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History

Nordea bank is the largest financial group in the Nordic region. It is considered a

universal bank, which offers services in corporate merchant banking, retail banking,

and private banking.

Nordea is the product of several mergers, which started in 1997 when the Finnish

Merita Bank merged with the Swedish Nordbanken forming MeritaNordbanken. Later

in 2000 MeritaNordbanken and the Danish Unibank merged. This merger was later

known as the Nordic Baltic Holding. Following the merger in 2000, the Norwegian

Christiana Bank og Kreditkasse joined the merger. By 2001 the entire group

conducted their operations under the name Nordea.

Before the final merge Nordea was available in Sweden, Finland, Denmark, and

Norway. Today Nordea bank is represented in 16 different countries all over the

world operating through a number of full-service branches, subsidiaries, and

representative offices. It is available all over Europe (UK, Germany, Luxemburg,

Poland, Russia, Estonia, Latvia, Lithuania) and it is also available Globally in Brazil,

US, China, and Singapore.

Mission and Vision

Nordic Ideas

Share and exchange Nordic ideas.

They are Nordic in operations while personal and local in delivering services.

They think Nordic and act locally.

Their market is of a size that makes it worthwhile to develop joint concepts,

products, and services.


Nordeas vision

They will be valued as the leading financial services group in the Nordic

financial market with a substantial growth potential.

They will be at the top of the league or show superior profitable growth in

every market and product area in which they choose to compete.

They will have the leading multi-channel distribution with a top world ranking

in e-based financial services and solutions.

SWOT Analysis

Strength

By offering financial services through web platforms, without any geographical

constraint, Nordea will be able to provide faster and more efficient transactions, and

to cover a wider customer segment. Moreover, online-banking reduces their

transaction cost and cost on personal management, because online banks rely less on

energy sources. As bank size increases and knowledge further develops, online banks

are able to consolidate the complexity of their business, which results in more

efficiency, faster operations, additional reduction on cost, and achievement of

economies of scale.

Weaknesses

Weakness becomes an issue when considering going online because in order to run

their business online banks have to execute their activities in countries where they

have high technological accessibility and IT infrastructure. Moreover, online banks


rely mostly on deposit product to generate their revenues then other financial offers.

From the customers perspective, security of their personal data is one of the main

issues. Fortunately, Nordea was not facing such weakness. The online services were

introduced in the Nordic counties, which IT infrastructure and access to technology

was already very developed. Nordea bank was very well able to differentiate

themselves from online banks by offering several services such as: e-signature, e-

payment, e-identification

Opportunities

Online banks provide profitable opportunities such as facilitating information, data

analysis, improving information exchange, fastening transactions, and enhancing

communication between economic agents. To accomplish these opportunities, they

offer a variety of differentiated services (ex: bonds, mutual funds, and mortgages)

bought for domestic and foreign customers. Furthermore, it enhances the

communication and collaboration between banks and other service providers. Setting

the base for implementing new business strategies will create value for both

customers and banks. Nordea took advantage of this opportunity by working in

partnership with other stakeholders such as Sonera (largest telecom company in

Finland). By working together they agreed on a contract to send all their interested

customers an online phone contract to link to Nordeas Solo Internet bank website

where they could identify themselves and then sign the contract
Threats

The main problem for online banking is the availability of such a large number of

competitors from domestic and foreign banks. In addition the lack of supervision on

online activities and the implementation of effective legal norms prevent online banks

from running a flawless business. Nordea did not face such threats as they had more

customers using their online services then other domestic banks. Moreover they were

not threatened by pure online banks since they lacked the personal relationship and

trust with its customers. Even foreign banks such as Citi bank, Deutshe Bank which

provide online banking were not considered as competitors to Nordea since they dont

have the local branch structure.

Approach to E-banking

Nordea started launching their e-banking services when Union Bank introduced

electronic payment systems. Nordea bank wanted to take advantage of such

opportunity by making most of their services online in order to reduce cost, and focus

their branch employees on selling more complex and higher margin financial

products. Their e-banking channel was established through a joint effort of the

managers and the IT department of the bank. Although their management support was

limited on the idea of going online, only after showing statistical proof of the

advancement that the e-banking project would introduce to their company, the

managers finally accepted it.

Nordea succeeded in the e-banking strategy through different steps:


1. First through the building of e-habit and e- trust among its customers.

Nordea was able to entice its customer to use the online channels through

the support of its branch employees who had already established a

personal relationship with its customers. Thus, based on this personal

relationship a sense of trust was created among their customers, which led

them to use the online services.

2. By interconnecting their customers through integrating different banking

dchannels: e-banking, m-banking, branch based banking, as well as

providing different types of e-services such as: e-payment, e-

identification, e-salary, and e-invoicing; They were able to provide

services that competitors lacked. For example: managing their customers

accounts, transfers between accounts, payments of domestic and foreign

invoice, and finally life and general insurance.

3. By making use of their customers data and preferences, they were able

to customize special services according to the customers needs.

From e-banking to e-business

Nordea believes that e-banking is no longer enough to differentiate themselves from

its competitors. Therefore in order to differentiate themselves they chose to go into e-

business. They planned on reusing the technologies that they already have to also

reach customers with companies and businesses; they called this new service E-

business. The main services that Nordea included in e-business were: e-identification,

e-signature, e-billing, e-salary, and e-payment.

E-Identification: Through this service, Nordea customers can now identify

themselves on the website of other participating companies and governmental


agencies. Also the e-identification system has been considered to be very

reliable and efficient by the Finnish Ministry of Finance.

E-Signature: this service came as an idea to them by accident. An executive

from Sonera which is the largest telecom operator in Finland, stated that since

customers can already get a loan online then why not also be bale to sign a

phone subscription contract online. Therefore after some time, Nordea reached

an agreement with Senora to send all interested customers an online phone

contract through a link where they can identify themselves and then sign the

contract. This system was later expanded to provide e-signature for other

contracts.

E-Billing: Through this services companies can now send their invoices

electronically to the bank, which are then forwarded to their customers who

have e-banking agreements, and those that do not have an e-banking account

will automatically receive a printed invoice through e-mail. Once a customer

receives an invoice online, they are asked if they wish to pay the bill, all the

customer has to do is click on the payment button and it is automatically paid

from there account.

E-Salary: this service is a more efficient way for companies to send the

salaries to their employees. Companies can send income statements straight to

the e-bank of their employees without the need for printed salary statements

sent through their e-mail.

E-Payment: this service allows customers to go to any online store in the Solo

marketplace, place an order and click on a link to Nordeas e-payment system

where they request electronic invoice, and with just one click they can approve
the payment which is instantly transferred to the sellers account. This method

has two benefits:

1. The merchant does not need paper invoices.

2. The merchant does not need to worry if the buyer pays or not. Nordea

ensures that there is no fraud in any way on the merchant side by

conducting a reliability check on all merchants who sell goods in the

Solo e-marketplace.

Banking channels at Nordea

Adding channels to a bank satisfy the main goal; adding value. The multichannel

services are the major assets of the bank. It facilitates the customers life through the

quick facilities and instant access and hence avoids wasting time with the whole

queuing process. Also, it enables the customers to do their banking anytime and

anywhere, which makes it flexible. Last but not least it allows the transfer of money

without any delays.

Interconnecting the customers becomes an easy process when different banking

channels such as; m-banking, pc banking, TV banking and branched based banking

are available.

ATMs are no longer considered as relevant and important as it used to be since card

payments and internet transactions took over it.

M-banking: the wireless service started with WAP phones in 1999. The WAP

phones enabled the customers to track their account and credit card

transactions, transfer funds between accounts, pay bills, trade equities and read

customer mail. The WAP service extended to the mobile phones. In 2000

Nordea was able to introduce stock trading, bank transfers and the purchase of
movie tickets via the mobile phones. In 2002 the wireless services introduced

the dual-SIM handset for mobile transactions. One of the slots was for the

operators SIM card and the second was for the m-payment card.

PC baking: Nordeas online banking started in the mid 1980s. The special

thing about it is that the e-banking and the bricks-and-mortar banking

complement each other. They kept the online consultation to an absolute

minimum which means that in order to gain the customers trust in Nordeas

services they minimized the phone consultation and disabled the online

consultation and adopted simple offers to succeed in the internet business. All

the Internet activities at Nordea take place through Solo.

Tv Banking: The TV banking started in 1996 through the use of a set top box

that connected to normal household TVs. It was created as a replacement

tool for computers and enabled the customers to write emails and check their

account balance. However this invention was not successful because in both

ways privacy is not taken into consideration.

Branched based banking: SOLO (Nordea internet bank) played a massive role

in decreasing the number of branches that Nordea has and hence decreasing

the manual transactions. The purpose was to make the staffs work more

efficient and helpful through selling and providing services instead of wasting

time and making transactions. Banking is local but it doesnt always require

an expensive branch, Internet could take over in many cases especially in

todays generation. This doesnt mean that there must be a competition

between branched banking and the Internet. Its quite the contrary; they

complement each other and co-operate in order to generate whats best for the

Nordea bank. Adapting such a strategy lead to a massive increase in customer


satisfaction as well as making Nordea a more competitive and stable

institution in the future.

How Nordea sustained its e-banking services

1. Since the beginning Nordea success was due to the efforts of its managers and

IT departments, they tried to engage all their bank employees in the new

process by motivation. This was achieved by eliminating the competition

between the online and the physical branch by integrating both channels. This

process was accomplished through crediting back the online revenues to the

branch the customer is associated with. The goal was to unite the cost

efficiency and convenience of online channel and the personal relationship

atmosphere of the branch network. In doing so, the entire organization was

able to push e-banking technology throughout establishing the same value

network of e-banking and the already established network.

2. Nordea had also used pricing schemes that set incentives for customers to

make more use of the Internet service. For example, a foreign currency wire

costs would cost $7 online while $14 in a branch. Another example is bill

payments, usually in any branch it would cost on average $3.50, while online

it is free of charge.

3. They established a 9 digit number code which ensures the security of

corporate customers; one time code from list of cards and a sign out code

provided from the central server.

This type of OTC has been proven to be highly convenient, as it doesn't

require the customer to install any software on their computers or carry on any

password generating devices. Moreover, the same code can be used on any
electronic channels such as PC, mobile phone, TV banking and for direct

interaction in branches. This OTC provided trust to the customers and

motivated them to conduct their business online.

4. Nordea earlier introduction of e-banking eliminated the need to spend extra

cost on attracting customer into their online channels. This was since they

focused on attracting their already established customers (internet believers)

through the personal relationship that was built among their branch

employees. This relationship ensured that their customers would use their

online services, and once they have made use of them, they passed on their

experience to other new customers (non-believers).

Despite their success in e-banking, Nordea were concerned with expanding their

operations geographically, develop customer relationship management through data

mining to provide customized services to their customers and last but not least,

engage in risk management services in order to minimize the risks between two

business and to increase the trust between the trading partners.

Nordea Today

Nordeas recent activities include; lending, deposits, private net banks, trade, project

finance, security services and risk management. For example the saving and asset

management products are designed according to the countrys and customers specifics

such as discretionary portfolio management was designed to meet private customers

needs; Emerging markets and theme funds as well as other products were also

designed to capture opportunities in the financial markets. Concerning risk

management, its considered a main capital market product. Nordea offers different
types of risks; commercial risks, political risks and currency risk. Nordea life and

pension offers products to pension customers, which are basically insurance policies.

In addition, Nordea offers customized set ups for different corporate customers which

also rely on the countries jurisdiction demands. All in all, Nordea currently offers a

broad range of financial products along with corporate lending and savings and asset

management.

Geographically speaking, Nordea made its way to a successful expansion beyond the

northern and eastern European region; Africa and Asias pacific region specifically

China and Singapore which were experiencing and economic boom.

Conclusion

All in all, Nordea bank was able to reach the peak in financial markets by adopting e-

banking system in its early stages. Also, they managed to integrate the previously

established value chain with e-banking through their primary activities that include

marketing, sales activities and services that focused on maintaining a personal

relationship built on trust with its customers in to the newly adopted e-banking

system, as well as their service activities that the employees offer to customers by

implementing different segmentation in order to maintain loyal customers. Secondary

activities include infrastructure, human resource management. Through their

infrastructure, Nordea bank was able to entice their customers to use online banking.

Human resources was a key activity in Nordeas bank in building a special

relationship with their customers and attract new customers through their employees

which means they focused on building a strong foundations by finding talented and

skilled employees who were motivated through rewarded incentives and providing

opportunities for career development.