Accenture Core Banking Forum Nordea Transformation - Hans-Henrik Eigtved September 2011
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Accenture Core Banking Forum Nordea Transformation Hans-Henrik Eigtved September 2011
Disclaimer
This presentation may contain forward-looking statements that reflect management’s
current views with respect to certain future events and potential financial performance.
Although Nordea believes that the expectations reflected in such forward looking
statements are reasonable, no assurance can be given that such expectations will prove
to have been correct. Accordingly, results could differ materially from those set out in the
forward-looking statements as a result of various factors.
Important factors that may cause such a difference for Nordea include, but are not limited
to: (i) the macroeconomic development, (ii) change in the competitive climate and (iii)
change in interest rate and foreign exchange rate levels.
This presentation does not imply that Nordea has undertaken to revise these forward-
looking statements, beyond what is required by applicable law or applicable stock
exchange regulations if and when circumstances arise that will lead to changes compared
to the date when these statements were provided.
These materials do not constitute an offer for sale of securities anywhere in the
world or a solicitation of any such offer.
2
Solid position in nine home markets
11 million customers –
Nordea’s nine home markets
whereof 1 million corporates
1,400 branches and 6 million
e-banking customers
AA credit rating
A top 10 European retail bank
and 1 of 2 Nordic companies
on Forbes 100
3
Nordea created through a string of mergers
Start: 300
1970: 80 banks
1980: 30 banks
1990: 4 banks
2010: Nordea
One operating model
Unique diversification
Proven business model
4
The formation of Nordea creates a fragmented
legacy structure
Primary activities Norway
Supplier Customer
Primary activities Denmark Customer
Supplier
out- marke- Customer
Supplier inbound opera- Customer
Supplier bound ting and service
Primary activities logistics Finland tions
Supplier logistics sales Customer
Customer
Supplier out- marke- Customer
Supplier inbound opera- Customer
Primary activities
Supplier bound ting and service
Supplier logistics Swedentions
Customer
Customer
Supplier logistics sales
Supplier Customer Customer
Supplier out- marke-
inbound
Supplier opera- firm infrastructure Customer
Supplier bound ting and service Customer
Supplier Supplier logistics tions Customer
logistics
human sales management
resource
Supplier out- marke- Customer
Supplier inbound opera- technology (IT) development Customer
Supplier Supplier bound ting
firm and service
infrastructure
logistics
Supplier tions Customer
logistics sales
Supplier
Supplier human resource procurement
management Customer
Supplier
Support technology
activities (IT) development
Supplier firm infrastructure Customer
Supplier Supplier procurement
human resource management
Supplier
Supplier Support firm activities
infrastructure
technology (IT) development
Supplier human resource procurement
management
Supplier
Support technology
activities (IT) development
Supplier procurement = an IT system
Support activities
5
Options for the most suitable integration journey
Group Executive Management decision
Options evaluated Evaluation criteria
IT cost
1 Execute current plans Cost
then national Business/Ops
optimization only Economic
cost
value IT savings
2 Enable national
propositions from a Benefits Business/
Ops savings
common platform
Revenue
growth
3a Stepwise harmonisation
starting with front-end Delivery risk
3c
domains (allowing some
Benefit cap-
back-end changes in 3c)
ture risk
Stepwise harmonisation Risk
3b Business dis-
starting with back-end ruption risk
domains Operational
risk
4 Rapid full harmonisation via
Customers
similar copies of standard
platform
Financial
Strategic
fit
5 Rapid full Learning and
harmonisation via organisation
single instance platform Processes
6
Source: NTP team
SOA's position in the 'option space'
One extreme Another extreme
Do nothing, i.e. SOA is on 'the middle road': Big, one-time-
continue adding IT investment, IT-
systems 'on top of' -preserve some existing systems complexity-reducing
the existing portfolio initiatives, e.g.
-butseparate 'chunks' of systems
of systems consolidating core
from one another (encapsulate) systems
-interconnect
the 'chunks' through
managed "service interfaces"
-and connect new systems 'on-top'
only through managed service
interfaces
-and (if appropriate) simplify
'chunks' internally
7
The initiative supports the journey towards the future distribution
target and he future way of doing banking
Customer
Netbank, online,
Branch Contact Centre mobile
Increase numbers and quality of 360°
Proactive meetings based on contact policy.
sales Increase proactive online sales.
Increase Increase
Customer- Migrate and increase customer
initiated initiated sales to Contact Centres and
sales
online.
Migration Increase
Migrate and increase service
Service/
transactions transactions to online channel and to
Decrease Migration Increase
Contact Centres. Decrease in Branch.
Common solutions and channel transparency will ensure that we
use our time – and our customers’ time – the best way possible
8
The bank of the future means great customer experiences
Banking with Nordea becomes:
Recognisable and Available and
Transparent Relevant
simple accessible
I can do my banking I can prepare for the next
anywhere, anytime… meeting with my advisor at I recognise this screen from
home, in peace my last meeting with my
advisor
Whenever and wherever I
meet Nordea, they know
about my activities and
what I might need
9
The bank of the future makes more room for proactive advisory and
relationship banking
CMS as we know it Netbank as we know it
I have enough time to build a
strong relation with the
customer
Nordea Front Desk
I am showing the customer
something he recognises
and understands
I can handle the customer’s
needs right here and now,
without referring him to
others
The products will be delivered to
the customer immediately in the
meeting
I have the overview of all the
customer’s ongoing
activities with the bank
My advisory and selling is
easily documented
10 Retail BankingThe bank of the future means customer focus and efficiency in all we do
– enabled by common IT solutions and infrastructure
We can launch products We can develop products that
faster across countries directly fit the advisory guide
through all channels
Products
Products
We can support customer-
facing employees with targeted
customer information
New common front-end – Nordea Front Desk
Group Credit Process
We spend less time on
manual processing and Service layer (SOA)
more time on work that
adds value to the customer
Across Nordea Business Process
Engine
We can reuse existing
One common format
IT components and
services for new
development Common Master
Common Legacy
Data –
IT – Retail Banking System
streamlined data
11The channel independent generic end-to-end business
process guides everything we develop
Design principles for the E2E process
Improve efficiency Improve customer service Improve quality
Real time / automated Channel transparency to allow Structured and standardized
execution (straight through the customer to change advisory process to ensure
processing (STP)) channel without loss of data customers are given the best
No internal handovers during One-stop shopping i.e. possible advice
the process to reduce lead time providing the possibility to close Highest possible level of IT
All information needed for the deal during the interaction support (including strive for use
execution gathered during the One solution proposal should of IT supported rule engines)
sales and advisory process cover all actions in relation to and validation to ensure less
PSOs/PSAs requested by the return flow and higher
All data is captured during the assurance that rules/
interaction - no follow up customer
procedures are followed
activities are needed One contract should cover as
A conscious balance between many actions in relation to
efficiency and risk (e.g. in PSOs/PSAs as feasible
relation to credit and resulting in one (or at least
acceptance) fewer) acceptance(s)
Re-use of existing / already Structured preparation phase
captured data in all parts of the (customer and employees) to
process ensure effective interactions
focused on value adding
activities
12The channel independent generic end-to-end business
process guides everything we develop
High level process
The process consists of five core activities
Possibly multiple iterations
Prepare Accept solution Execute solution
Identify need Tailor solution
interaction proposal proposal
Purpose To prepare for To establish a mutual To do the credit To conduct credit To conduct automatic
the interaction understanding of the assessment and to decision including execution of the
with the financial needs of the suggest and select capturing of all solution proposal(s)
customer customer through actions (e.g. open, relevant data - all in one go -
including defining dialogue covering update) in relation including providing
To receive
the purpose of e.g. the customer’s to Product Service confirmation to the
acceptance from
the customer financial and life Offerings/ customer when the
customer in
interaction situation Agreements (PSO/ Product Service
accordance with
PSA) that match Agreements (PSA)
acceptance rules
the customer’s are ready to use
financial needs
Output Reviewed and Mutual Finalised credit Credit decision Product Service
verified agenda for understanding of assessment Agreements (PSA)
Accepted contract
the customer the personal either ready to use
Verified content of the (s) reflecting the
interaction including needs, the (open), updated to
solution proposal(s) solution proposal
appointment and financial needs use or no longer
containing PSO/PSA
identified high level and how the available to use
related actions
need as purpose for financial needs (closure)
including all needed
the customer match the personal
information for
interaction needs
execution
Verified conclusion on
captured agenda
13
pointsThe NTP customer centric front-end supporting common business
processes and through a SOA-based integration layer linking to
encapsulated national back-ends
Corporate Netbank Private Netbank
Customer
HH Credit
Corp. Credit
Assessment Assessment
Nordic Teller PSD-tool
Nordic CMS
Marketing and
Sales Leads
Service Oriented Architecture (SOA) based integration layer
Deposits Safe-keeping & Settlement Payments & Cards Credit & Loans Master Data
Encapsulated Back-end Encapsulated Back-end Encapsulated Back-end Encapsulated Back-end
Norway Finland Sweden Denmark
14Interface
Replication
Domain adapter
High Level IT Architecture Approach Inter-mediate system
Group-wide Common front-end systems
front-end
systems
Branch
r
Contact Partners Internet determine integration
standards
Design principles
Customer Product
Process Internet/
Relationship Others Service Common Process
Management Self Service
Management Delivery management
Front to back harmonization
Integration Integration layer kept “thin”
layer and only routes calls to
back-end systems
analytics
ments**
Intl.pay-
Cards**
Master
Sales
data
Group-wide
Selective partial
back-end harmonisation of
systems back-end systems
National National systems modified to
back-end support common front-
Document
payments
Domestic
accounts
handling
analytics
Deposit
& loans
Credits
Master
Sales
systems end*
data
15Development
process
Surrounding
The NTP Development Process processes
Nordic Policies and Business Strategies
NTP Roadmap
A B C
Business Process Design Prepare Business Change Change Realisation Initiatives
Analyse Common Detailed Business Change and
Understand Local
Current State High Level Future Future Business Implementation preparation
Business Consequences
Process Business Design and Business Roll out planning
Case Change and
Design Requirements
(Benefit) Create Change & Implementation material
Implementation Business
Strategy Execute Business Implementation incl.
Case
Organisation and Capability adjustments
Handover to Business Roll out
PSO Family Assessment and Definition
Common terms and definitions Information modelling Roll out
LDM Business
Information Modelling Support
approved
Overall IT Requirements and UI Design
Solution Design IT Analysis and Design
estimations Implementation and Integration test
System and Acceptance Test
Deployment
IT Pilot
Support
NTP Business Change Approach
Making it essential Making it ready Making it happen Making it stick
16Lessons learned from working with the E2E-process and
development framework
” Without a method things
would be even more
chaotic ”
(Sydney Grenzebach &
”Not simple, but easily Henrik Schultz ) ”Essential tool for collaboration
understandable and fairly across so many programmes –
accessible. We have by following the being able to align terms and
model got something that can be references – else you should have
handed over and approved (form done it yourself anyway”
and format, flexible transition to the (Andreas Rønnebro)
on-going activities)”
(Lennart Oreskov )
” The really good part is the division into
A/B/C, e.g. that the A phase is a pure
business driven phase.
”Believe that the method provides
The method has been a management
the right results with the right content
tool to realize the objectives and the plan
- makes me feel calm. Provides
has been build around the method – This
security that the things are done –
has saved us time”
and that we know where we are as
(Verner Mikkelsen & Katrine Kloster
the results are documented”
Andersen)
(Bjarne Thejl & Palle Nielsen)
17The Nordea Transformation Programme standardise
Change area
the Nordea ways of working and IT systems in two phases (relative to today)
We are this far!
Transformation Area From (Today) To (Phase 1) Vision (Phase 2)
Customer • Different go-to market • Similar go-to market • Similar go-to
value approaches approach market
proposition • Similar product concepts • Similar product concepts approach
• Different products • More common products and products
Sales & • Different sales and advisory • Common sales and advisory • Common
advisory processes processes* and
processes • Different credit assessment • Common processes for credit improved
processes assessment* processes
Production • Different processes for • Mostly common* and • Common
processes – Product service delivery improved processes for and
– Document handling – Product service delivery improved
– Document handling processes
IT systems • Mostly different IT systems • New common front-end • Consolidated /
• Some group-wide solutions solutions for serving retail harmonised
for corporate customers and customers systems
support functions • Partially consolidated back-
end systems
18 * Remaining differences linked to product differences and non-consolidated IT systems
Source: NTP teamTop management anchoring over time is essential!
Nordea Rights Issue Prosepctus Spring 2009
Published 19 March 2009, page 56
”Nordea’s IT strategy is designed to support Nordea’s overall strategy, which
in practice means supporting efficient and multiple sales channels, as well
as developing a scalable and flexible infrastructure to support Nordea’s
cross-border operating model and potential future acquisitions”
”Nordea….are currently running a number of key group-wide projects of
strategic importance. One of the main initiatives is the Nordea
Transformation Programme (NTP), which focuses on harmonising and
consolidating business processes and IT solutions for the main banking
activities in the Nordic countries. In addition to directly supporting Nordea’s
organic growth strategy and efficiency, the NTP is expected to increase the
flexibility of IT processes and components. The NTP has been set up to
initially deliver solutions to the customer facing parts of the bank, and then
in latter stages to consolidate the core banking systems.”
19Did we manage to execute the internal integration while securing
front-end focus, income and profitability growth?
mEUR Group Operating Income and Operating Profit
20
Source: Nordea Annual ReportsThank you!
Hans-Henrik Eigtved
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