As chairman and president of ING Direct USA, a leading online bank acquired in February by Capital One, Arkadi Kuhlmann wants consumers to put more money into savings. Banks must provide a helpful customer experience, but consumers must be more responsible with what they do with their money. Here, Kuhlmann discusses his views on saving.
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What’s with you and getting Americans to save money? Where does this passion come from?
It’s a form of independence. A savings account gives you the freedom to know that you are in control and financially independent. Look, in life there are few things you can guarantee. You can’t guarantee you’ll have a job tomorrow, or that your spouse will still want to be married, or that you’ll wake up in the morning.
But you can control what you save and what you spend. Interestingly, our customers tell us saving is addictive. The more they save, the more ways they find to save more.
When we started the bank in 2000, it was a time when instant gratification and spending without regard for one’s ability to pay back the money had enveloped America. It was a recipe for disaster, and we believed that the right thing to do was to set off on a crusade to lead Americans back to the old-fashioned values and saving.
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What role should a bank play in helping people build a net worth? Why shouldn’t they be neutral places with no opinion?
Banks need to make it easy for consumers to save their money and be financially responsible. Fees, complicated online systems and convoluted language all deter consumers from wanting to pay attention to their money.
Just like a drive-thru or a restaurant, the customer experience determines adoption and frequency. If service is great and you feel gratification rather than frustration during the experience, you will repeat it. Same with saving and investing.
If we were to give credence to the theory that most Americans can’t make even fundamental financial choices without guidance, then should banks and bankers step in do more for the customer?
Consumers and financial professionals both need to play a role. Consumers need to educate themselves and understand the consequences of their financial decisions.
To that end, financial professionals need to be transparent about their products and to take responsibility for ensuring customers are only permitted to obtain products that are suitable for their financial situations.
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What are your thoughts on new banking regulations for the consumer?
The Consumer Financial Protection Bureau is designed to be a great watchdog for consumers. I hope we see some “Good Housekeeping” seals of approval for financial products coming from them as they get up and running.
Consumers have been intimidated by the variety of bank products in recent years and would benefit from less small print and more transparency.
What are your feelings about the pervasive negative attitude so many in this country have toward banks? Are they justified? Yes, I’m talking about Occupy Wall Street.
Part of the issue for consumers is that the news they see and read focuses on the negative behavior of people and institutions rather than the positive. There are 9,000 banks in this country and although there may be a few bad apples, they have a mission to help their customers financially.
Those bank associates come to work every day wanting to do the right thing for their customers. But this is a two-way street. Consumers also need to focus more on being financially responsible. I think a dose of saving would be a good thing for everyone.
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