Why create a new brand?

What processes and decisions lead a company to create an offshoot of their main brand?  I get the direct bank concept and the attraction; however it appears that the common theme is to basically make the direct bank a separate entity entirely with the hopes that cross sell with the main brand will eventually occur. How successful are these separate direct banks and does active cross sell actually occur and boost revenue / client loyalty?  Don’t you just dilute the efforts of acquiring new clients away from the main bank? Aren’t you in essence just creating a two headed monster?  I can see the business case in the ING Direct model since they are not a brick / mortar bank and the fact that they kept the name of the bank within the new brand.

My assumptions:

·         As mentioned they are targeting a separate demographic that would not normally be attracted to the main bank

·         They are going after the quick deposit money – but have to shell out more in high yield  interest so it is better to keep separate ledgers

·         Branching out will afford them the opportunity to test and build out new technology on the new entity without hurting the main banks operations or pocket book

·         Age old marketing ploy - customers will always buy new version of an old product

The startup costs and duplication of efforts must be worth it or we would not see so many of these popping up in the marketplace.

I would be interested in hearing more from those that may have contemplated this or actually implemented and drove a direct bank concept to market.