In the fight for differentiation, technology…

The digital world is increasing competition and customer expectations in the banking sector, creating a growing need for all banks, both new and old, to differentiate themselves in innovative ways. But that will be impossible without the right technology platform on which to build ingenious new services. Camilla Leikvoll is the Managing Director of Storebrand Bank, part of Norway’s second largest asset manager and insurer.

Camilla Leikvoll, Managing Director of Storebrand Bank

During her 14 years at Storebrand, she’s held key roles, including Head of Group Strategy, and is now leading the bank’s effort to deliver a best-in-class, integrated customer journey. So, we spoke to her about how she sees the future of the Norwegian banking sector and how Storebrand’s technology is meeting the needs of customers today and in the future.

How do you see the future of Norwegian retail banking and Storebrand’s place within it?

Norwegian banks have been very forward leaning in terms of their digitalisation and simplification of their value chains compared to many other developed markets. What’s been a really big success is the common bank infrastructure. Most people underestimate how ground-breaking advances like BankID really are, and how much it has enabled interconnectedness in society.

There have been lots of discussions around the future of banking and how to build on Norway’s established common infrastructure platform and new regulatory frameworks like PSD2. In reality, we’ve not seen any major disruption to the market yet, but we have seen an increase in the speed of innovation, partnerships and ecosystems. New players have driven the race to increase customer focus, which has been lacking in the industry, and they will continue to challenge the establishment to stay alert. As we move forward, I expect the industry to face challenges from many fronts – and that’s a good thing, both for the industry and the customer.

Although Storebrand is a digital bank, we still sell generic banking products and it’s very difficult to differentiate oneself purely on product. Banking products are either must haves, such as mortgages, or generic, like bank accounts. We at Storebrand don’t want to get caught up in a race to the bottom on price. We see a real opportunity in delivering exceptional customer journeys and we think the future winners will be those who can deliver this most effectively.

What do you think about the future of physical bank branches?

Banks that are able to differentiate themselves have a competitive advantage in winning and retaining customers. The savings banks, for example, have always focused on their physical closeness to customers, but I think that physical closeness in a more mobile and digital world is less important. The experience of closeness is what matters, and an outstanding digital experience combined with accurate data can replace this. They let us understand our customers and their needs, so we can be relevant to them. We’re not a physical bank, but we still appreciate the need for closeness, and we strive to achieve this through other means.

The core banking platform market is evolving, both globally and locally. How does this impact Storebrand Bank?

Challenger banks often point out that traditional banks have lots of legacy systems and will therefore always be behind the curve in developing new processes and products. Even though many do have a complicated stacks, most banks acknowledge this and have invested significant resources in building on top of this layer, and it’s my assessment that innovation isn’t necessarily related to size but culture and focus.

Storebrand Bank has maintained one core system. When we discuss our core systems, we must remember that Storebrand is not primarily a bank, but part of a savings, investment and insurance group. And part of our competitive edge is that we can support our customers in all aspects of their financial needs. For example, we want to be able to offer our customers comprehensive retirement management, where they can see their pension, savings (especially important given that two-thirds of all savings volumes sit at banks) and mortgage in one place. Storebrand Bank has a natural position within this holistic service.

We’re also experimenting with new services. Storebrand established a partnership with Swedish FinTech Dreams in 2017, focusing on savings. We recently scaled up this partnership by introducing a consumer debt refinancing service to supplement our product offering with a unique value enhancing application that motivates our customers to repay expensive debt faster. Our solid platform on which we can build additional services has enabled this.

What advice would you give a financial service company considering a platform upgrade or overhaul?

There’s a difference if you have a clean slate to start from or are reviewing a complex tech stack. Our focus has been on acquiring services where we, as a company, can’t add value to the customer by developing it ourselves. This is our approach to the core systems and related infrastructure, focusing on reliable operations and cost efficiency. It’s let our internal teams focus on the other layers of the customer journey where we can add value, either within the bank, through partners or across product segments in the Group.

What’s important to remember is that you don’t modernize a bank just by modernising the core. The core system enables all the other exciting development. So, you need to differentiate between what the core provides in direct value and what you plan to use of your own resources.