The Strategist

ING Group will lay 7000 people off to save money for tech investments

10/03/2016 - 16:05

Dutch financial conglomerate ING Groep plans to cut about 7 thousand jobs, and invest heavily in its own digital platform to save about 900 million euros ($ 1 billion) for the year, reports Reuters.

ING Group will lay 7000 people off to save money for tech investments
The layoffs will affect a little less than 12% of ING’s workforce, which now consists of 52 thousand people. This reduction will be the largest for the company since 2009, when ING had to restructure its activities on insurance after receiving state aid during the financial crisis.

In the past year, other large banks have announced mass layoffs in their subsidiaries to improve their profitability. However, ING said that the job cuts should help to unite technology platforms and centers of risk management. It can also help ING to struggle with burden of low interest rates.

According to Ralph Hamers, CEO of ING, such programs should be declared when they are affordable. "We are strong, we have good financial results, we are growing. This the moment when you have to carry out a ‘repair’, not when there is no longer any choice," - said Hamers

ING announced that it will invest 800 million euros into its technology platform, to be deployed in Spain, Italy, France, Austria and the Czech Republic within the next five years. These countries are mature and have competitive economies, dominated by existing banks.

As Hamers put it, just three or four years ago digitalization of banks was held mainly in the Nordic banks, and now it goes everywhere. ING's business model, focused on maintenance of low human physical presence in Germany, was a serious success. Thus, ING managed to get around the largest German bank Deutsche Bank.

Most of the reductions will be held in the Netherlands and the Benelux countries (3.5 thousand in Belgium and 2.3 thousand in the Netherlands). There, ING will integrate its subsidiary, Record Bank, which is the third largest Belgian retail bank by net profit.

Previously, ING announced its intention to convert popular social media like WhatsApp, Facebook, Twitter and LinkedIn, in channels for sending requests for payments. The organization aims to provide a direct connection between contacts of the mobile banking application’s users.

The app will allow users to create links that can be shared not only via selected Internet channel, including WhatsApp, Facebook and Twitter, but also via SMS and email.

The recipient receives a request for payment, along with a single-touch activated reference to the Dutch online payment service IDEAL. Funds remitted through the IDEAL, are automatically credited to the customer's current account.