Nordea personal Banking Investor Presentation Topi Manner, Head of Personal Banking 12.12.2016
Executive summary Challenges and new opportunities Our new ambitions Focus areas of the new strategy • Changing macro-trends • Highest customer satisfaction in • Low-cost, digital (mobile)-first and target customer groups lean core offering for all customers • Shifting customer preferences • Highest employee satisfaction • Tailored value propositions for driven by new digital technologies rating amongst peers selected, high-value customer groups • Market leading position in • Individualized, risk-based pricing profitability (best in class C/I ratio • Falling customer satisfaction to low 40:s) • Reshaping the service model to meet customer expectations and lower cost Results and Expectations Strengthening customer satisfaction, financial performance and role in society 2
Personal Banking in Brief Nordea’s home markets • Number of customers: – Denmark: – Finland: # customers Market position # employees – Norway: – Sweden: 1.7m #2 2,400 • Market position: – Denmark: – Finland: 2.9m #2 2,900 – Norway: – Sweden: 0.8m #2 900 • Number of employees: – Denmark: – Finland: 4.2m #4 2,100 – Norway: – Sweden: 3
The ambition for Nordea Personal Banking by 2021 remains # 1 # 1 # 1 Customer Employee Profitability satisfaction satisfaction • • • The most satisfied Leading CSI for C/I improved to low affluents and home employees among 40s owners, on par for peers other customer groups 4
Macro trends are challenging the current Personal Banking model Shifting advisory preferences Low growth and high competition Continued regulatory tightening • • • Current target customer group is Banking sector exhibiting low Continued regulatory tightening shrinking growth − MIFID II − Decreasing demand for face to face − Low growth banking income Imposing higher requirements advice forecasted advisory services in order to keep − Increasing customer urbanisation − Investments/pensions, payments retrocessions and mortgages expected to − PSD II outgrow (~4-5% CAGR) overall • Opening up banking standards to Current value proposition not suited market to growing segments new third party providers − Difficult to attract young, high • Strong competition for selected potential customers • Pressure on fees may: profit pools − Difficulty penetrating the affluent − Open up market further − Digital first banks targeting affluent markets − Affect our ability to provide complex advise (e.g. Nordnet) investment advice − Several banks building strong digital solutions and expanding in payments 5
Key changes to reach the goals Invest to attract, build share of wallet, and retain our highest value customers Both current and future affluents (young potentials) Homeowners Build a strong mobile-orchestrated relationship model Mortgage Savings & investments Improve the cost-to-serve Daily banking platform to cater to the needs of the majority of all customers Digital-only core model for daily banking customers 6
Mobile will be the foundation for all customers going forward Consumer Loans Self-served interaction Mortgage models Insurance journey Guided interactions Payments Robo and advice & accounts guidance Regular auto Investment Personal assisted portfolio review products (some products and segments) Digital (mobile) platform for all interactions 7
We will incentivize the right customer behaviour Behaviour Incentive Conducting all banking activities digitally on mobile Track mobile behavior (e.g., digital sessions) and Mobile life platforms reward at milestones Acting prudent to achieve lower risk score and Financial health Reward high quality customers with better pricing increasing total volume of business Collecting banking business with Nordea for Discounts on next product added for Affluents and Full relationship banking improved service for the customer and more Home owners business for the bank Increasing savings to prepare for their future and Track recurring savings behavior and reward at Future savings give business and funding for the bank milestones Ensuring customers are quickly and easily settled Proactive cross selling during home buying process Stable home with everything they need, maximizing return on focused on relevant products for home owners effort for the bank 8
Customers’ key needs addressed through four distinct offerings Offerings tailored and more flexible than in current logic Homeowner Young Potential Affluent Best in class homeowner journey Next generation Affluents High savings and investments focus Digital first home journey with possibly advisor support Digital first with support from Distinctive wealth management specialized advisor team via remote expertise, digital tools and products available across channels Everyday banking for all customers • Digital availability of a full scale bank 9
We will invest and add features where it is important to customers Reduce cost Add features Savings / investment products & Less products & advisory advisory Mortgage products & Migrate to advisory digital Affluent Everyday Banking Homeowner Young potential 10
Aligning value to society with value to Nordea… & Value to society Value to Nordea ▪ Educate customers on the use of digital ▪ Migrate customer interactions (service and Mobile life sales) to digital self-service ▪ Helping customers live the life they can ▪ Reduce risk of the customer relationship by Quality customers afford educating and supporting ▪ Helping customers gain scale benefits from ▪ Increase retention and build high share of Full relationship banking their financial situation wallet ▪ Encourage savings, activate customers’ wealth ▪ Higher savings per customers and more scale Future savings and help them grow from the investment offering ▪ Make it easy and safe to buy a home while ▪ Capture the homeowners which is a priority Stable home segments due to low C/I managing financial and non-financial risks
Change will start in 2017 Existing and new development are managed as one program, currently under four themes Transformation delivered in one program Priorities for 2017 set to deliver change and impact early with 4 themes Launching phase 1. Migrate to digital Launch new value propositions Reprice and migrate customers from existing customer program to 2. Develop affluent offering new customer groups Preparation phase 3. Home buying journey Develop new fast approval process and risk based pricing for mortgage 4. Streamline lean back bone Develop new savings and wealth offering, including simplified products, simple robo-advise and upskilling advisors 5. Migration of customers to new value proposition New PB – PeB collaboration model 12
Recap – our plan in nutshell 13
Thank you! Topi Manner, Head of Personal Banking topi.manner@nordea.com 12-12-2016
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