[ad_1]
Digitization has rapidly changed one industry after another in Sweden. Large traditional banks have come under heavy pressure from several smaller players who have selected parts of the banking operations and then have fiercely competed with low prices and availability. For those who want to trade stocks, there are specialized banks that have applications that are very easy to use. Other players specialize in cheap mortgages. Some online brokers have half the price of funds compared to major banks.
All of the new players have in common that their digital business model increases costs and offers consumers affordable alternatives. The conscientious consumer takes the raisins on the cake and finds the lowest mortgage rate at a specialist bank and the cheapest pension savings at another player. Being loyal to the bank you’ve had a long relationship with has paid off worse and worse over time. The big banks have been good everywhere, but perhaps not the best in some parts. What has been an advantage is the long-term relationship and the credibility and security that banks have been able to offer with a solution package for various financial services.
Handelsbanken stubbornly remained
It is in this context that Handelsbanken’s change in strategy must be seen. The bank has previously strongly advocated the importance of being physically present in the community, with many local branches. The principle has been to lend money according to the “church tower principle”. This principle of risk minimization is based solely on lending money to entrepreneurs and individuals who are seen from the tower of the town church. Physical presence at a local office became a guarantee that you only loaned money to players whose character and creditworthiness could be personally assessed.
This approach to its customers has been deeply ingrained among Handelsbanken employees. Despite the digital business logic outlined above having become increasingly clear over a long period of time, Handelsbanken has stubbornly stuck to its strategy.
When then-CEO Frank Vang-Jensen in early 2016 announced his plans to close 50-60 offices due to digitization, he created a violent storm of protest. This is also believed to have been a major factor that contributed to Frank-Vang-Jensen being forced to resign as CEO shortly thereafter.
But four years later, CEO Carina Åkerström proposes a closure more than twice as large. Around 180 offices out of 300 will be closed, the number of employees will be reduced by around a thousand people.
Previously successful strategy change
The fact that CEO Carina Åkerström is selling on this change as “picking up steam” is a description that probably not all clients sign off on. It is not communicated which offices will disappear, but those with the lowest profitability and the fewest number of clients will, of course, smoke first. They are probably in the field. The group of clients that gets into a lot of trouble is greater, who cannot or dare not do their banking business digitally.
From that perspective, it becomes a bit special when Carina Åkerström describes the change as “customer driven” and that the bank “has been waiting for customers for quite some time.” During the crown, there are probably many elderly people who have not been able to visit their local bank branch due to the risk of infection.
Handelsbanken is now on a “digital journey of change” in which it will “come to terms with its cost problem,” CEO Carina Åkerström said at today’s press conference. This is exactly the case – whether customers follow the journey largely depends on how strong the digital offering will be.
Carina Åkerström also emphasized that the offices are the backbone of Handelsbanken. It’s possible, but today’s announcement of fewer branches signifies a clear shift from Handelsbanken’s previously very successful strategy.
