The Danish bank sector is under pressure – and this is forcing banks to focus on their ability to execute, and to do it fast, explained PA’s Tina Hjort-Ejlertsen, business change and implementation expert, at PA Consulting Group’s Executive Seminar on 13 May. The seminar’s guest speaker was country manager Peter Høltermand, SEB Denmark.
According to Tina, strategies are important; however, the ability to execute strategies is equally important.
Tina explained that with the financial crisis came shortage of capital, increased regulation and control, and a large number of banks have rearmed in order to live up to the increased demands. At the same time, the market has changed due to the continuing development of technology, which creates new opportunities for companies that are able to react fast through new business models. However, increasing technological development may be damaging for those companies that are unable to keep up, and could cause them to lose market share.
“This situation increases the need for new business models and streamlining in the bank sector. Change is a condition, not an option, and the ability to transform the business successfully is crucial. Banks that are able to change will be the winners of this competition,” said Tina.
According to Tina, currently only the few are able to change their business model and to carry out transformations. Most companies use their resources on ‘lost change’ projects, due to their inability to execute them effectively. Moreover, said Tina, it is important to have the right employees. A strategy may be great; however, without the right kind of people to execute it, the company won’t succeed. Unfortunately, investment in the right competences has been limited in recent years. Companies have focused on cost savings instead of attracting talent. Last but not least, companies fail to consider the importance of company culture.
“Too many companies spend time on developing their strategies and setting the direction; however, the strategies are never executed due to the company culture. There is a real need for a cultural change in these companies,” said Tina.
Prosperity in a time of crisis
Country manager in SEB Denmark, Peter Høltermand, knows all about change and the need to be able to execute. When the crisis emerged, and competitors started to slow down, SEB took a different direction.
“The crisis was a unique opportunity for us. We kicked off our growth strategy, realising it was a risk. It takes courage to make this kind of decision in the middle of a crisis but we were certain that we had the right strategy,” said Peter Høltermand.
SEB was founded in Sweden and is one of the oldest and largest banks in the Nordics. 65 per cent of its business is generated from the corporate segment, and today SEB is among Denmark’s three leading banks, targeting large and middle-sized companies.
During the crisis, a number of smaller Danish banks closed, and the international banks withdrew from the Danish market. That meant a change in competition and with this, the client’s options when choosing a bank became more limited . Peter Høltermand also believes that SEB’s relatively conservative credit policy contributed to the fact that SEB did well during the crisis. Moreover, SEB emphasised the importance of strengthening its relationships with its clients.
“SEB targets a very limited group of clients. We want to be close to our customers and to take the role as their advisor, and this extends to their business strategies,” said Peter Høltermand, adding that companies need to think strategically when choosing their bank.
“The number of banks that a company wants to do business with needs to be aligned with the number of the company’s business activities in order to optimise the price of the credit,” said Peter Høltermand.
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