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Tomorrow’s banking rests with a changing client need

Tomorrow’s banking rests with a changing client need


​​Swedbank Chief Executive Birgitte Bonnesen writes in the latest WSBI-ESBG News & Views

>> Read: News & Views

​BRUSSELS, 19 October 2017 

C​hanging consumption patterns lead to expectations from clients to provide traditional banking services in a new way.  Those changes are driving investments and developments in the banking industry.

Tomorrow's banking business is shaped by the same factors as in the past. It's the client's behaviour. And that is also what should be driving change in the sector. Then there is of course new regulation, which shapes our future decisions a lot too. Here I am thinking about The European Union Payment Services Directive, or PSD 2, that will be a blueprint for how we work with third-party providers. That's why it is so important that we get the technical standards on PSD 2 right.

Partnering with third-party providers

Swedbank's strategy is to actively seek partnerships with third party providers, and we already have good APIs in place. The pace of development in the sector is faster than ever. One of our greatest challenges is how to shorten time to market. To fix this, we partner up with third-party providers. Two recent examples are our acquisition of the payment service provider Payex and a partnership with the small FinTech company “Mina Tjänster" (=my services).

Accelerating innovation

Banking technology is developing faster and faster in parallel with the digitisation of the banking sector. One of the things that make the Swedish banking market special is the common infrastructure that the banks have built up. Because we have the common infrastructure, the banks can concentrate on providing good service to the customer, which in turn makes Sweden a highly efficient country for banking services.

The common infrastructure in Sweden is mostly about payments, the complex system that makes it possible to transfer money between private clients, companies and banks. An obvious success story is Swish, the direct money transfer from person to person, where you can text money directly into another person's bank account. But also our customer authentication solution BankID and mobile BankID, which is widely used by public institutions as an electronic identification procedure. In Swedbank we also have an in House lab. Advanced and innovative banks are the largest Fintechs in the industry.

Branches remain part of meeting customer need

The backbone of retail banking business is the network of branches. These days, we are available 24/7 to our clients, digitally. This has meant closing down some branch offices and investing more into our digital customer interface. In general terms, the younger generation of customers has different needs than the older generation. We have almost 8 million customers – private, corporates and institutions – and we need to cater to them all.

The competition in the Swedish banking market is fierce, with many small and large banks, and an array of new entrants coming in. The market is not stuck in a structure that excludes new players – which is good. It keeps large, established players like us on our toes.

Client data: a path to better, deeper client relationships

We will need to use the client's data to make our offer relevant. The business model for many other successful industries is to analyse the client's data, so one can see, hear and understand the client. Spotify is a really good example. For every search, the list becomes more and more relevant. Clients expect us banks to be just as proactive in our offer.

In the old days, we talked to our clients when they came into the branch office. The reality today is that few of our clients ever go to the branch office, so we have to find a new way to reach them and to be proactive. That is why the European Commission's initiatives on the Digital Single Market and launching the EU data economy are so interesting and important.

>> Read: News & Views

Innovation Hub; Innovation; Retail payments; Payment services directive