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2 Ways Danske Bank is Responding to Fintech Competition

All banks are having to find a response to upstart start-ups that are using a combination of technology and new thinking to change the industry; Danske Bank is making big strides

The speedy rise of the fintech industry in recent years has generated a lot of hype about how new companies are disrupting the grand old giants of the banking industry. Fintech startups differentiate themselves by offering new or better digital products, and are forcing incumbents to get up to speed quickly.

While some of the more forward thinking incumbents responded by overturning legacy systems, digitalizing products, and partnering with fintechs, the majority of firms are “late adopters,” and are still trying to develop a holistic digital strategy to match changing customer expectations. Those that run operations functions are doing this in two ways, especially the operations team at Danske Bank.

  1. Focusing on the customer experience: Just under half (43%) of financial services executives believe that fintechs will have a high impact on customer experience and traditional providers could end up losing customers if they do not focus on improving their processes that underpin the “customer journey.”

    Danske’s approach: The bank has traditionally approached customer experience by thinking about how the customer fits into an existing process. Managers reframed their thinking to ask, “How do we fit into the customer journey?”, which has made a real difference.

    By thinking about how they can provide something that is similar to the type of experience customers get outside of financial services (booking a flight via a smartphone for example), the operations team produced some very different questions and solutions. They implemented a new process ownership that produced an institutionalized end-to-end view of how the bank delivers services to the customer.

    Within the bank, business process owners from the business side and primary service owners from the operations side work together to oversee the end-to-end process. These cross-functional teams discuss and prioritize process improvements and incorporate new ideas. Rob de Ridder, EVP of group operations, says that this change has given Operations more strategic influence than ever.

  2. Creating an internal innovation function: More than 45% of IT executives who work in operations functions say that the best way to respond to fintechs is to create an internal innovation team to develop competitive products. Many firms are launching fintech-like innovation centers separate from the business. These innovation centers are responsible for coming up with products and services that are far better than those developed inside the institution.

    Danske’s approach: Rather than asking themselves “Are we better than yesterday?”, Danske Bank’s teams have reframed the question to “How can we be massively better than yesterday?” It all started a few years ago when the bank commissioned a team that worked separately to develop a mobile app in a much more fintech-like way.

    The team worked closely with customers and used rapid trial and error. The most interesting thing about what was developed was that everything happens in the app — consumer-to-consumer payments, and consumer-to-business payments — so it is the app the does the heavy lifting. The approach has been a success, and the mobile app is now rolling out across the Nordic region.

    A supplement to that group, which in the media has been called Project X, is a team of just over 100 people, and is looking at how it can help with other important moments in customers’ lives. In Project X, the team starts with a different premise from most innovation teams. They don’t just want to make a 10% improvement but ask how something can be 100 times better than what it used to be. This question takes them to a different starting point when thinking about process improvement.


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