1 •

SIMPLIFYING I.T. IN

BANKING

ENABLING Future

Competitiveness

Background

• 1.2bn > 318 mn > 23 mn > 5.6 mn > ?

• Grew up in India

• Started working life in Silicon Valley, USA in a

Startup

• Moved to Australia in 2001 and spent the last

12 years at Commonwealth Bank of Australia

(CBA)

• Ran delivery stream of the CBA Core Banking

Programme for 3.5 years

• Last role: CIO for CommSec (Australia’s largest

online equity trading platform)

• Married with no kids and have relocated to

Copenhagen

Interests

Joseph Edwin Head of Core Banking Programme, Nordea Bank

3

Digitalisation is changing the world

Source: CRN, University of Massachusetts Darthmouth, Mashable, Business Insider, Mobile Marketer, Forrester, Internet Retailer, The Economist, AllhingsD

What does it mean for

Banks?

4

• Books are purchased online and delivered directly to the doorstep

• eBooks (including rich media features) increasingly substitute hardcovers

• Online movie libraries allow consumers to watch any content at any time

• Online piracy of copyrighted content can only be countered by convenience

• Traditional movie, TV series and advertising format no longer valid

• Tapes, records, and CDs belong to the past – music is purchased online

• Music does not have to be owned as millions of songs are accessible online

INDUSTRY DIGITALISATION IMPACT

Music

Books

Video

• Travel experiences are rated and shared online

• Offers are researched, compared, and booked online

• Disintermediation of traditional hotel and taxi models

Travel

• Analogue cameras and manual photo processing are out-of-date

• Camera merged with mobile phone

• Photos are digitally enhanced, shared, and rated online

Photo

…it has already disrupted several industries

EXAMPLE

COMPANIES

WHO IS NEXT?

5

In banking, our customers have the same needs as before

– but as in other industries, their behaviour is changing

CHANGING CUSTOMER EXPECTATIONS…

Co-creation Network

building Personalisation

… AND CHANGING CUSTOMER BEHAVIOR

• Impatient & empowered - 24/7

availability and immediate delivery

• Knowledgeable - Specialised and

tailored advise that complements the

research we have done ourselves

• Integrated & connected – Integrated

into my process and

connected/compared with peers

• Require relevance - Personalized

products, services and interaction

• Are becoming less loyal

• Use several channels in combination

• Use digital channels more intensively

• Use digital channels to enforce:

And they are rapidly adopting new technology

Number of transactions at branches

(million)

Number transactions in the mobile

channel (million)

33

24

16

?

2010 2012 2014 2020

1 11

59

?

2010 2012 2014 2020

At the same time there is also a surge in new operational

regulations ahead

& OUR CUSTOMERS

Machinery room

Products

Short selling

CSD

regulations

AIFMD

UCITS

Long-term

financing

Prospectus

Directive

Bank

account

IORP II

SFT

transparency

Margin for

derivatives

Mortgage

Directive

Securities

legislation

MMFs

MAD

AML

EMIR PRIPs

MiFID II

FTT

FATCA Data

protection

SEPA

Dodd-Frank

Payment

package Corporate

governance Benchmark

regulations

Transparency

Directive

Balance sheet regulations Operational regulations

Recovery and

resolution

Solvency 2

TLAC

Structural reforms

for banking

Investor

compensation

Living

wills

Leverage

ratio

NSFR

Shadow

banking

Banking union

Capital

requirements

Deposit

guarantee

Fundamental

review of the

trading book

8

Modernisation of Technology & Simplified processes are

imperative

NEW CUSTOMER BEHAVIOURS

MOST BIG BANKS NEW ENTRANTS

Personalised Network

building

Co-creation

• Core banking platforms that are decades old

• Many different sub-systems integrated to each

other but not modular. Stable and proven but

not very flexible

• Lean companies without branch offices taking

advantage of the speed and convenience of

the digital channels and modern flexible

technology and architecture

• Mono-line businesses that are extremely

good at what they do

9

SO, WHAT SHOULD

WE DO?

10 •

LAY DOWN STRONG

FOUNDATIONS FOR

SUCCESS!

11

… and we need new Core Platforms to get there

Great customer experiences

Easy to deal with, relevant and competent, anywhere and anytime, where the personal and digital relationship makes Nordea my safe

and trusted partner

11 •

Build the “engine”

for relevant and

agile reactions to

customer needs

Agility

Leverage scale and

improve operations

efficiency and IT

efficiency

Scale

Improved speed of

response to

regulatory changes

Resilience

0

96

161

225

106

3

1

144

163

163

153

111

175

80

70

127

127

127

233

170

0

163

82

115

103

172

206

239

178

137

117

204

208

204

199

178

211

157

155

182

185

186

242

206

134

206

159

182

Primary Colours Extra Colours

12 76

116

154

Chart Colours 166

166

166

191

191

191

127

127

127

204

102

0

0

96

161

119

154

188

Our Delivery Approach

Inside:

SIMPLIFIED

Outside:

DIFFERENTIATED

New great

customer

experiences

Efficient and

effective

foundation

TRUST

AGILE

INNOVATIVE

VALUE

CREATION RELEVANT

RELIABLE

WELL

STRUCTURED

COMPONENTS SCALABLE

COST

EFFECTIVE

STANDARDISED

ANYTHING,

ANYTIME,

ANYWHERE

…

EASY

PERSONAL

13 •

CHALLENGE THE STATUS QUO!

EVERYTHING CAN BE IMPROVED.

Five key activities in the Nordea Simplification Programme

• Focus all development activities towards supporting simplification

Simplification

compliance

Initial

simplification

• Customer information, savings/deposits, transaction and loan products in all

business areas across the Nordics

Core Banking

Platform

(CBP)

• Domestic, international and SEPA payments for all business areas across

Nordea group New Payment

Platform

• Consolidate the local data warehouses across the Nordics into one to

meet both regulatory requirements and changing customer demand

Group

Common

Data

• Simplification of products, data and processes

$ £

€

%

Delivering targeted, customer-focused products by tailoring 5

core banking products

11 million unique

product offerings

available via tailoring

…saved easily…

…for my future

Small streams…

6 key principles will guide our approach to simplification

1. Simplification has highest priority

2. One Nordic solution

3. Business in lead, line is accountable

4. Adopt rather than adapt

5. Frequent deployments, built-to-last

6. Simplification in everything we do

We are privileged to be able to invest in our future

16 •

INVESTMENT IN OUR PEOPLE

IT

GOVERNANCE

ENTERPRISE

ARCHITECTURE

BUSINESS

ACUMEN

AGILE DESIGN

THINKING ANALYTICS

EXPERIMEN-TATION

KEY INVESTMENTS TO MODERNIZE IT CAPABILITY

TECHNOLOGY PRE-REQUISITES: LICENSE TO OPERATE

Simple, easy and convenient banking!

Simplified Bank

THANK YOU