DNB’s chief financial officer, Kjerstin Braathen, tells Joy Macknight how Norway’s largest bank is optimising its people, technology and resources to get the most out of its digital transformation.

Kjerstin Braathen

The change in customer behaviour and expectations, as well as new technology, that is driving banks to develop and deliver products and services in new ways presents an opportunity for cost efficiency, according to Kjerstin Braathen. As chief financial officer (CFO) of Norway-based DNB Group, she is acutely aware that incumbent institutions must address the cost-to-serve issue to remain competitive with new market entrants.

Being a strategic CFO is critical in a world where a bank’s resources are torn between regulatory compliance and innovating at speed. “How efficiently we use our resources, whether that is investing capital in the right ventures or deploying staff in the right areas, will determine our ability to meet customer needs while delivering on profitability and shareholders’ expectations,” says Ms Braathen.

DNB is creating a culture and management structure to increase its pace of innovation. For example, top management meets more frequently together, and with various parts of the organisation, to speed up its decision-making process. “We want to empower the right people to get the job done, while ensuring we are compliant,” says Ms Braathen. “While most banks are talking about similar things structurally, the ability to execute and deliver on digital transformation depends on an organisation’s culture, competence and flexibility.”

Future mindset

The Norwegian bank is strengthening specific competencies, especially in technology and data analytics; hiring talent as well as upskilling; and educating its staff. For example, DNB launched a mobile app to keep staff up to date at a general level, with add-ons in areas of interest.

DNB has established a new business division with three priorities: open banking and application programming interfaces (APIs); data management and customer insights; and payments. It also created a 'digital floor', which is a creative space to bring together people with different capabilities to work on strategic initiatives. For example, the bank’s mobile app, Vipps, was put on the digital floor at an early stage of development.

Launched in 2015, Vipps moved from being mainly a person-to-person payment service in the first year to a payment platform within two-and-a-half years. Although DNB created Vipps, more than 100 Norwegian banks are now owners of the platform. More than half of the country’s population uses Vipps, and the verb 'to vipp' is being added to the latest edition of the Norwegian dictionary. Importantly, 22% of transactions are generating fees and there are other plans afoot to monetise the platform.

Forging a digital bank

DNB has had a head start on the digital journey compared with its European counterparts, as Norway is a mature market for online services, with 96% of the population actively using the internet and more than 90% using online banking services. Today only 6% of payment transactions are done via cash.

“Over the years, we have been developing our digital banking offering and while digital won’t be the only customer interface, it will be the dominant one,” says Ms Braathen. She reports that the mobile channel was the only source of customer interaction growth in the past five years.

As such, the bank has closed 70% of its branches over past three years, with 50% shut in 2016 alone. It did so while continuing to grow its activity in the mortgage sector, for example, at the same pace as the year before.

DNB launched a fully digitised secured mortgage refinancing process in the first half of 2017 and a digital application for new loans in the second half. Today, a customer could be out for a Sunday walk, see a house for sale and check in less than two minutes on their mobile phone to see how much they can borrow. DNB’s next step will be to scale the digital process for new mortgages.

The bank is currently piloting a digitised credit process for small and medium-sized enterprises and large corporates. Additionally, it is looking at using APIs to combine information from accounting and enterprise resource planning systems, to give small companies quick and accurate snapshots of their financial standing to manage their business efficiently.

Looking ahead

While it may be hard to predict what the banking industry will look like in five years’ time, Ms Braathen is sure where the battle is today. “We must deliver on customers’ expectations and offer products and services that make them choose to deal directly with the bank to retain the customer interface,” she says. “Looking at the broader picture of disruptors and new regulations that allow other players to enter the value chain that has previously been the reserve of the banks, the answer is not to lock down and protect but to get better at delivering for customers.”

She also highlights the danger of boxing the banking business into a corner. “Our business strategy is more about keeping our options open rather than optimising in one direction,” she says. “We are eyeing the major trends and maintaining our ability to move fast once we feel confident in an initiative.”


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