be able to deposit, withdraw or transfer funds, all at no cost while also earning interest.

Canadians will save on average $185 a year in banking service fees by choosing its service, the Dutch-based banking giant says.

The financial company expects the new product will appeal to its existing 1.7 million customers,

“We think this is very important for Canadians. We think offering a chequing account will change the relationship we have with them to become a part of their daily life,” Peter Aceto, president and chief executive officer of ING Direct Canada said in a telephone interview.

The company also expects the product to attract some new customers.

“Many, many Canadians who have chosen not to be our customers have told us the number one reason is we don't offer a complete product suite, with the most important being a chequing account,” Aceto added.

ING is hoping to tap into consumer resentment over what it calls some of the highest banking service fees in the world.

Some 38 per cent of Canadians say they are “disgusted” by their chequing account fees and 66 per cent believe their current banking fees are unfair, the poll also showed, according to research done for ING by the polling firm Angus Reid Public Opinion.

A quarter of Canadians don't know how much they pay in monthly bank fees and three-quarters said they would switch to an online, no-fee chequing account if one were available, the survey also found.

Since ING doesn't operate any branches, customers will have to go to an automated banking machine to withdraw their cash.

Through ING's relationship with the Exchange Network system, customers can access their accounts at any one of 2,400 ABMS across the country free of charge. Many such machines are located near credit unions, which form the bulk of the network's members.

Customers can also access their accounts through an Interac bank machine but the bank that owns the machine charges non-bank members a $1.50 transaction fee.

Financial services consultant David McVay, of McVay and Associates, in Toronto, said he recently put out a report suggesting the discounter begin offering chequing accounts and credit cards to boost its profitability.

“It would be a good idea. They'd have a good cross-selling opportunity with their existing client base,” McVay said.

The move is unlikely to disturb Canada's big five banks, McVay added.

“They're a lot more competitive than they were when ING first entered the market,” he said.

ING's announcement is likely to have a bigger impact on PC Financial, McVay said. The Loblaw Cos. Ltd. financial service, backed by CIBC, offers a similar kind of no-frills chequing account, he said.