Growing the Swedish business by adapting to customer needs

Transcription

1 Growing the Swedish business by adapting to customer needs Catrin Fransson, Deputy Head of Swedish Banking Kjell Hedman, Head of Customer Offerings and Products

2 Contents Macro economy and market conditions in Sweden The Swedish retail operations Service leadership and channel integration Products Maintaining strategic market shares and target growing segments

3 Macro economy and market conditions

4 The Swedish economy GDP growth (%) General government balance, % of GDP P 2007P P 2007P General government debt, % of GDP Current account balance, % of GDP P 2007P P 2007P Source: Swedbank

5 Rising interest rates 3 2 Inflation (%) The Riksbank repo rate (%) P 2007P June Dec June Nov Dec Jun Dec Forecast interest rates* The Swedish central bank is expected to raise interest rates both on expectations of future inflation as well as concerns about housing prices * Forecast Swedbank at 29 August 2006

6 The Swedish banking market Competition Household deposits Other Household lending ICA Banken IKANO LF Bank Skandiabanken Sw edbank ICA Banken IKANO Banken Other Sw edbank Savings banks LF Bank Skandiabanken SHB Danske SEB SHB Savings banks Nordea Nordea Danske Bank SEB Total stock SEK 666,334 M per Aug Total stock SEK 371,124 M per Aug Source: Statistics Sweden / Swedbank

7 Changes in customer behavior Self-service channels are replacing human channels The population is growing in urban areas and declining in rural areas Customers bank where they work, not where they live Customers want their bank to be more accessible with longer hours Customers are less loyal in their banking relationships Source: Forrester

8 The Swedish retail operations Service leadership and channel integration

9 Goals and targets Manage costs efficiently Maintain high market share in key product areas Leverage on large customer base Grow high-potential product areas and customer segments

10 Strategy Automation and centralization of back-office functions Reallocation of resources to areas with higher growth Customer segmentation and professional roles Service leadership meeting customer needs and demands by being Accessible Proactive Easy to use Channel integration leveraging Sweden s largest branch network, internet bank and telephone bank

11 A customer-oriented and professional organization A common sales methodology throughout the Swedish retail operations Customers have been structured into segments Professional roles have been standardized and each employee has been specialized to work with a specific customer segment Each employee goes through training for their professional role and has to pass a certification test Increased productivity frees up time for more customer interaction and sales Improved efficiency has made it possible to reallocate resources to growing areas and segments without increasing staff

12 Training efforts 511 managers and 4,180 employees 12,100 training days 48 Local Bank Managers 144 training days 460 Branch Managers 1,380 training days 860 Corporate Advisors 2,150 training days 1,080 Private Advisors 2,700 training days 2,060 Bank Tellers 5,150 training days 100 Private Banking Specialists 300 training days 80 Insurance Specialists 240 training days

13 Productivity improvements SEK M Business volume per employee SEK M Sold products per employee Sep Sep Sep Sep Cost/Income ratio* Number of employees 0,7 0,6 0,5 0,4 0, Sep ,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0,000 7,534 7,305 6,875 6,523 6, Sep * After loan losses

14 Service leadership Meeting customer needs and demands More available to customers than other banks In branches On the internet Over the phone Uncomplicated interaction in all channels and professional staff at the right place More proactive customer interaction with well-trained staff

15 Channel integration The Internet is the hub of all marketing efforts The internet is the starting point when looking for goods and services Personal meetings Media Call centers On the internet goods are being bought by consumers rather than being sold to them Search engines Direct Mail The web page should make acting on a purchasing decision easier All marketing efforts should point to the web-page Events Advertising /campaigns Cooperations

16 Channel integration Proactive sales through the internet channel A common product offering through all sales channels A simpler and faster buying experience Better bundling of products for increased cross-selling Targets More business and increased sales More satisfied customers Better and more efficient use of resources

17 Summary Swedish macro economy is strong and stable, supporting further market growth Competition from large universal banks as well as niche players Continued efficiency focus Changing customer behavior makes service leadership and channel integration essential

18 Products Maintaining strategic market shares and target growing segments

19 Key market shares Corporate Banking Percent Jun Sep Deposits Mortgage lending Leasing and factoring Bank lending Mortgage lending incl. Jordbrukskredit Source: Statistics Sweden / Swedbank

20 Corporate banking Volumes Lending volumes, SEK bn Deposit volumes, SEK bn Sep Sep. 2006

21 Corporate banking Market characteristics Competition is tough, all banks want to grow on a mature market Customers prefer single point of entry and easy access to experts and services Customers are demanding advanced products and better service Corporate customers need more cross-border products and services

22 Corporate banking Focus Utilizing market-leading branch network to provide local single point of entry for customers Roll out a comprehensive international product offering demanded by the SME segment Target Nordic-Baltic midcaps (turnover MEuro), based on our presence in the Baltic and Russia Target new cash management volumes within existing customer base with a new electronic banking tool (ECM) Help owners of SMEs nearing retirement find new owners and divest

23 Corporate banking Key success drivers Proactive sales Balanced scorecards International corporate offering Extended cross-selling Introduction of economic capital-based pricing tools Higher efficiency in internal routines

24 Key market shares Households Percent July 2006 Sep Deposits Lending Mortgage lending Asset management Leasing and factoring Source: Statistics Sweden / Swedbank

25 Households Market characteristics An increasing proportion of all products are sold through the internet channel Channel integration important in order to guide customers from information search to purchase Fast credit decisions and handling of customer requests are increasingly becoming competitive advantages Products such as consumer credit are increasingly sold through targeted marketing efforts (i.e., consumer finance) Niche players and new entrants have taken market shares in important product areas such as mortgages and consumer finance

26 Households Retain strategic market shares Mortgages Maintain market shares Deposits Maintaining market leadership Mutual funds Reclaim the initiative Target institutional investors

27 Households Growth areas Pension savings Cards Increase the number of cards and the use of cards Structured products Focus on innovation, higher product penetration and new customer segments Consumer credit Credit scoring of customer base, differentiation in pricing and centralized customer service Private banking Property & casualty insurance Establish Swedbank s P&C products in the market

28 Household mortgages, Sweden Market shares restored % % Increased sales: - metropolitan and other growth areas - internet - distributors Tighter cooperation with Group s real estate broker Mar Jun Aug Improved efficiency: - faster handling of loan applications - decreased costs Balance, market share New sales, market share

29 Mar-06 May-06 Jul-06 Jan-06 Mortgage lending Market growth Market growth, mortgage lending 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Total lending Lending to households

30 Deposits Deposits, market shares (%) Household deposits, stock SEK bn Swedbank SEB SHB Nordea Net savings, Jan - Sep 2006 Stock, Jan - Sep Sep Source: Statistics Sweden / Swedbank

31 Mutual funds Assets under management, by investment type 100% 90% 80% 70% 60% 50% 40% 4% 13% 4% 15% 24% 3% 2% 5% 3% 9% 16% 7% Other Swedish corporations Nonprofit institutions serving households PPM (The Premium Pension Authority) Unit Linked IPS (Individual Pension Saving) Swedish households, direct inv. Swedbank s allocation of net assets dominated by Swedish households Diversifying the customer base is our top priority Swedish corporations consist of corporates, financial and non financial institutions and public sector 30% 59% 20% 38% 10% 0% Total market Swedbank Source: The Swedish Investment Fund Association / Swedbank

32 Mutual funds Key actions Secure top performance and ratings Better product portfolio management Speed up development and the rate of new product launches Broaden our value proposition for non-retail customers Corporates, financial and non financial institutions, public sector Add new distribution channels Domestically and internationally Improved internet services

33 Pension savings Swedbank market share of total premiums (SEK 100 Bn) Swedbank market share 14 % 6 % 17 % Private pensions SEK 14 Bn Occupational pension plans SEK 80 Bn Subject to competition: SEK 60 Bn National pension plan SEK165 Bn PPM: SEK 23 Bn SEK 260 Bn in total premiums SEK100 Bn open to market players Source: Swedbank % Jun Source: The Swedish Insurance Federation

34 Cards Number of cards issued, millions Card transactions, millions Mar. 04 Jun. 04 Sep. 04 Dec. 04 Mar. 05 Jun. 05 Sep. 05 Dec. 05 Mar. 06 Jun. 06 Sep Mar. 04 Jun. 04 Sep. 04 Dec. 04 Mar. 05 Jun. 05 Sep. 05 Dec. 05 Mar. 06 Jun. 06 Sep. 06 Purchases Acquiring of transactions at POS

35 Private Banking The total financial assets of wealthy individuals is SEK 700 bn Market shares 2005 Nordic market growth in this market segment is 10 percent Swedbank s market share is 5 percent in Sweden There is significant room for major Private Banking providers to grow Key Swedbank customer group: SME owners nearing retirement Other 42% Avanza PB 1% Nordnet PB 1% Kaupthing PB 1% Sw edbank PB 5% SEB PB 28% Carnegie PB 8% HQ PB 8% Nordea PB 6% Source: Mercer Oliver Wyman

36 Swedbank Private Banking Business volumes, SEK M 60,000 50,000 40,000 30,000 20,000 10,000 0,000 Q Q Q Q Q Q Q3 2006

37 Summary Strong competition in corporate market Improved service Roll-out of comprehensive products and cross-selling Internal efficiency More demanding households market focus on service leadership, channel integration and cross-selling Retained market shares: mortgages, deposits, mutual funds Growth areas: pension savings, cards, structural products etc