Nordea Bank Abp, headquartered in Helsinki, Finland, is today one of Europe’s top universal banking groups, offering products and services in the areas of personal banking, commercial and business banking, wholesale banking and asset and wealth management. The product of successive mergers of Nordic banks Unibank, Merita Bank, Nordbanken and Christiania Bank during the late 1990s, Nordea can trace its origins back 200 years. The group serves more than nine million private, corporate and retail customers with its home markets being Finland, Denmark, Norway and Sweden as well as operations in 16 countries outside of the Nordic region. The group boasted a total operating income of EUR 8.5 billion and total assets of EUR 554.8 billion in 2019. One of Europe’s top 10 financial institutions based on market capitalisation, Nordea has been granted a coveted AA rating for its stability. Committed to helping customers “realise their dreams and aspirations”, this bank has led the way in Europe’s race toward digitalisation. Its internet bank is the preferred financial partner of approximately six million customers, and the group is committed to providing omnichannel access. Nordea has won awards recognizing its achievements in such areas as innovation, digital offerings to retail customers, private banking and investment banking as well as a strong position in the small- and mid-size corporate segment. Its shares are traded on Helsinki, Stockholm and Copenhagen stock exchanges. A leader in sustainability, Nordea is committed to doing its part to conserve the world’s resources for future generations.
International Banker was pleased to be joined by Nordea’s president and chief executive officer, Mr. Frank Vang-Jensen, to discuss how the bank is navigating through the pandemic and its plans and visions for the future.
Mr. Vang-Jensen, thank you for speaking with us today….
As Nordea’s Group CEO, what has been the most challenging aspect of dealing with COVID-19 thus far? Has the pandemic significantly changed your approach to leadership in any aspect?
The COVID-19 pandemic has naturally impacted individuals, businesses and societies in multiples. For us, it has also brought our purpose—enabling dreams and everyday aspirations for a greater good—more to life. We swiftly went from idea to decision to action and solved customer challenges together. It was impressive to witness a combination of drive, ownership and quick execution. That was, and is, the way to do it, for the benefit of our customers and societies.
Right from the beginning of the pandemic, we have been fully focused on supporting our customers. As an example of this, we were quick to react and grant instalment free periods for customers affected by the pandemic. In addition, many of our other customers needed other kinds of support and expertise, so it has been important for us to proactively reach out to our customers, providing individual advice, webinars or tailor-made solutions.
As a business leader, I’m actively assessing how this pandemic will impact my way of leading and running a business. The situation raises the question of finding new ways of leading, being flexible and staying attentive. There is nothing new with remote work and services, but maybe with the pandemic, we are finding the right balance of working in the office and at home.
Our customer surveys show improving customer satisfaction, partly because customers appreciate being serviced remotely, being in the living room or kitchen. We need to consider how to inspire different teams and how to create the right metrics to support innovation, proactivity and with continuous deliveries. Less hierarchy but more consistent follow-up and support in the organisation.
COVID-19 is challenging us to re-think our leadership principles and practices. Maybe the changes in the ways of working are not going to be as radical as in the wildest analysis, but it obviously is something that we should consider and take with us—naturally guided by our purpose and values.
If I can point out one good thing that has come out of a tragedy like the corona crisis, it is that we have simpler solutions and use more common sense. I have experienced that we are more to the point. Our employees have been able to find solutions they could never find in an instruction or through long internal processes. They have come up with the best and most customer-centric solutions.
This has been an accelerator for our new way of working at Nordea. My approach as leader is to remind our employees again and again what we have learned and to stay focused on what we are here for: the customers.
Among the most important current objectives for Nordea seems to be optimising the customer experience through the development of an omnichannel model. How is this particular objective progressing? Has the bank had to accelerate any specific aspects of this objective as a result of COVID-19?
We want to ensure that our customers can meet us when they want and use the channels they want. That is what omnichannel is about. We want our customers to be able to interact seamlessly between our different channels (examples being branch, contact centre, bot, mobile or web). It makes it easy to experience a smooth combination of digital and human advice. That, in turn, makes us more available to our customers.
Already, prior to the outbreak, we had an ambitious roadmap for further strengthening our omnichannel model, and the COVID-19 situation has confirmed the importance of accelerating the execution of this plan. A key priority is to connect even better to the customer data across channels, to always be relevant and personal, ensuring that our customers feel recognised, no matter how they interact with us.
One example of a great omnichannel experience is Nora—our online savings advisor. We believe that banks have an important role advising customer how to achieve better financial wellbeing. To help our customers to a more stable and maybe eventually wealthy future, we need to make savings both easy and accessible. Nora is a valuable contribution to this. We have very well-educated advisors, but that´s not the best way to engage all customers, which is why the digital advisor Nora that is available 24/7 makes a difference.
Since recently, we have our advisors using Nora, which is another important step in our ambition to serve customers the way that suits them best. When the advisors are using the same tool as the customers, it makes it much easier to help and support the customers—and create mutual value in the customer relationship.
As far as the bank’s digital journey is concerned, how do you gauge feedback from customers with regards to new products and services? And how significant a role does such feedback play when it comes to guiding the bank in its aim to maximise customer experience?
Our approach is to listen, learn and act. We collect customer feedback through various methods from larger-scale satisfaction surveys to touchpoint feedback across channels. More specifically, on our digital solutions, we use usability tests, benchmark studies and focus groups in relation to service offerings. We even have internal anthropologist competencies to understand customer preferences and expectations by engaging in customer testing. Not only focusing on what the customers’ needs are but also why.
Our digital-development teams are, as they call themselves, “obsessed” with customer feedback. We track and measure everything from the use of our services to how well they work. All feedback is analysed. This gives us a clear view of what we should fix and optimize to gain a better customer experience. Improvement is the combination of fixing and improving existing features as well as introducing totally new ones.
A concrete example is that some customers expressed that it wasn´t easy to find what they needed in our mobile-banking app. That feedback led to several improvements resulting in top ratings in app stores—4.5 ratings in a 5 scale on all markets. The personalised experience you get through our mobile 1 soon will also be the same in our new Netbank.
In Nordea’s second-quarter report, you mentioned that due to the pandemic, the bank has “witnessed an increasing trend for e-commerce, mobile payments and digital customer interaction” and that most customer meetings “have been online while we have been fully operational with more than 70 percent of our staff working remotely”. At this stage, do you believe that some of these changing trends that you mentioned will be in place just temporarily, or could some of them remain permanently?
Yes, I have no doubt that the accelerated digital trend will result in more permanent structural changes. We have seen a clear impact in the use of our digital services. The biggest increase is from our more senior customers—they have used our digital services about 30 percent more than a year ago. Some will probably not be lasting after the corona crisis, as it is human nature to fall back to well-known behaviours. But we have received really promising feedback from our customers, indicating a more permanent change.
Compared with last year, our customer satisfaction with, for example, online meetings has increased by 29 percent, reaching the high level we also see in physical meetings. Customer’s feedback has really enabled us to conduct great online meetings.
It is interesting to see that what really counts for our customers in online meetings is actually mostly good old virtues, like the personal advisor being well prepared, knowing the customer’s individual needs, wanting the best for the customer instead of overselling, creating a welcoming and stress-free atmosphere. Sharing the screen and using the web-camera are essential features that draw online meetings closer to physical meetings from the personal aspect. It is convenient, and I have no doubt that we also, after the COVID-19 period, will see many more digital interactions than prior to the outbreak.
What do you consider to be the most exciting, innovative product or service that is currently available to customers? And what particularly makes it so exciting?
For me, it is our new mobile-banking app. For years, people have referred to mobile as the remote to the bank, and we are now, with our new app, presenting just that. We have rolled it out throughout our four home markets with top ratings, and we have now more than one billion log-ins across the Nordics.
Through our app, our customers can not only manage payments, mortgages and savings, but they can also meet their advisors in video meetings, book appointments, see the full overviews of their financial situations, manage subscriptions and, soon, also add engagements with other banks. However, what makes our app different is that it doesn´t only make our services available. It´s also built in a way where customer research and design has made us easy to deal with.
Nordea seems to have really ramped up its focus on sustainable banking in recent years. Last year’s annual report, for instance, mentions that you have expanded green corporate loans to customers in all four Nordic home markets as well as expanding green mortgages into Finland and Norway. What are the main ways in which these green securities differ from conventional corporate loans and mortgages?
Our target is to help our customers in their work with sustainability. Green corporate loans and mortgage loans are good examples of Nordea’s initiatives to enable our customers to contribute to a more sustainable future. The main difference from conventional corporate loans is that the entire chain is green.
The loans are granted to investments made by our customers that have an impact on sustainability; this can be related to, for example, energy-efficiency gains or that the investment contributes to lower water usage. There are multiple areas where you can have a green loan, and the approved areas follow our Green Bond Framework.
Moreover, sustainability is not just products and services. It is our way of working—it is all about our actions, from environmentally friendly ways of using resources to improving diversity and inclusion throughout the bank.
Nordea Asset Management, which manages Nordea’s funds, was recently awarded excellent scores by the United Nations-supported Principles for Responsible Investment (PRI) for its overall sustainability strategy and governance. What are some of the key specific ways in which a fund ought to be designed in order to be considered excellent?
As a start, you cannot have a good fund—sustainable or not—without a strong asset manager who has a clear investment objective and a solid investment process. For us in Nordea, this means active management, where we actively take investment choices to get the best risk-adjusted investment possibilities for our customers.
In particular, within sustainable investing, the active approach comes through. The approach we are using includes integration of environmental, social and governance (ESG) factors in our investment process, engagement with companies on these matters, voting in annual company assemblies, as well as in some cases actively excluding companies and industries from the investment universe. All important things to act on in the interests of our customers.
We are also happy that our efforts have been recognised by both customers and the industry. Customers have entrusted us with more than 69 billion euro in our products with elevated ESG, and in our flagship STARS products, we have seen a growth of 25 percent since the start of the year (2020). These numbers bring us into the world’s top 10 when we measure flow to sustainable products.
For Nordea, it is important to keep a customer perspective. The customers’ desires are not aimed at a single product or specifically, the equity side of their savings. Customers express a desire to become more sustainable throughout their savings while still expecting us to give them excellent risk-adjusted returns. This has been our mission for some time, and we are, therefore, very proud of our approach. In our dialogues, we ask customers about their objectives, and we are able to offer them fully sustainable solutions across equity and fixed income.
What is Nordea’s biggest single objective over the next one to two years? And how do you intend to achieve it?
We launched a new direction for the bank about a year ago. We decided to focus on three key priorities: To 1) optimise operational efficiency, 2) drive income-growth initiatives, 3) create great customer experiences.
In the past few quarters, we have moved in the right direction and started to deliver on our priorities. We have seen clear performance improvements in all the main areas of the bank. Our customer-satisfaction levels are higher now than prior to the outbreak. We have launched new products and services for our customers. For example, we now offer green mortgages in our mobile-banking app. Our business volumes have continued to increase in a range of areas, particularly in mortgages and savings. On top of that, we have found simpler and less complex ways of working and started to build a strong cost culture.
When we decided on the updated business plan and new targets, we also wanted to change our mindset. It is all about execution and to keep in mind that everything we do starts and ends with our customers.
Our main objective is to continue delivering on these priorities and promises. It requires passion to serve our customers and relentless drive forward. That is also our way forward—do things a little bit better every single day.
You certainly seem to be achieving that goal for the benefit of your customers, Mr. Vang-Jensen. Thank you again for your time today.