Building the Future Bank by Simplification Retail Banking Innovation Conference, London

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1 Building the Future Bank by Simplification Retail Banking Innovation Conference, London Jukka Salonen, Head of Group Simplification 14 March 2017

2 Nordea is the largest financial services group in the Nordics 11 million customers Distribution power Financial strength - EUR 10bn in full year income (2016) - EUR 616bn of assets (Q4 2016) - EUR 32.4bn in equity capital (Q4 2016) - Common equity tier 1 capital ratio of 18.4% (Q4 2016) - AA level credit rating EUR ~42.8bn in market cap - One of the largest Nordic corporations - A top-10 European retail bank 2

3 A short piece of history Nordea created through a string of mergers From the start: - Around 300 banks 1970s: 80 banks 1980s: 30 banks 1990s: 4 banks 2017: Nordea - One operating model - One legal structure - Unique diversification - Proven business model 3

4 Operational landscape for Nordea pressure for transformation coming from multiple directions Digitalisation Operational regulation Balance sheet regulation Simplification 4

5 Our customer relationships are turning digital fast Online advisory meetings Online meetings share of total meetings excl. corporate customers Transactions, m Q Q *Source Nordea Annual report 2016

6 Simplification Programme will primarily focus on building the digital engine part of Nordea s future operating model Relevant Personalised Agile Trust CUSTOMER FACING Easy Anything, Anytime, Anywhere DIGITAL ENGINE Well structured Reliable One operating model for product and service delivery Innovative Cost effective End-to-end automated common processes Scalable 6

7 Financial industry investments on IT increasing heavily IT modernisation and Core Banking solutions the main priority Corporate investment priorities vs 2014 IT spending priorities Channels 1 1 IT Modernisation Core banking system CRM solutions 10% 23% Innovation 2 2 Innovation Risk / Compliance / Anti Money Laundering 12% Risk mgmt. / Reg. compliance 3 3 Channels Business Intelligence / Big Data / Analytics 14% IT Modernisation Attracting / Retaining talent Attracting / Retaining talent Risk mgmt. / Reg. compliance Virtualisation of your infrastructure Channels - Mobile / Internet Services (performance optimisation of systems, 6% 6% 21% Payments 7% 0% 5% 10% 15% 20% 25% Source Temenos banking survey (2016) 7

8 Key building blocks of the Simplification Programme Common ways of working Common end-to-end digital processes Common modular products Infrastructure and environments Group Common Data Core Banking Platform New Payment Platform Customer & Counterparty Data Sustainable change capabilities 8

9 We have already come along way building the capabilities and foundation for change now it s time to deliver Success Target Picture Start from scratch Acceleration Breakthrough Basic modules delivered Full scale simplification Initial Simplification 70% products reduced 3,6 m IDs cleaned Basic ramp-up 600 people 30 nationalities First deliveries: Savings Pilot SEPA Interbank in 7 countries Building up capabilities cross the bank 1000 people 35 nationalities Big deliveries: Savings Finland SEPA Interbank finalisation Delivery engine in place Entire bank to support transformation Basic modules for core banking and payments delivered Local DWs closed More complex product migrations Business to own the new capabilities and to move simplification further Decommissioning of legacy to be continued over

10 Simplification programme either delivers or enables business impacts, anchored in core capabilities of Agility, Scalability and Resilience Core capabilities Business Impacts Agility 1 2 Customer-centric and uniform banking experience across countries and channels Common core engine for relevant and agile reactions to customer needs Scalability 3 4 Increased scale and automation to improve operational efficiency Common robust processes and digital platforms to enable growth and partnerships Resilience 5 6 Reduced operational risk from complex legacy systems Improved speed of response to regulatory changes and counterparty data requirements 10

11 Cornerstones for the success People Simplification principles 1. Simplification has the highest priority 2. One Nordic solution Culture Delivering Simplification Governance 3. Business in lead 4. Adopt rather than adapt 5. Frequent deployments, built-to-last 6. Simplification in everything we do Strategy 11

12 Simplification Direction where GSP is the key enabler Change capabilities CBP, NePP, Data Culture & Mindset ONE Cluster simplification Environments and infrastructure 12

13 Thank you! Jukka Salonen, Head of Group Simplification 14 March 2017