A bank and cafe in one
Lenzie Davis serves a customer at the ING Direct Cafe in Los Angeles.
Tess Vigeland: Most of the time, when you get a letter from the bank these days, it's to let you know that more fees are on the way. Or your loan application has been denied. But, one bank is going another direction. Offering free cups of coffee at its cafes across the country. It's also providing money management seminars and free Wi-Fi.
Marketplace's Jennifer Collins visited its branch here in L.A.
Jennifer Collins: Lenzie Davis is like any good barista. He makes a mean latte...
Sound of milk frothing
And a killer smoothie.
Sound of blender
But at the register, he goes a step beyond "debit or credit."
Lenzie Davis: I see you got the Electric Orange card? How's that working out for you?
Customer: So far, so good.
Lenzie: Those no fees really help, right?
Davis is one of a dozen barista/personal-finance advisers who work at the ING Direct Cafe on a busy corner in Los Angeles. The company's signature bright orange decorates the windows along with the words "Save your money." Inside, you'll find computers and Wi-Fi access. You can buy food and drinks, even t-shirts and coffee mugs with ING's logo.
Manager Mike Gurewitz says the cafe is the online bank's brick-and-mortar connection to the public.
Mike Gurewitz: You know, the idea behind it is that we want to make banking as simple as having a cup of coffee.
ING has been rolling out cafes across the country for the past 10 years; the next one will open in San Francisco this fall.
L.A. resident Ricardo Macias was skeptical.
Ricardo Macias: I was like, "Really, this is a bank?"
But he listened to the barista's sales pitch anyway. Macias has a checking account with one of those too-big-to-fail banks. The account used to be "free." Now... not so much.
Macias: Basically I'm not happy with my bank that I'm at right now.
ING Direct -- like many online banks -- saves money on branches and keeps fees to a minimum. Macias opened a savings account with a 1 percent interest rate plus an investment account.
Macias: This place makes you feel a little bit better about banking.
A computer terminal at ING Direct's Los Angeles Cafe. The travel cups are for sale as well as "The Orange Code," published in 2008 and written by CEO Arkadi Kuhlmann and branding consultant Bruce Philp. You can even buy a mountain bike at the cafe. ING Direct spokespeople say sales of these products as well as food and drinks cover the operating costs of the cafes.
Richard Speer: I think they're a genius in how they're approaching the market. You know, a lot of Internet banks have come and gone.
Banking consultant Richard Speer says the online banking business model makes it tough to turn a profit.
Speer: Eighty percent of the money they have, 90 percent of the money they have is money market money which can move in a heartbeat.
Banks need more profitable products -- like loans or CDs -- to say in business. Speer says the only proven way to attract those kinds of customers is to open branches.
Speer: At the end of the day, the vast majority of consumers prefer to deal with an individual.
Speer says ING's cafes provide that quasi-branch feel -- but they don't compare to real branches. The baristas won't cash your paycheck and if your question is too complicated, they'll direct you to the bank's call center. But even so, marketing Professor Barbara Kahn says ING is onto something.
Barbara Kahn: They were ahead of the curve and now it's something I think you're going to see a lot of banks do this.
Credit unions have been have been marketing themselves as friendlier financial institutions. Kahn says small banks direct their officers to join social organizations or sit on community boards to show their engagement. ING Direct teaches basic money management to L.A. school kids and offers investment seminars at the cafes.
Kahn: If there's a place where you feel that it's safe and comfortable and a pleasant place to come to, I think that should build loyalty.
On the day I dropped by, ING was having a company party -- people lined up at a photo booth, snagged cupcakes, chatted with baristas -- on their favorite topic.
Davis: So did everything work out with the savings account?
Customer: Yes. I mean I think so.
Well, that... And they were selling blending drinks for a dollar -- bright orange, of course.
I'm Jennifer Collins for Marketplace Money.