Key changes are afoot at ING Chile as it braces itself to become a major pawn in its mother company’s Latin American restructuring strategy. The Chilean division leverages the vast network of its global 107,000 strong workforce and available resources to deliver positive experiences to customers and simultaneously create ING brand promoters. Concurrently, clients experience an individual and personalised service, which offers a wide diversity of saving and protection options, and helps them build their long-term plans at retirement.
It is the only financial company in Chile involved in the business of life insurance, AIA and mutual funds as well as having a stronghold in voluntary pensions with savings of over $1bn. AFP Capital, the company’s pension fund, is one of the top three in the country with nearly two million clients and $34.1bn in managed funds. Additionally, it boasts over 70 mutual funds which provide customers with an alternative to investing in equities and fixed income.
Wealth management strategy
When ING Chile launched its novel wealth management strategy in 2010 it made client focus the key ingredient. For ING this method has meant not only higher sales volumes but more importantly increased client loyalty and an improved understanding of consumer needs, its CEO believes.
Andrés Castro, CEO of ING Chile, explains: “Without a shadow of a doubt the most pertinent element of the ING Chile wealth management strategy has been consistent client support. In an insurance market which is highly dominated by a product and factory-driven approach, having clients at the core of our daily work marks a fundamental change in the business.”
When it comes to the serious issue of reliable wealth management suppliers, the majority of people base their choice on the advice and recommendation of family members, friends and colleagues according to ING. The trust clients put in the knowledge of those around them has increased as they appreciate real life experiences more than similar sounding advertisements and marketing messages from companies they cannot associate with.
Because word of mouth carries more credence than advertising, ING Chile employees are harnessing the influence of its satisfied clientele and continue to deliver on their brand promise. It appears the task is clear-cut and depends exclusively on its employees following a simple, ING approved approach. They have to be easily accessible, clear and transparent in all dealings, and fast and efficient all the way through their professional client advice.
Keeping it clean and straightforward with a graspable vision of what the group needs to achieve for its clients defines the facets that set ING apart. It moreover shows how the wealth management strategy at ING Chile differs from that implemented by its competition, Castro says.
“Essentially it is the client focus that really makes the difference. Simply speaking, while at ING we try to foster contact with clients, rival companies simply limit contact to sale, withdrawal and claim processes. Additionally, the lack of complete product offering makes it even more complex for competitors to communicate and delivery promises to clients. The industry determines what our clientele needs not the other way around.”
Positive effects of strategy
Results so far are showing that ING is on the right track with its methods and wealth management strategy. The group made a good start to 2011, posting in May a 1Q11 net result of €1.38bn, compared to €1.23bn in the same quarter last year. Strong capital generation at ING Bank continued into 1Q11 with the bank’s core tier one ratio increasing to ten percent.
Jan Hommen, CEO of ING Group, said: “Both the bank and the insurance division posted strong results in the first quarter, illustrating clear progress on their respective performance improvement programmes as they prepare for their futures as stand-alone companies.”
The solid first quarter result comes after a positive year in 2010 when ING recorded a higher underlying net profit. ING Bank reported another successful quarter as results benefited from a healthy interest margin, higher client balances, lower risk costs and focus on cost control. Total operating profit at ING Insurance showed a significant improvement in the first quarter, supported by higher sales and growth in assets under management.
The mother company announced at the end of July that it is to sell its Latin American life insurance, pensions and investment management businesses to Colombian Grupo de Inversiones Suramericana for €2.61bn. The deal values the Latin American operations at 1.8 times book value, 16 times its estimated earnings. The Latin American businesses to be sold had combined revenues of €670m in 2010 and the sale will make ING a profit of €1bn according to the company.
In mid May ING exercised its option for early repurchase of €2bn, with the total payment amounting to €3bn, and which included a 50 percent repurchase premium. Provided the strong capital generation continues, ING intends to repurchase the remaining €3bn core tier one securities at the latest by May 2012 from retained earnings, on terms that are acceptable to all stakeholders. This will be conditional upon there not having been any material changes regarding the company’s capital requirements and/or ING’s outlook on external market circumstances.
ING Chile gives greater prominence to lasting plans and says the company’s strategy will benefit its clients not only immediately but also in the long-run. Castro explains how ING’s wealth management strategy has put more emphasis on the need for clients to get actively involved in building their retirement plan.
“Firstly, the ‘Get your Number’ campaign has put that concept across and helps clients to be more conscious of the future. ING is definitely more effective regarding its advice when each client defines a saving and protection target. Secondly, once a goal has been determined, ING utilises its product offering to propose a saving plan for each consumer or segment of clientele. Finally, once the saving plan has been determined, the company commits to track performance and risk profile to assure promise delivery.”
Employee guidance and training has always been of paramount importance to the company, and secures commitment to the programme from the top down, its CEO believes.
“Historically staff training has always been a key component of the ING business. With the introduction of our wealth management strategy, training underwent a radical change, as it was necessary to complement specific product knowledge to a broader expertise. Nowadays it is not enough to know about insurance products because a client-focused strategy demands going the extra mile in terms of proficiency on saving and investment topics that are necessary in enlarging the previously narrow product offering. In addition, the annual certification of our united sales force is a must, if we want to improve the quality and standardise the advice offered by our employees,” he says.
Corporate social responsibility
CRS programmes feature highly in business culture today and are a way for companies to give back to its communities. This is no different for ING Chile which has made CSR a priority and encourages employees to get actively involved. As provider of retirement solutions, the company understands that such a contribution to the local community will convey to clients and employees a durable assurance of belonging. Castro believes this is an achievable goal: “The key fundamentals to ensuring the success of this strategy is the long-standing commitment devoted to these initiatives while fostering participation in our employees in all the initiatives. Finally, once these actions are publicly communicated we close the circle and clients understand our dedication to continue servicing them in the long-run.”
“We send our employees out with a solid commitment to their communities and expect them to deliver high quality services and products, as well as pay attention to social responsibility matters. Besides our focus on education, which is the foundation for granting opportunities in any developing country, we have targeted our attention on environmental matters such as reforestation and energy saving campaigns,” he states.
Castro points out: “ING Chile, as well as every country where the group has local presence, cooperates and partakes in programmes with society in a positive and responsible way. We promote a continuous dialogue between the public, NGOs and our employees. In Chile, we specifically focused on furthering education with our programme “more opportunities: study builds futures.” We believe education is a great tool to combat poverty and inequality. Because of this, we work alongside “Súmate,” a non-profit organisation that helps young people. It particularly centers on those who have dropped out of the Chilean school system. We try to help Súmate by looking at ways to reinsert drop-outs into educational programmes.”
Elaborating on one of its key educational projects, Castro states: “It involves the construction of a school in Lota, southern Chile, which was a region notably affected by the earthquake in February 2010. There are over 450 donors nationwide to help us achieve this goal, and we have a complete system of corporate volunteering under this umbrella as well. At the outset, the project started with tutorials, where ING’s employees supported young students in math, biology and other subjects. We also performed visits to schools as part of our plans for the next semester to start our motivational speaking for children.”
The drivers on implementing the new corporate wealth management strategy, both in terms of retail and corporate approaches, emerged when the company realised through its life insurance business division that there was a significant gap in service and product offerings for corporations. “The Insurance industry focuses on life and health coverage while our wealth management strategy demands a complementary focus on retirement services. It was necessary to introduce a cultural adaptation to our existing tied-agent channel saving products. At first corporations reacted slowly to the new proposal but soon they realised about their key role as promoters of retirement planning,” Castro enthused.
Without exception the company established that a considerable proportion of employees have replacement rates with pensions of an average of a ten-year gross salary, which is lower than 50 percent while international standards require about 70 percent.
Castro notes: “We demonstrated through training sessions to employers and employees that a small but disciplined voluntary saving can help contributors reach higher rates. This dynamic considerably facilitates the devotion of corporations to our group plans. The Chilean workforce is dependent on corporations as they represent a privileged umbrella with the ability to channel a variety of services for employees in relation to life and health insurance, but also in saving. It is ING’s objective to become the leading retirement service provider for corporations.”
There are however some challenges for the company regarding the enrolment process according to Castro, who says ING has implemented efficient ways to resolving any potential issues.
“The enrolment is a long and gritty process. To catch the employees’ attention it is necessary to gain access and be able to count on the committed participation of the human resources areas. This is not easy to achieve due to different priorities. Our tied-agent needs to obtain a concrete implementation agenda from the corporate representatives to avoid misunderstanding or postponements,” Castro explains.
Moreover, the company believes that it is important to be extremely efficient in any contact with prospective clients. In face-to-face interactions, agents should be extremely clear on the advantages and disadvantages of the product. The same clarity should apply to automatic enrollment tools, which are usually extremely straightforward. “They are simple and direct while upholding the main objective of building up your saving and protection plan,” Castro adds.
ING outlook and mission
One of the company’s strengths is to listen to client views and suggestions regarding its different products and services. It then analyses the comments and acts on specific criticism to improve customer experience. ING Chile has also put programmes into operation in various areas to support customer-focused innovations and improvements.
The ongoing challenge for the company during the period of 2011-12 will be to maintain momentum by continuing to consolidate its corporate platform to help reach its goals.
“Among other initiatives, it is our inspiration to widen product offerings that meet protection and saving needs for employers and employees. New schemes are under way with important emphasis on cutting-edge IT platforms. However, with a continuing focus on both operational and behavioural elements, we are in good shape for future accomplishments,” Castro believes.