No paper trails for new online bank RaboDirect

A middle-aged man exuberantly professes to his female companion that he has found the woman of his dreams.

"But she turned me down, so I thought you would make a good second-best."

As a theme for a television advertising campaign, it's difficult to fault amusingly brutal honesty. The dry reality is that the ad is one of several for a new "straight-talking" internet bank, RaboDirect.ie, which is flogging savings accounts that pay a competitive interest rate of 3 per cent.

Second-best is not good enough for RaboDirect, part of the Dutch financial institution Rabobank. "Our aim is to be the best buy in the marketplace," says RaboDirect's Irish general manager, Greg McAweeney.

So consumers will be awaiting the bank's response to its online savings competitor, Northern Rock, which this week increased its demand rate to 3.05 per cent.

Almost one thousand people registered their details online within the first two weeks of Rabobank's launch, says McAweeney, who is confident the bank can meet its 10,000 customer target by the end of 2005.

RaboDirect is establishing its presence ahead of the expansion of Bank of Scotland Ireland into a chain of former ESB shops and the arrival of Danish financial institution Danske Bank, which has bought National Irish Bank and Northern Bank.

"We were always going to hit May regardless of what the others did," he says. "The rationale was to get in 12 months ahead of the first SSIAs maturing."

Capturing the SSIA cash is all-important to the newer, smaller players. McAweeney says RaboDirect is not naive enough to imagine that there will be a €15 billion windfall to be shared by the banks: people will simply spend much of their money.

Nevertheless, SSIA maturities have been factored into RaboDirect's targets for year two and three. Capitalising on the SSIAs is not just about offering a resting place for homeless lump sums; it's about encouraging people to continue their savings habit.

But good habits are easier to break than bad ones. There is always a risk that consumers will appreciate RaboDirect's efforts at helping the ad breaks pass less painfully, but stubbornly keep their money with the likes of AIB and Bank of Ireland.

McAweeney started to develop the business case for a purely internet bank here in 2003, while he was an employee at ACC Bank, Rabobank's business banking arm. During focus group consumer research conducted last year in the aftermath of the AIB overcharging scandals, much venom was spewed.

"It is very, very clear that Irish consumers are very frustrated with their banks. They don't feel that they are getting good value from their banks and, in many ways, if you look at the profits they make in a European context, they're not," he says.

McAweeney says he is not a typical career banker.

"I don't really see through a banker's lens," he says. "Some banks fall into the trap of thinking consumers spend a lot of time thinking about their finances, when the reality is that they don't." RaboDirect offers a range of investment funds alongside its flagship 3 per cent demand account, and personal loans are next on the cards, scheduled for next year. Mortgages will probably be next, but they "are difficult for us" because of the volume of paperwork.

"We don't have paper flying all around the place," he says. "We'll never do chequebooks. We don't do ATM cards. It's a pure cost thing."

The bank prides itself on its secure systems, its transparent pricing, its low minimum deposits and its all-round consumer-friendliness. It claims to eschew the misleading jargon and gimmicky special offers favoured by some competitors.

Before joining the Rabobank group, McAweeney worked in Australia for four years, developing e-business strategies for Siemens and advising the Credit Union Services Corporation Australia (Cuscal) on its approach to the internet.

He returned to Ireland in 2002, squeezing in an MBA before joining ACC Bank.

It was decided that the ACC Bank brand should remain devoted to business banking and that the new online bank should attempt to emulate the success of Rabobank's Belgian internet bank and share its back office in Antwerp.

Similar online banks are now planned for Germany, Australia and New Zealand.

"The good thing about Rabobank is that there are opportunities to move around," says McAweeney, who is due to get married in Hunter Valley, near Sydney, next January.

He is optimistic that there will be few teething problems with RaboDirect's Digipass security system, which requires customers to keep a small hardware device with them when they want to log in to their account or transfer money out of it.

"If people can book quite sophisticated holidays online, they can bank online."