It is difficult for an incumbent bank to disrupt itself, but the exponential change in technology and customer expectations seen today requires more than incremental renovation, the head of SEB’s innovation platform, Christoffer Malmer, tells Joy Macknight.

Christoffer Malmer

Christoffer Malmer

With disruption picking up pace in the banking industry, one of SEB’s responses was to launch an innovation platform, dubbed SEBx, in mid-2018. The 160-year-old Swedish institution wanted to experiment around building a bank from scratch, without the hindrance of legacy technology, processes and structures.

“It was not a lack of willingness within the bank to lean into digital transformation, but rather restrictions from an execution standpoint. We wanted to unleash that willingness to experiment and explore what could be possible in a separate setting,” says Christoffer Malmer, head of SEBx.

Career history: Christoffer Malmer  

  • 2019 SEB, head of SEBx
  • 2016 SEB, co-head corporate and private customer division
  • 2014 SEB, head of wealth management
  • 2011 SEB, global head of financial institutions coverage

The platform’s purpose is twofold: explore emerging technology and build new products. “From the outset, the team wanted to have a specific product or business opportunity in mind to ensure we didn’t become too focused on technology exploration. As such, we agreed that we shouldn’t write one line of code without the customer in mind,” says Mr Malmer.

Identifying an opportunity

In deciding on a proposition, the SEBx team used pitch deck templates for raising money with venture capital firms. “It had to be a business opportunity that we could raise money for in the market,” explains Mr Malmer. After floating almost 80 ideas, the team settled on a building a solution for the self-employed, or 'solopreneur'.

The self-employed segment was of interest for several reasons. First, it is a rapidly growing demographic, as informal employment becomes increasingly common. Second, banks struggle when dealing with solopreneurs, as they are a blend of private and corporate customers, relatively complex but still small businesses, which makes it difficult to build scalable models.

Third, the SEBx team recognised the business opportunity and potential revenue pool in serving this segment. Lastly, it presented an opportunity to help more people do what they really want to do. “There are many people who have a talent, craft or passion but don’t feel confident to set up their own business. We are lowering the barriers to following a dream,” says Mr Malmer.

The team, which started with seven and is now 35 strong, began building prototypes a few weeks into the initiative and showed them to a test group of solopreneurs. “The feedback was validation for us to continue on this track,” says Mr Malmer. The solution is expected to launch in 2020.

Sustainable tech stack

Part of the hypothesis behind the SEBx initiative is to bring together the strength of an incumbent and the benefits of a start-up. For example, cost efficiency is one stand-out advantage of a start-up, which can build from the ground up with scalable modern technology, thereby keeping down operating expenses. Today, incumbents are being challenged to calibrate to the new cost base. Mr Malmer says: “We are blending the opportunity set that comes with an incumbent – the licences, products and capital markets funding – and building it on a new technology stack.”

In addition to building technology that supports specific use cases, the SEBx team is intent on building technology that is recyclable, reusable and scalable. “We try to build generic components so that the platform is reusable and scalable, for example if there is opportunity to tap into another market, or if we decide to pivot or another part of the group wants to use it,” says Mr Malmer, who adds that the platform was built with open banking in mind.

Experiential learning

An important aspect to the SEBx initiative is feeding discoveries back into the bank, which it does in several ways. First, SEBx employs the concept of ‘gig workers’. “When we have a need for edgy expertise or competences, staff within the SEB group join SEBx for one or more months,” says Mr Malmer. “We leverage their expertise and then they return to the organisation with fresh perspectives and experience with new technologies and new ways of working, such as agile and scrum.”

Another example is sharing technology exploration, such as experiments with cloud technology. “We have a broader cloud transformation initiative running in the bank, which is a step-by-step process within a large organisation. SEBx is building cloud-native from the outset, which means we can get to concrete challenges much faster,” says Mr Malmer. “The whole group is leaning over our shoulders as we explore how cloud behaves in specific environments, how to reap the benefits and what it means for risk management, fraud detection and cost efficiency.”

Changing the bank’s way of working is another important aspect. SEBx employs agile methodology, with cross-functional teams that work in two-week sprints. Mr Malmer says: “In addition to the dual purpose of new technology and new products, a third purpose is emerging: building a modern organisation from the ground up. And while SEB is also experimenting with agile working, SEBx can build a new culture, a new way of working and understand what that means for leadership, collaboration and transparency. We certainly don’t claim to have figured it all out and it is still early days, but we are excited about the journey.”


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