Nordea is recognised as a leader in all the countries of the Nordic region and continues to show strengths in retail banking. The Banker talks to Kari Jordan about the secrets of its success.To become a successful regional bank in a highly competitive market is extremely difficult but that is exactly what Nordea has done. The bank’s journey of Nordic success began as a merger between Sweden’s Nordbanken and Finland’s Merita Bank in 1998. However, this domestic consolidation was not considered enough for the successful future of the bank, so the renamed MeritaNordbanken merged with leading Danish bank Unidanmark in 2000, forming Nordic Baltic Holding (NGH). In 2001, the bank merged with the former Norwegian state bank Christiania Bank and a year later the Swedish post office bank, Postgirot Bank, became a fully owned subsidiary of Nordea, the new name of NBH.

The merger of four different banks in four different countries resulted in four different management systems, leadership styles, cultural values, all working under four different legislative and regulatory regimes. The challenge, therefore, was to create a single Nordic bank that would enable regional growth and a focus on a common future. “The aim was to create a single entity with a common image and flag under which the different countries were working,” says Kari Jordan, Nordea’s head of retail banking.

Rebranding exercise

The bank undertook a major rebranding exercise in 2000. While many banks would find that idea daunting, the exercise to change from Nordic Baltic Holdings to Nordea has proved highly successful for the bank. “It was not a difficult change because, before the launch of the new name, we had discussed the change in public often and so awareness was high,” says Mr Jordan who has been with the bank for almost 10 years and has been through the previous two name changes.

“In Finland, the name had achieved 90% brand recognition even before it was officially launched.” In Norway, too, where the name of Christiania Bank had existed for more than 100 years, the new name was taken up quickly once it was introduced.

The name, which is said to come from a combination of the words Nordic and Ideas, has been a success. According to Mr Jordan, it clearly relates the bank to the Nordic countries and speaks to the people working in the bank and its customers.

Economies of scale

By giving the separate banking entities in the four countries a single banner and identity to work under, Nordea benefits from an economy of scale and sharing of best practices. “Each bank has a strong history in their country although the relative sizes differ,” says Mr Jordan. In Finland, the bank enjoys a 30%-45% market share; in Denmark 20%-25%; in Sweden 20%; and in Norway 15%. “Therefore the starting point for the bank was good.”

Nordea continues to benefit from the good management and best practices from the banks in each country, which together contribute to the overall strength of the bank, says Mr Jordan. For example, the loyalty programme and concept, which was developed in one country, was then shared by the other country subsidiaries so that time and money was not wasted in duplicate innovation.

Commenting on the success of the merger, Mr Jordan says: “There is nothing like an easy merger.” The banks in each country had their long held traditions so the task of developing a unified culture to complement the single brand and image strategy is not going to happen overnight, he says. “We are almost there but there is still some mileage to go; evolution is never complete and things can always be improved.”

Nordea also has a strong presence in the Baltic Sea region. Most recently it has acquired a small bank in Poland that is the result of three mergers. “For the time being we are focusing on streamlining the products and to grow organically,” says Mr Jordan. He is optimistic that new Europe will attract a lot of foreign investment and therefore there will be plenty of opportunity.

Three business areas

Nordea operates in the following business areas: retail banking, corporate and institutional banking, asset management and life insurance. Retail banking is the largest business area, accounting for about 76% of the total income in the second quarter of this year. The extensive nationwide network in each country is an attractive proposition for any regional or multinational organisation seeking a single banking partner in the region.

The bank is noted for its highly successful e-banking channel which was started in Finland in 1995. Today, the channel has 3.5 million customers and accounts for more than 130 million payments transactions per year.

The success of Solo is representative of the bank’s successful multi-channel approach. “The internet channel has always been a part of our multi-channel strategy and never a stand alone enterprise. We believe in an integrated multi-channel strategy in which services are complementary in each channel,” says Mr Jordan. For example, whereas customer acquisition begins on Solo, it is completed in the branch.

“Customer satisfaction with the bank is very high.” Having worked in banking for almost 25 years, Mr Jordan recognises the importance of correctly skilled staff. “I am very proud of all the people working in the retail banking area without whom our success would not be,” he says.

Innovation

“An important part of our retail strategy is to continue to be the leader of the pack. And innovation is important to keep us in this number one position,” says Mr Jordan. Nordea was one of the first banks in the world to offer comprehensive mobile banking.

In its approach to the branch infrastructure, too, the bank has been sensitive to customers’ changing needs. “Our branches have been changing quite radically in recent years,” says Mr Jordan. The increase in internet-based transactions and resultant decrease in branch-based transactions means that the branch function has changed. Nordea has seized the opportunity to re-educate and reskill its branch staff to take more of an advisory or sales role. “In so doing, we hope to be prepared for the future clientele whose growing wealth will require more advisory services,” he says.

Even though there may not be a similarly large regional Nordic bank, Mr Jordan says that there are good competitors in the markets: “Competition is keen in all the Nordic countries.” As competition increases and demands continue to change, it becomes difficult to continue to acquire customers, he says. “There is an in-built conservativeness and reluctance to change. The difficulty is not acquiring customers but doing it profitably while still fighting the competition.”

Lifecycle products

The bank is sensitive to the demands of its different customers with its product range covering the complete customer lifecycle, from student loans for the young to products of wealth management (such as asset management, mutual funds, life insurance, etc) for the older generation.

Mr Jordan is clearly optimistic about the future. “Eras in the banking business, as in life, come and go. Today, as always, retail banking is an important and large part of Nordea’s strategy,” he says. His message to banks is: “There is a lot of money to be made from retail and it is up to the banks how to capture it. Innovation plays an important part in the success of retail banking.”

Nordea’s success cannot be doubted: with 45% of the population in the Nordic countries as customers, it is clearly a bank to watch and learn from.

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