Nordea — four banks, four countries, now that it has sold off an unprofitable bank in Poland. With 11 million customers, 900 branches and a goal to become a great European bank, Nordea had some challenges ahead.
The CEO says the aim of Nordea in its business is to create a great customer experience, said Rasmus Werner Nielsen, CFO at the bank in a presentation at the Teradata user group conference in Dallas.
So when the global finance group decided to propose a €100 million project for a data warehouse, the group proposed it as a way to improve the customer experience.
“A three year budget of €100 million is not that easy to negotiate with management,” Nielsen said. “We needed to tell them they would get something far better then what they had today when meeting the customers, and then it is far more difficult for management to say no.”
It may have seemed a stretch, but the data warehouse project was the only of several proposed projects that survived through the financial crisis.
Banking, said Nielsen, faces tough times with a lot of competition, especially for large corporate customers; a massive regulatory agenda and a macro economic environment of low growth and low interest rates for the foreseeable future. Although Europe is beginning to show signs of business improvement, banks still face a capital squeeze, loan losses, credit migration, questions about their business model, asset writedowns and funding problems.
Nordea looked at the business issues it faced even after the four component banks merged in 2001. It still had IT conflicts and different systems in the four banks that were not compliant with each other and required a lot of manual adjustments to work, especially when it came to regulatory reporting.
“We wanted one integrated finance process and thereby add value to the departments doing business with customers by increasing quality with reduced lead time and reduced costs,” said Nielsen. “And we also wanted a better day for everyone working in the bank. They shouldn’t be spending their time reconciling numbers but analyzing those numbers.”
By moving to a Teradata financial data warehouse, the bank has seen an increase in time available for analysts to do analysis, increased quality, improved reporting time and reduced costs. The bank is also closing its books three days sooner that it did before.
The move to a financial data warehouse was not an IT-driven project, Nielsen added. To develop the data warehouse, the bank set up a steering group with the heads of he different business areas such as retail, marketing, treasury and risk management.
“Thereby we captured them and made them responsible for this being a success.” For the rollout, Nordea did one country at a time in different segments such as accounting or reporting.
“Each time we had a success we shouted it out loud and clear. Sweden got customer profitability first, and then each country wanted to be part of a similar success. We took it one by one rather than making a big bang.”
Nordea focused on reporting — management reporting, customer profitability, and special analysis.
“We didn’t change the sourcing,” added Nielsen. “It is a mess, but we cannot change that overnight.”
The customer profitability system may be the most important.
“This is where we meet the customers. Each single relationship manager can look up the system and get the same overview no matter where you sit. “They are able to prepare for a meeting without having to worry about whether the information is correct or not.” They can also run simulations on changing margins and the impacts it would have.
“This is what management really likes.”
Profitability is a home-grown system partly because Nordea still has different products in different countries and countries have different reporting requirements.
“So it was easier to do it ourselves and keep alignment between countries while letting them have their own products.”
Users can drill down into reports and access view by time periods, currencies, organizations, branches or products, for example.
“This is the value of the data warehouse.”
Now users want key performance indicators (KPIs) and the data warehouse operators need to respond.
“We need to be able to produce new KPIs as quickly as possible or users will start creating things on the side.”
That means Nordea will have to look ahead and to the sides. For three years, said Nielsen, the data warehouse team has practiced saying “No” to users who wanted to include special features in the data warehouse. He regards that practice of saying no, a practice that often irritated management, as a key to the project’s success because it kept everyone tightly focused on a single goal.
Other key learnings — get the CEO onboard, obtain business area participating, limit the scope, stay focused and keep it from becoming an IT project.
Data governance has not been clearly defined, he admitted in response to a question. It falls between group finance and IT, but all the sourcing comes from the business areas.
“But if you left it to the business area they would just lean back and say fix it.”