ING has been leading the sector in Spain for 22 years, standing out as the first digital bank. Can you elaborate on ING's evolution in Spain?
ING launched in Spain with its Cuenta Naranja, or Orange Account. Our mission was to make the difficult easy and make it possible to receive payments from one's very first euro without the need to switch banks. We have evolved, but we have continued to maintain that close relationship with our customers. Our evolution has been from telephone banking with a single product to today, where we offer a comprehensive service to cover all our customers' needs. Our purpose is to “empower people to stay a step ahead.” In short, we aim to help and encourage our customers to fulfill their dreams.
ING is today the “non-bank bank,” for so many years being the alternative to traditional banking. How do you maintain freshness and that distinction with respect to traditional banking?
The key is to stay focused the customer and their needs. Product creation, transparency, and simplifying processes are all tools that help us achieve this goal. Assisting customers in managing their finances is a distinguishing factor. Between 2016 and 2020, we set the growth of our customer relationships as our goal and sought to become their primary bank. In addition, we personalize customer service. Of our 450 million digital contacts, 25% are personalized, and our target is for this figure to reach 100%. We are always available to help when the customer needs us. Via mobile, sales have increased from 24% to over 50%.
98% of your customers are digital and, of those, 40% only use their mobile phones to interact with the bank. How do you see your customer base evolving in terms of digitalization?
There are two tendencies here. First, digitalization, where customers are raising the bar and expecting more from us. Currently, what we see as a differentiating trend is customers that solely use their mobile phones for banking. So, we are developing our ability to generate sales via mobile. It is not just about launching an app, but also managing processes, maintaining communication, and so on. Naturally, expectations continue to rise, and we ensure we always work to stay ahead of the curve.
Net profit in 2020 reached EUR85 million, which implies a drop of 54%. However, the NPL ratio stands at 1.08%. What is your assessment of 2020, and why do you have such a low NPL ratio?
2020 was an unprecedented year. We have observed the resilience of our business model, in that COVID-19 has had a harsher impact on some of our customers. Nevertheless, we managed to maintain our revenues, with just a decrease of 4%, due to the increase of diversified sources of income such as investment, insurance and consumer loans, which in just 4 years have gone from representing 26% of income to the current 44%. We have been able to make provisions as a result of prudence. In terms of individuals and as a digital bank, our customers have not suffered due to the pandemic, given that they have had access to all of our services on a normal basis. We have gained solidity and future projection through sales, closeness with our customers, and the undisrupted way of managing the pandemic. Nevertheless, many people need to work with a digital bank that can meet their needs. Over half of our customers come through recommendations. In 2020, we signed up an historic record of 200,000 new customers.
How are you managing your customer acquisition strategy?
Simply, we are being transparent with our offer. We have no small print, and recommendation makes a major difference. In terms of NPLs,our first customers were savers with an extremely low-risk profile. In 2008, when I was Chief Risk Officer, we launched pre-approved quotes, which today remain as the standard quotes. We know our customers extremely well, and we have always acted in an entirely risk-conscious manner. Another very important purpose is the financing of our customers.
About 4% of ING's customers will start paying fees for their savings in their accounts. What led ING to change this?
We have to start by taking a perspective on the sector and its current situation. A large part of our income came from interest rates, which started to drop in 2008. They then dropped to zero and then below. That source of income is therefore diminished. The second thing to note is that the regulator is becoming increasingly demanding. We are employing more resources and greater effort, and this is coupled with competition in banking digitization and increased demands from customers. This means revenues are falling, and costs are rising. Therefore, either we reinvent ourselves, or we are in for a struggle. The banks that will succeed will be those that can achieve closeness to their customers at an efficient price. This is the direction we are taking and in which we are heading. The second challenge is that of bringing about the custom of paying for value-added services. These were free until a few years ago. The key is to maintain absolute transparency with our clients. When we raised the issue of negative interest rates, we came up with a value proposition that minimized its impact. This measure affects 4% of our clients. If a customer has more than EUR30,000 with us and does not cover all their needs with ING products, they may either begin paying a safekeeping fee or choose to take their money elsewhere. Aligned with our transparency, we have advised our customers several times and with enough lead time to ensure this will not come as a surprise.
Thanks to its leadership in digital transformation, ING is able to serve 40 million clients with less than 1,400 offices worldwide. What is its strategy in Spain in terms of its branches?
In 1999, we did not have any branches as such. Over time, we saw it wiser to offer a small number of them. They were not set up as offices to draw in clients, but to offer comfort. It is also true that there are certain products, such as a mortgage, where it is important to be able to accompany customers, in person, at a branch. The same goes for investment projects. Therefore, although it is not a frequently used channel, it is relevant and offers proximity. Currently, we plan to keep all branches open.
What are ING's main priorities for the rest of 2021?
Our priorities are to be here for our customers, continue to grow as a bank holding the mobile phone front and center of this growth, and stand for our opportunity in the Spanish market.