Wired Banking Goes WirelessNordea’s eBanking and eBusiness Services: Wired Banking Goes Wireless Nordea’s eBanking and eBusiness Services Turku September 2005 Antti Tainio


Slide2: NORDEA: 10m Personal Customers 1m Corporate Customers 4,2 m Internet Customers global nbr 1 in nbr of net-payments since 1982 25.000 e-business contracts global pioneer – explosive growth 1.220 branches – 28 000 employees local sales critically important High tech AND high touch = innovation taken to the customer


Reshaping the Banking Industry - through 3 Steps…: Reshaping the Banking Industry - through 3 Steps… Step 1: E-banking has been the biggest change since the branch network was established – massive change still under way Step 2: The next dimension – e-banking services integrated in E-business value chains is being entered into in the Nordic countries – immense value for economic life and society at large – responsibility and business opportunity for banks Step 3: There is more to come – personalisation, customisation, safe storage of information, risk elimination, omnipresent banking etc


The new world – networked economy is a reality : The new world – networked economy is a reality The interaction between businesses, business and consumers and public sector and citizens is rapidly moving to electronic value chains. Banks need to be present to make the transition: 1. faster (build on established massive e-banking habit and trust and use banking sector's salespower for next steps), 2. cheaper (reuse familiar identification, signature, file service and  payment tools) and 3. secure (banks have had to invest in strong security and are part of defense against money laundering and fake invoicing).   Without proper bank involvement take-off will be seriously delayed and cost levels unacceptably high.


Slide5: SUPERIOR BASE IN E-ECONOMY MAJOR ASSET WHAT BANKS HAVE


A very straightforward story in 3 stages: Start early - 1982 4.1m e-customers - over 75% penetration in Finland, Norway and Sweden Engage all staff All sell eBanking and eBusiness services! Keep it simple ! clinically Add services - all value - not hype A very straightforward story in 3 stages Integrate channels -e,-m, branch, contact center e-payment, e-bill, e-signature e-ID, e-salary etc Customise value of datamines Personalise tools for customers eBanking in Nordea


Slide7: Nordea’s netbank customers - August 2005: Netbank customers: 4 191 738 private: 3 775 788 corporate: 415 950 Equity trading customers: 367 578 Netbank


Slide8: Largest e-bank in the world Netbanking creates habit Habit is a key resource. Exportable to corporate customer e-processes


Global Laboratory for e-banking - Nordea Finland: Global Laboratory for e-banking - Nordea Finland Via the net - best month: 96 % of corporate payment (Internet and File transfer) 89 % of student loans - paperless 80 % of equity orders 77 % of private/small foreign payments (close to 100 of larger corporate) 69 % of car financing 62 % of household customer payments 60 % of mutual funds 41 % of consumer credits - paperless 39 % of foreign exchange 34% of travel insurance 22 % of mortgages - loan paperless - mortgage deed still paper 10% of time deposits 8% of general insurance


Slide10: High Low Adding channels & access devices = ADDING VALUE 1982 1984 1992 1996 1998 1999 2001 2002 Customer satisfaction Devices Same passwords in all & no installations = total mobility ! One service agreement covers all channels - customers can use any device ! One service - Many doors – one key same user experience (look & feel – sequences) Also in second role – as employee in CM etc.


Slide11: Customersatisfaction Adding new services: 1.e-banking, 2.E-commerce and 3.Insurance services = adding value exponentially 1982 1988 1992 1996-98 1999 2000 Balan- ces+ Pay- ments Equity- transact E-identi- fication Mutual Funds E-shopping payment E-Loans E-billing E-signature Foreign payments E-student- loan Life insurance Now virtually all banking services and increasingly E-services E-salary WAP-eq WAP-fx E-mortg 2001 2002 General Insurance Time dep Foreign equities Time deposits Warrants 2003- 2005 ePI e-invoicing ePI C2B XML


We have a strong e-business vision: We have a strong e-business vision It is all about customer value - VALUE for MONEY As with e-banking earlier … E-business will grow - b-t-c, b-t-b, c-t-b, g-t-c, c-t-g, c-t-c…. Especially important and potential in the Nordic area Our role as enabler is critical Our potential for new income is substantial > MONEY for VALUE It can only be a question of TIME before wide user take-up The earlier get to critical mass of users - the earlier will we get the take-off


Slide13: 1 000 000 Corporate Customers 9 500 000 Private Customers 1 000 000 Corporate Customers Dream segments All save costs for the corporate customer


Slide14: 4 200 000 Frequent netcustomers Added value for corporate + public sector customers Direct E-commerce payments 2.600 merchants now ! No billing - includes identification Dream segment


Slide15: Solo-payment: Nordea’s Solo Mall Joint market for Finland & Sweden & Denmark & Norway Links to over 800 merchants’ pages


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Slide17: Wap e-commerce ------ Merchants ----- Dataflora Kinopalatsi Uusi Vaasalainen WapStore Options Back --------Solo--------- Custom number [...] Code [...] To accept Options Back ------ Kinopalatsi ----- Choose the movie: [Star Wars - episode III] >> Continue > Continue > Continue > Continue > Buy with e-payment << Back Options Back ----Nordea Bank----- Solo Solo Market In English På Svenska Suomeksi Options


Slide18: Also to other addresses (1992) Identification Corporates needing identification 4 200 000


Slide19: 4 060 000 Important as Public Sector starts using the net Identification Public sector


Slide21: 123456 ****


Slide22: 4 200 000 Netcustomers Identification Authentication Encryption Binding signature E-signature - for any 3rd party agreement. Added value for corporate +public sector customers Instant action- no mailing


Slide23: = main Telco in Finland, offers the possibility to make a gsm-agreement over the net by using Nordea’s e-signature at https://mpp.inet.fi/gsm_kauppa/index.html “ In order to make a new service contract you need to have Nordea Bank’s Solo codes. With the codes you will be identified electronically and provide a binding signature.” E-signature and -identification


Slide24: E-salary E-salary enables an employee to browse through his monthly pay slips electronically via Solo. Thus, the sending of a pay slip in a paper form will no longer be necessary. The pay slip details are saved in files thereby enabling the user backtrack to earlier salary data. E-salary gives an opportunity for companies to save on postage costs and to provide better service especially in companies whose personnel travel extensively or work long periods of time abroad.


Slide25: 4 200 000 Netcustomers E-invoice -directly to PC/TV No mailing - less errors E-invoicing is a major task – a European opportunity - >Added value for corporate + public sector customers Receive and approve with your mobile


Slide26: E-billing with net-invoice Link in the net-bank


Slide27: Moving to billers pages: - showing the invoice details - selling new products, making agreements etc. E-billing with net-invoice


Slide28: European standard (ePI – Electronic Payment Information) Standard EBS602 V1.1 Standard Implementation Guideline SIG605 V1.0 Country Specific Texts TR607 available at www.ecbs.org Austrian banks have adopted ePI for e-payments Implemented for e-invoicing by banks in Finland, Sweden… (Financial Invoice = Finvoice – ePI+ XML, SOAP for transport..) Many more countries show interest ePI is a European standard - both a central basic standard and an enabler for innovation NOW IS TIME TO TAKE IT IN USE !!


Slide29: Banks have the road to every account - globally Now is the time to use the ready and very secure road for transporting e-invoices e-Customer


Slide30: The new world – e-banking for e-business/e-government Trustbased: E-id E-signature Faster Payments: Direct e-payments 3 d secure card payments E-payment+ Low value and micropayments Document transport: E-invoices E-salary E-pension Risk elimination direct payments Card payments E-guarantees E-trade finance Strong id


Reasons for implementing ePI – the European standard: Reasons for implementing ePI – the European standard Electronic payment initiator (ePI) is the tool to create error-free payment order (easy to feed C2BXML) Can be used for e-invoice payments, e-payments, direct debit, salary payments Easily integrated to payment and administrative systems (standard locations for information, ebXML etc) Effective container including all relevant information Simple seller reference (URI, salary, invoice..) Completed by account information and ordering customer´s reference when needed (ready for direct debit)


European Central Bank support:: European Central Bank support: "For benchmarks we only need to look at the Nordic countries, where the e-readiness is most developed in Europe and where e-invoicing is being implemented with the support of public authorities. Your SEPA project will make you fit for the future if your vision incorporates this kind of ambitious benchmarks to introduce new competitive services." Gertrude Tumpel-Gugerel, Member of Executive Board ,in speech to European Payment Council Letter from European Commission 26 January 2005: “We consider that it is very necessary to improve the efficiency of payments.. Therefore we support standards such as the electronic payment initiation (EPI)…”


Slide33: Create the base: 4.200.000 e-banking customers e-payment e-billing e-salary e-invoicing e-identification e-signature e-card Interconnect to 960 000 corporate, association and public sector customers E-banking: First Quantum Leap E-banking for e-business: Second Quantum Leap


Slide34: It does not end here - more is being prepared…


Slide35: Web home Portal insurance funds bonds cards credits new accounts stock exch Personal product offers Your favorite merchants Virtual communities Personal budget Financial news Personalised and dynamic - Web Home External


Slide36: Long term saving E-services Financing Payments General insurance Next life event buy new home build/renovate new car retire holiday abroad birthday party establish business x Private and Public sector part of life event


But - technology should not be at the wheel…: But - technology should not be at the wheel… Success needs: Relevance > service really needed Simplicity > no time to learn Often needed service or together with such > otherwise forgotten Self-selling > useful also for customer’ customer Supported by personal selling > hesitance thresholds Building on existing > starting from zero becoming hopeless Without these – even the best technology may flop!


Balance between technology and customer usage: Balance between technology and customer usage Needs a very practical approach: Create new value (convenience, cost savings, value for customer’s customer) Highest focus on keeping it simple Understand what technology can do and what customers can take in – increasingly driven by information overflow aspect Network to make citizens move to e-services at large – like they have done in banking – new drivers partner up Using levers like economy of repetition, economy of reuse, economy of scope, established trust, familiar brands, relationships, pricing etc Joint open standards (local, regional, global – but do not for the slowest) - “centralised but centerless” = protecting competition


Recommendation to our corporate customers:: Recommendation to our corporate customers: It is easy to buy technology - but customer behaviour does not change over night >> START EARLY Seldom needed services will not get the attention needed to grow/survive >> PARTNER WITH OFTEN NEEDED Services must be increasingly customised and personalised around life situations >> PARTNER WITH VITAL DATAMINES Build on existing habit and trust and reuse ID, payment- e-signature etc tools >> BREAK PRESENT FRAGMENTATION TREND Proceed step-by-step with open standards >> beware of STATE OF THE ART MEGA-INVESTMENTS


It is all about human behaviour: It is all about human behaviour "What I hear, I forget. What I see, I remember. And what I do, I understand.“ Jackpot: same use experience In different human roles and situations In all bank services and most e-business and e-government In all devices economy of repetition economy of reuse economy of scope economy of scale economy of loyalty


Slide41: BANKS ARE GOOD PARTNERS INTEGRATED CHANNELS + e-Habit Familiar Reusable and ready e-tools


Slide42: The future is not planned nor prognosed. antti.tainio@nordea.com Thank You!