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Corporate Change After the Global Financial Crisis

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  2. Economics, Finance, Business & Management
  3. Credit and Capital Markets – Kredit und Kapital
  4. Vol. 53, Issue 2
  5. pp. 245–271

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Arnold, I. Corporate Change After the Global Financial Crisis. . A Case Study in Direct Banking. Credit and Capital Markets – Kredit und Kapital, 53(2), 245-271. https://doi.org/10.3790/ccm.53.2.245
Arnold, Ivo "Corporate Change After the Global Financial Crisis. A Case Study in Direct Banking. " Credit and Capital Markets – Kredit und Kapital 53.2, 2020, 245-271. https://doi.org/10.3790/ccm.53.2.245
Arnold, Ivo (2020): Corporate Change After the Global Financial Crisis, in: Credit and Capital Markets – Kredit und Kapital, vol. 53, iss. 2, 245-271, [online] https://doi.org/10.3790/ccm.53.2.245
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Corporate Change After the Global Financial Crisis

A Case Study in Direct Banking

Arnold, Ivo

Credit and Capital Markets – Kredit und Kapital, Vol. 53 (2020), Iss. 2 : pp. 245–271

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.53.2.245
Language
English
Pages
27
Keywords

Author Details

Prof. Dr. Ivo J. M. Arnold, Erasmus University Rotterdam, PO Box 1738, 3000 DR Rotterdam, The Netherlands

References

  1. Arnold, I. J. M. (2019): Internet Search Volumes of UK banks during the Crisis: The Role of Banking Structure and Business Model. Global Finance Journal, https://doi.org/10.1016/j.gfj.2019.05.001.  Google Scholar
  2. Arnold, I. J. M./van Ewijk, S. (2011): Can Pure Play Internet Banking Survive the Credit Crisis? Journal of Banking & Finance, Vol. 35, 783–793.  Google Scholar
  3. Boot, A. W. A. (2000): Relationship Banking: What Do We Know? Journal of Financial Intermediation, Vol. 9(1), 7–25.  Google Scholar
  4. Boot, A. W. A./Thakor, A. V. (2000): Can Relationship Banking Survive Competition? The Journal of Finance, Vol. 55(2), 679–713.  Google Scholar
  5. Cyree, K. B./Delcoure, N./Dickens, R. (2009): An Examination of the Performance and Prospects for the Future of Internet-primary Banks. Journal of Economics and Finance, Vol. 33(2), 128–147.  Google Scholar
  6. Delgado, J./Hernando, I./Nieto, M. J. (2007): Do European Primarily Internet Banks Show Scale and Experience Efficiencies? European Financial Management, Vol. 13(4), 643–671.  Google Scholar
  7. Dermine, J. (2005): Le Taux Modèle: ING Direct, A Growing Success Story. Case Study, INSEAD, Fontainebleu, France, 05/2005-5282.  Google Scholar
  8. DeYoung, R. (2001): The Financial Performance of Pure Play Internet Banks. Economic Perspectives, Vol. 1, 60–78.  Google Scholar
  9. DeYoung, R. (2005): The Performance of Internet-based Business Models: Evidence from the Banking Industry. Journal of Business, Vol. 78(3), 893–947.  Google Scholar
  10. Diamond, D. W. (1984): Financial Intermediation and Delegated Monitoring. The Review of Economic Studies, Vol. 51(3), 393–414.  Google Scholar
  11. Eisenhardt, K. M. (1989): Building Theories from Case Study Research, Academy of Management Review, Vol. 14(4), 532–550.  Google Scholar
  12. Financial Times. (2019): ECB Bank Supervisor Enria Criticises ‘National Champion’ Mergers. March 19.  Google Scholar
  13. Furst, K./Lang, W. W./Nolle, D. E. (2002): Internet Banking. Journal of Financial Services Research, Vol. 22(1–2), 95–117.  Google Scholar
  14. Güttler, A./Hackethal, A. (2005): How ING-DiBa Conquered the German Retail Banking Market, working paper, European Business School, Germany.  Google Scholar
  15. Heskett, J. L. (2005): ING Direct. Case Study, Harvard Business School, 9-804-167.  Google Scholar
  16. Hyett, N./Kenny, A./Dickson-Swift, V. (2014): Methodology or Method? A Critical Review of Qualitative Case Study Reports, International Journal of Qualitative Studies on Health and Well-being, Vol. 9(1), 1–12.  Google Scholar
  17. ING. (2017): ING Spain and Model Bank: Crafting our Future Mobile Banking Model. Investor presentation, March 2, 2017.  Google Scholar
  18. Onado, M. (2009): Northern Rock: Just the Tip of the Iceberg. In: The failure of Northern Rock: A multi-dimensional case study, The European Money and Finance Forum, Vienna 2009, pp 99–116.  Google Scholar
  19. Petersen, M. A. (2004): Information: Hard and Soft. working paper, Kellogg School of Management.  Google Scholar
  20. Rajan, R. G. (1992): Insiders and Outsiders: the Choice between Informed and Arm’s Length Debt. The Journal of Finance, Vol. 47(4), 1367–1400.  Google Scholar
  21. Sequeira, S./Ryans, A./Deutscher, T. (2007): ING Direct USA – Rebel with a Cause. Case Study, IMD International, Richard Ivey School of Business, London, Canada, IMD-3-1845.  Google Scholar
  22. Thomas, G. (2011): A Typology for the Case Study in Social Science following a Review of Definition, Discourse, and Structure. Qualitative Inquiry. Vol. 17(6), 511–521.  Google Scholar
  23. Verkoren, H. (2001): ING Direct Strategy, Presentation 12 April 2001.  Google Scholar
  24. Verweire, K./van den Berghe, L. (2007): ING Direct: Rebel in the Banking Industry. Vlerick Leuven Gent Management School, Case Study, Reference. No. 307-053-1.  Google Scholar
  25. Verweire, K./de Grande, J. (2008): Het Succes van ING Direct: Strategisch Innoveren binnen Gevestigde Financiële Instellingen: Droom of Werkelijkheid? Incrowd, Vol. 18(3), 6-8.  Google Scholar
  26. White, L. J. (2003): The New Economy and Banks and Financial Institutions. Working Paper EC-03-04, Stern School of Business, New York University.  Google Scholar
  27. Arnold, I. J. M. (2019): Internet Search Volumes of UK banks during the Crisis: The Role of Banking Structure and Business Model. Global Finance Journal, https://doi.org/10.1016/j.gfj.2019.05.001.  Google Scholar
  28. Arnold, I. J. M./van Ewijk, S. (2011): Can Pure Play Internet Banking Survive the Credit Crisis? Journal of Banking & Finance, Vol. 35, 783–793.  Google Scholar
  29. Boot, A. W. A. (2000): Relationship Banking: What Do We Know? Journal of Financial Intermediation, Vol. 9(1), 7–25.  Google Scholar
  30. Boot, A. W. A./Thakor, A. V. (2000): Can Relationship Banking Survive Competition? The Journal of Finance, Vol. 55(2), 679–713.  Google Scholar
  31. Cyree, K. B./Delcoure, N./Dickens, R. (2009): An Examination of the Performance and Prospects for the Future of Internet-primary Banks. Journal of Economics and Finance, Vol. 33(2), 128–147.  Google Scholar
  32. Delgado, J./Hernando, I./Nieto, M. J. (2007): Do European Primarily Internet Banks Show Scale and Experience Efficiencies? European Financial Management, Vol. 13(4), 643–671.  Google Scholar
  33. Dermine, J. (2005): Le Taux Modèle: ING Direct, A Growing Success Story. Case Study, INSEAD, Fontainebleu, France, 05/2005-5282.  Google Scholar
  34. DeYoung, R. (2001): The Financial Performance of Pure Play Internet Banks. Economic Perspectives, Vol. 1, 60–78.  Google Scholar
  35. DeYoung, R. (2005): The Performance of Internet-based Business Models: Evidence from the Banking Industry. Journal of Business, Vol. 78(3), 893–947.  Google Scholar
  36. Diamond, D. W. (1984): Financial Intermediation and Delegated Monitoring. The Review of Economic Studies, Vol. 51(3), 393–414.  Google Scholar
  37. Eisenhardt, K. M. (1989): Building Theories from Case Study Research, Academy of Management Review, Vol. 14(4), 532–550.  Google Scholar
  38. Financial Times. (2019): ECB Bank Supervisor Enria Criticises ‘National Champion’ Mergers. March 19.  Google Scholar
  39. Furst, K./Lang, W. W./Nolle, D. E. (2002): Internet Banking. Journal of Financial Services Research, Vol. 22(1–2), 95–117.  Google Scholar
  40. Güttler, A./Hackethal, A. (2005): How ING-DiBa Conquered the German Retail Banking Market, working paper, European Business School, Germany.  Google Scholar
  41. Heskett, J. L. (2005): ING Direct. Case Study, Harvard Business School, 9-804-167.  Google Scholar
  42. Hyett, N./Kenny, A./Dickson-Swift, V. (2014): Methodology or Method? A Critical Review of Qualitative Case Study Reports, International Journal of Qualitative Studies on Health and Well-being, Vol. 9(1), 1–12.  Google Scholar
  43. ING. (2017): ING Spain and Model Bank: Crafting our Future Mobile Banking Model. Investor presentation, March 2, 2017.  Google Scholar
  44. Onado, M. (2009): Northern Rock: Just the Tip of the Iceberg. In: The failure of Northern Rock: A multi-dimensional case study, The European Money and Finance Forum, Vienna 2009, pp 99–116.  Google Scholar
  45. Petersen, M. A. (2004): Information: Hard and Soft. working paper, Kellogg School of Management.  Google Scholar
  46. Rajan, R. G. (1992): Insiders and Outsiders: the Choice between Informed and Arm’s Length Debt. The Journal of Finance, Vol. 47(4), 1367–1400.  Google Scholar
  47. Sequeira, S./Ryans, A./Deutscher, T. (2007): ING Direct USA – Rebel with a Cause. Case Study, IMD International, Richard Ivey School of Business, London, Canada, IMD-3-1845.  Google Scholar
  48. Thomas, G. (2011): A Typology for the Case Study in Social Science following a Review of Definition, Discourse, and Structure. Qualitative Inquiry. Vol. 17(6), 511–521.  Google Scholar
  49. Verkoren, H. (2001): ING Direct Strategy, Presentation 12 April 2001.  Google Scholar
  50. Verweire, K./van den Berghe, L. (2007): ING Direct: Rebel in the Banking Industry. Vlerick Leuven Gent Management School, Case Study, Reference. No. 307-053-1.  Google Scholar
  51. Verweire, K./de Grande, J. (2008): Het Succes van ING Direct: Strategisch Innoveren binnen Gevestigde Financiële Instellingen: Droom of Werkelijkheid? Incrowd, Vol. 18(3), 6-8.  Google Scholar
  52. White, L. J. (2003): The New Economy and Banks and Financial Institutions. Working Paper EC-03-04, Stern School of Business, New York University.  Google Scholar

Abstract

This paper examines the strategic response of the Dutch bank ING to the global financial crisis. Prior to the crisis, ING was a prominent global exponent of direct banking, using the so-called pure play internet (PPI) business model. PPI banking is a hybrid business model that combines features of relationship and transaction banking. Downsides of this business model are that it may lead to overexposure in securities and that it may attract savers that have an above-average sensitivity to interest rates or risk. Using data on the geographical activities of ING, the timeline of relevant events in the history of ING and strategy statements of ING management, we examine how ING has responded to the strategic challenges of the crisis. We conclude that PPI banking should be viewed more as a market penetration strategy than as a full-blown business model that is tenable in the long run.

Table of Contents

Section Title Page Action Price
Ivo Arnold: Corporate Change After the Global Financial Crisis: A Case Study in Direct Banking 1
Abstract 1
I. Introduction 1
II. PPI Banking Compared to Traditional Business Models 4
III. ING Direct: From Past to Present 7
1. Rapid Growth (2001–2008) 1
2. Crisis and Restructuring (2009–2013) 1
3. Return to Growth (2014–2018) 1
IV. Strategic Responses to the Crisis 1
V. Balance Sheet Analysis 1
VI. External Validation 2
VII. Discussion and Conclusions 2
References 2

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