What UK Banks Can Learn From The Scandinavian Banking Model, By Erki Kert, CEO Big Data Scoring

Erki Kert, CEO, Big Data Scoring

The experience of banking customers in the UK is completely different to that in Scandinavia. While the UK might be home to more of the big names in banking, it is those in Scandinavia that are getting the best, most convenient and innovative services. But why is this?

This article will explain why banks in Scandinavia have been so good at addressing the needs of their customers, while highlighting the areas that UK banks need to improve. Fortunately, there is evidence that the experience for UK customers is slowly changing for the better – but how long will it take for the standard to be similar to that in Scandinavia? And what exactly are the kinds of high-tech banking services that we could be seeing in the UK in five years’ time?

Where Scandinavian Banks Excel

One Swedish bank that those in the UK could learn a few lessons from would be Handelsbanken. Specifically, its customer-focused philosophy: using the ‘church-spire principle’, branch managers are given total autonomy when it comes to how they deal with clients. These branch managers make the final decisions on loans and interest rates – not head office – meaning that all products can be tailored to suit each customer. Clients don’t ever telephone customer service call centres – they speak to the branch manager directly.

However, when you have a customer base as large as those enjoyed by the big four UK banks, this level of personalised service is hard to emulate. Scandinavian banks have the advantage of having a smaller customer base to deal with – while UK banks are part of the wider Anglo finance world, Scandinavian banks are smaller, therefore more agile and can make changes more quickly.

One of the most interesting things that Handelsbanken is doing, incidentally – and somewhat counter to current trends in the UK and Scandinavia – is opening up more branches. Typically, Scandinavian customers don’t visit branches, with Robin Teigland, associate professor at the Stockholm School of Economics, pointing out that many people under 30 in the region would never have visited a bank branch in their life.

So why is this? Banks in Scandinavia have been putting technology at the forefront of their offering for many years, meaning that they have the most advanced online banking services. While the advanced broadband network infrastructure in Scandinavia has contributed to this, as well as high levels of internet usage – Norway and Sweden have respectively the third and fourth-highest levels of internet penetration in the world – technical innovations have also propelled the use of online banking services in this region. In Sweden, a secure electronic identification system called BankID was introduced in 2003, with around two-thirds of the country’s population now using it across a number of financial services – not just online banking, but for filing tax returns and e-commerce too. 

This is not the only service that has been collaboratively created by banks in Sweden for the greater benefit of customers. The Swish mobile payment app, introduced in 2012, lets users make real-time payments to friends and family simply using their phone numbers. It’s not surprising that use of mobile banking services in Sweden is ahead of the rest of Europe, with 45% of Swedes using these services compared to the EU-wide average of 38%, according to figures from KPMG. And the digital trend in Sweden doesn’t end there. Thanks to innovations like Swish, the society is well on its way to becoming ‘cashless’. According to figures from the Bank for International Settlement, notes and coins make up just 2% of Sweden’s economy, compared to around 10% in the Eurozone. ATMs are being withdrawn from service in large numbers.

The rest of this editorial will be published at a later date.